The Secrets Of Peppers and Rogers

Psst ! If you want to make your web site more profitable, here’s the inside scoop. The Peppers and Rogers Group just released “The State of One to One Online,” revealing “the five secrets to competing online profitably.”

Here’s what works for the top one-to-one marketing web sites.

Loyalty. The Peppers and Rogers Group evaluated web sites based on the company’s four one-to-one strategies that can build loyal customer relationships — identifying, differentiating, interacting and customizing.

  • Identifying — Know your customers by building detailed profiles over the duration of the relationship. Entice your web customers to register with your web site so you can identify them each and every time they visit. The tracking capability of the web allows you to build rich customer profiles using registration, transaction and clickstream data.
  • Differentiating — Customers love to be treated like they’re special. Your web site should present personalized information and recommendations based on each particular customer.
  • Interacting — Each visit to your web site is an opportunity to interact with your customers. These visits help you learn more about your customers so you can treat them better the next time they visit your site.
  • Customizing — Tailor your products and services to meet the individual customer’s needs. Your web site should morph to each customer; content, commerce and other tools and applications should be presented in a personalized way.

“The State of One to One Online” report was the result of poring over the 500 web sites nominated by the readers of the Inside 1to1 email newsletter to select the best sites. After reviewing 51 sites, the Peppers and Rogers Group selected the 32 best web sites that effectively build 1to1 relationships with customers. Analysts found that there were five key visitor benefits, which they dubbed the top five secrets to competing online profitably.

  1. Don’t just protect customer privacy — tell users how you’re going to do it.

    People do business with companies they trust. As you’ve heard from me time and again, protecting user privacy encourages customers to participate in your one-to-one web marketing efforts, and it forges trusting relationships with your customers. The key to being a best 1to1 web site is to be very explicit about how the user information will and will not be used. The sites that Peppers and Rogers Group found to be the best at protecting user privacy were Peapod, FireFly, Dell, CDnow, S&P’s Personal Wealth, FedEx and E*Trade.

  2. Explain your motives for wanting to create a relationship.
  3. The best sites are explicit in describing to customers exactly how the customer will benefit through exchanging personal information with the site. I have found that many sites using personalization do not provide enough information and education regarding the benefits that the user will receive.

    I suggest you don’t bury this information within a privacy statement on your customer service page or within another page. Put it smack dab on the home page! Peppers & Rogers Group found that Amazon.com, Lands’ End and When.com explained their motives very well.

  4. Organize around customer needs — not products.
  5. The Peppers & Rogers Group selected Fidelity, Amazon.com, TicketMaster, Movie Critic, Garden Escape and 24.com as sites that exemplified the best practice of organizing the web site according to the customers. Organizing around customers rather than products enables the customers to find information quickly and find products that are relevant to their interests.

    I put this secret high on my list. It takes a great company that is truly in tune with customer needs to foster loyalty. Of course, to implement this type of system, you have to walk in your customers’ shoes.

  6. Give customers individual control.

    Isn’t this a great secret? I highly advocate user-managed profiles, because the customer who invests time and information in your web site is or will be a loyal one. Peppers and Rogers Group found that the best of the best sites personalized content for individual users, allowed customers to update personal profiles, enabled customers to customize the site look and feel, and/or allowed users to store multiple billing and shipping preferences. The top selections included Realtor.com, When.com, 1-800-Flowers and AA.com.

  7. Motivate customers to collaborate with you.

    This is where exit barriers come into play. Peppers and Roger Group believes the very best web sites observe user behavior, transactions and site interactions to anticipate needs, providing personalized information or recommendations. Some of the best include TheTrip.com, When.com, 1-800-Flowers, and Baan.

    Says Julien Beresford, Peppers and Rogers Group director of research and publications: “Typically these sites recognize returning customers, communicate that they want to create a relationship, anticipate user needs based on internal and external data, and make a bargain.”

    Making a bargain means that you provide an explicit benefit to the customer to entice them to register and share information. At a minimum, practicing secret #1 and #2 will do this. You can also provide online-only promotions, services, discounts, membership clubs, etc.

Advice From Don Peppers

Peppers suggests you start with secret number three (Organize around customer needs — not products). “You can’t start a relationship without understanding your customer’s needs,” Peppers says.

So what happens if you follow all of these secrets? How do you know the one-to-one efforts on your web site are working? Peppers replied, “The ultimate yardstick to measure your one-to-one efforts is the LTV (lifetime value) of a customer. This is very difficult to measure and requires extremely sophisticated systems.

“You should determine a proxy variable to serve as your metric. For example, a bank could measure the average number of products a customer uses. This is not as difficult to measure. If you know what your goal is for one-to-one efforts on your web site, then you will be able to determine a reasonable metric.”

So what should you make sure you do right when implementing your one-to-one web efforts?

“The biggest mistake companies make when implementing one to one,” Peppers told me, “is underestimating the degree to which a web site needs to be integrated with other systems and data. Although it is hard work, it is not impossible. Customers will want to check inventory, order status, configure products and perform other activities online. These activities require integration with other systems and processes.”

The next Peppers & Rogers Group report will be released in August. For more information visit The State of One to One Online.

Next Week: Beyond targeted advertising.

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