We all know that the customer experience (CX) is important. Nobody likes to have a bad experience, so it goes without saying that every business should deliver a good experience.
One of the leading experts guiding brands to prioritize and deliver such good experiences is Don Peppers — CX luminary and co-author of the seminal book The One to One Future (among many others), and advisor to Evergage. I had the pleasure of interviewing him about his background, his books and his experiences at The Personalization Summit last month where he was a speaker. Check out his keynote presentation and read on for some great insights he shared with me!
Hi, Don. Thanks for speaking with me today. To get started, can you share a little about your background?
Sure. I didn’t study business or marketing in school. But after I graduated from college with an engineering degree and spent some time in a couple of different industries, I went to work in the advertising agency business. My job was to bring in new clients, so I was tasked with developing personal relationships with potential clients.
At one point, at the agency I was with, we had the opportunity to give a talk about the impact of interactivity on advertising. This was back in 1989. At that time, people thought that “interactivity” meant that one day you would see a commercial on TV, and then push a button to print out a coupon for it from your set-top box. The internet existed but people thought that interactivity would only really happen once there were fiber-optic cable connected homes and businesses, something that most experts felt was at least 20 years in the future.
I couldn’t get anyone at the agency to give the talk, so I had to do it. To prepare, I considered a hypothetical example: If a child was able to talk back to Tony the Tiger in a TV commercial, what would Kellogg do with any feedback or information the child gave them? The answer was obvious. They wouldn't do anything with that data. Remember that this was in the era of mass marketing, and information from an individual customer would be considered anecdotal, and not necessarily representative of the full market. You couldn’t act on that information in 1989 unless it was representative of a market, or at least a segment.
A lightbulb went off in my head, however. What I was doing at the B2B level was making calls out to prospective clients, with the objective of having them talk to me about their business, so we could establish a relationship. I realized that the personal, one-to-one relationships I was developing with business prospects was exactly the kind of thing that would eventually become possible at the B2C level. So I gave the talk around this, and I called it “1-to-1 marketing.”
There was a woman in the audience, a marketing professor at Bowling Green State University in Ohio. She said, “You should write a book.” I said, “Well, I’m pretty busy.” So she suggested we work together. That woman was Martha Rogers, and in 1993 we had our book, The One to One Future: Building Relationships One Customer at a Time. By sheer coincidence, the first commercial web browsers became available a few months after its publication, and our book soon became a cult hit.
Thank you, what an excellent story! And what are you up to today?
Today I am a consultant, speaker and writer on customer experience topics, and I have published over a dozen books together with Martha Rogers and on my own.
How would you say your vision of marketing evolved since your first book, The One to One Future, was published?
Well, it has evolved considerably. Of course, it’s hard to separate what my early conception of 1-to-1 was vs. what it is now. There is one thing that I think Martha and I got wrong in 1993. We thought that privacy would be a much more important factor in personalization than it ended up being. We thought that consumers would be very wary about handing over their personal information to businesses. In fact, we even thought there was a business opportunity for “privacy intermediaries.” You would give them your information, tell them what you wanted to buy, and they would put bids out to businesses on your behalf, without disclosing your personal data. That, of course, hasn’t happened. Not yet, anyway.
But I do think that we’re seeing more and more focus on privacy. Within the next few years you’re going to see a lot of companies taking privacy more seriously — especially in light of GDPR.
To give you guys some credit, I think it would have been difficult to foresee the amount of personal information we would be willing to share online before social media and e-commerce really got off the ground. But now it’s clear that consumers don’t mind sharing information as long as they receive some value from it.
Yes that’s true. We didn’t quite predict the privacy dynamic correctly, but we did predict e-commerce, social media, and even the gig economy. We predicted all of that.
Yes, you nailed it! Let’s move on to the present. In your recent book, Customer Experience: What, How and Why Now, you caution businesses to stop operating under the Goldfish Principle. Can you explain to our readers what that is and why it no longer makes sense in today’s world?
Martha and I coined the term “Goldfish Principle” based on the fact that there are certain species of tropical fish that have no territorial memory. They literally don’t recognize their surroundings, possibly because in the open sea they would have no need to. So, we would say you could put one of these fish in a goldfish bowl and it would swim around and around, always being surprised by “new” things! And businesses that don’t recognize their customers, we say, are operating on the Goldfish Principle because they have no “customer memory.” Let me give you an example.
