By J. Dean Spence
You know you are reading good business literature when it helps you put into perspective past interactions with companies you have dealt with.
The circumstances surrounding my last trip to the dentist left me upset, but after reading Ian H. Gordon’s Managing the New Customer Relationship I understand even more clearly why I was right to be mad.
DENTIST APPOINTMENT FROM HELL
I was in a job interview confidently answering all of the questions. Suddenly, my cellphone rang and briefly killed my mojo. (Stupid me had forgotten to turn it off.) I recovered but it was a needless distraction in what was a good interview.
After the interview I checked my voicemail. It was my dentist reminding me of an appointment in a few days—this after they called three weeks prior to remind me about the same appointment. I called to confirm, and asked them to send me emails in the future instead of calling me.
They said, “Okay.”
The NEXT DAY they CALLED asking me to reschedule the appointment. And then TWO DAYS AFTER THAT they CALLED again (right after another job interview!) to confirm the new appointment!
MASS CUSTOMIZATION
Gordon makes it clear that businesses today need to understand and implement mass customization where possible. Each individual customer or client has different expectations, interests, wants and experiences of and with your business. These factors must be accounted for, to the point of undue hardship, when providing individualized products and/or services to your customers/clients.
Mass customization involves a business collecting customer information about customers’ behaviour (transactions and interactions with your business), preferences, social influence (i.e. on social media), and needs, and then interpreting these needs to tailor products and/or services for each customer. Gordon says this process of collecting customer information is called sensing, and he argues that it allows businesses to predict “how customers will respond to specific offers, communications and attempts to create value for and with individual customer.”
Ultimately, Gordon suggests mass customization is a key way to add value to customer relationships. For Gordon, then, it is data collection that drives a company’s mass customization efforts. Similarly, United Airlines’ Chief Marketing Officer Tom O’Toole argues, “[Data] lets us track and evaluate the customer experience over time and intervene if we see the relationship weakening or how to grow it. It enables is to be very, very informed about individual customer relationships.”
In “Remaking Marketing Organizations for a Data-Driven World”, Eric Leininger and O’Toole discuss this same subject—although they don’t use the term mass customization. O’Toole says, “[United Airlines] develops personalized offers based on individual customer value and other criteria, deliver those offers to specific individuals through email, digital channels, and social media, and then have the feedback loop to business results at the individual level: Did they book? Did their number of flights with us increase? Did their spend with us increase? And, by extension, did our share of the customer’s total flights and flight spend increase?”
From a marketing perspective, Gordon and O’Toole suggest that conventional marketing is not being totally replaced by marketing based on mass customization, but is complimenting it. According to O’Toole, “We’re taking the conventional segmentation, advancing it to the individual level, and optimizing it….We value and want to provide a good travel experience to all of our customers. That said, there is an identifiable customer segment—“high-value customers”—that produces a greatly disproportionate share of the revenue and value creation. We focus intensively on driving our share of business, not just at the segment level, but at the individual level, for these customers….So, yes, we’re still talking about customer segments, but now we’re focusing at the individual level within customer segment.”
Is this the age of mass customization? Leininger asks O’Toole if it is unique to the airline industry. “I don’t think it’s at all unique to the airline industry,” O’Toole answers. “Yes, travel and financial services and retail are relatively advanced. But it also applies increasingly to health care and energy and a wide range of other industries. I think that it ultimately will apply and can apply to virtually all industries.”
UNDUE HARDSHIP
Mass customization sounds expensive, right? But remember I said products and/or services must be tailored “to the point of undue hardship.” Neither Gordon nor O’Toole use this phrase, but they do suggest that customer choice cannot be unlimited. For example, if your company manufactures coffee machines that comes in three colours (black, red, and blue), I would call it a species of undue hardship if a customer demands a purple coffee machine. You just don’t have the capacity for it.
O’Toole argues that it would be nice to offer customers the choice of up to 25 preordered meals on flights. “That all sounds fine until the flight attendant needs to know that the guy in 12B had the kale and quinoa. And what happens when there is bad weather, and to get you out sooner, we swap aircraft or put you on a different flight, when you paid in advance for the kale and quinoa?”
He goes on to say, “We increasingly need to balance service individualization with operational execution to find the optimal combination of personalized products and services with reliable operational service delivery in a highly dynamic business on thousands of flights around the world every day.”
Nevertheless, mass customization is made easy these days because of technology, especially social media. And certainly a dentist should be able to provide “tailored communication” at no added cost. Gordon says that mass customization can even reduce costs: “Dell showed the computer industry how this could be done when [it] pioneered build-to-order processes that engaged the customer, leading to reduced parts and finished goods inventory carrying costs and write-downs associated with end-of-life products as well as other benefits such as faster introduction of current technologies.”
IT’S MY WAY OR THE HIGHWAY
For Gordon, there are three main dimensions in which customization may be applied: “product customization; services and auxiliary or augmented product dimensions such as installation, delivery and financial terms; and communications for individual customer engagement and dialog, as well as the communication channels to be employed.”
Again, the cost of tailoring communication for a dentist should be zero, but the cost of communicating with a client in ways that he or she doesn’t want can be high.
I’m looking for a new dentist.