I was staying in a hotel in Atlanta for three nights. The first evening, I called down to the front desk to request a wake-up call in the morning. The person at the front desk said, “Yes sir, Mr. Peppers, we can arrange your wake-up call, no problem. And just to let you know, you’re part of our very special Guest VIP program. Would you like a newspaper and a cup of coffee delivered to your door in the morning?” I said, “Wow, that’s great, but can you bring me a Diet Coke instead?” She said of course.
So the next evening, I called for a wake-up again. This time, I was told, “Yes sir, Mr. Peppers, and just to let you know, you’re part of our very special Guest VIP program. Would you like a newspaper and a cup of coffee delivered to your door in the morning?” And the third night, the same thing.
That’s the Goldfish Principle in operation. So after my three-day stay at this hotel, do you think I really considered myself one of its VIPs?
Right, so the Goldfish Principle is what happens when a business treats a customer as if it’s their first interaction, even when they already know each other.
Exactly. And it’s not acceptable to treat people this way now that it’s feasible to use technology to remember individual customers, even if you have millions of them. It wasn’t really possible 30 years ago. But it is now.
So you’re saying that customers today know that businesses have the capability and the data to remember them, so it doesn’t make sense to act like you don’t know them. They expect you to remember them, like you expected your hotel to remember that you preferred Diet Coke from one day to the next.
Oh definitely. You want another example? Think back to the last time you called into some company because you had a problem. The first thing you probably did was go to the website to see if you could solve the problem yourself. You only called because you couldn’t figure it out on your own. In the U.S. more than 80% of inbound calls to customer service lines begin this way. But what was the first thing you had to do once you got someone on the phone?
You had to explain your problem.
Exactly! Even though you were on that company’s website two minutes ago. And they don’t have a clue what you were doing there. I would say that something like 95% of companies I’ve seen aren’t able to “connect the dots” between your site activity a few minutes prior to the phone call, even though the technology already exists! If you’re registered on the site, of course, then it’s easy. But it’s even possible for anonymous visitors. You could display a phone number on the site that is unique to that visitor in the moment. So when the phone rings, you can link it up to that person in real time.
As an alternative, some companies — Amazon, for example — use a system where they say “instead of you calling us, we’ll call you.” So when they make the call they do, in fact, look into what you were researching on the site so they can provide better assistance.
These technologies exist. Why don’t companies put them in place? Perhaps because the majority of companies still look at omnichannel communication as an expensive luxury. If it reduces their costs, then they’ll do it. But if the only thing they’re doing is improving the customer experience, they don’t see the money in it. They aren’t putting themselves in their customers’ shoes, and they don’t understand why a better experience would actually be financially beneficial for their business.
I completely agree. Your keynote at The Personalization Summit taught us about the competitive advantage of 1-to-1 personalization. Can you elaborate on how personalization provides a competitive advantage?
Well, it’s really simple. Customers don’t come to you for the privilege of an experience. If you can create a completely frictionless experience, however — one that’s almost “invisible” to the customer — then it’s less likely that they’ll make the effort to leave and go someplace else.
If you can simply remember or predict what a customer wants, then they’re much more likely to take you up on the offer than if you gave them a lot of choices and required them to pick one. Back in the days of direct mail, it was widely known that offering choices would actually depress response! So the more personalized the selling process is, the more frictionless it will be for the customer, and the more loyal the customer will be in the long term.
And, of course, each customer costs something to acquire. But it costs much less to sell to a customer you already have. The more I sell to each customer, the higher my margin is with that customer. And that’s fundamentally why customer loyalty makes so much sense as a business strategy.
That makes sense – personalization creates loyalty, which results in a competitive advantage and long-term value. So to conclude, what’s the one thing you’d like everyone to take away from your keynote presentation?
The one thing I would say is: personalization is a benefit for customers. If the only reason you personalize is to try to immediately make more money, you will fail. Customers will see through it and they won’t trust you with their information.
But if you personalize to make the experience better for the customer, you will develop trust and loyalty, and probably sell more stuff in the end.
So your intentions have to be pure?
Yes. If you set your mind on doing the right thing for your customers, then having a business model that makes money is only a question of tactical configuration.
Great advice. Thanks for sharing your expertise with us today, Don!