Last week RSR had the opportunity to attend DemandTec’s DemandBetter 2011 event in San Francisco. The keynote speaker was Don Peppers, co-author (along with Martha Rogers) of the seminal 1997 book on customer relationship marketing entitled The One to One Future — Building Relationships One Customer at a Time. Peppers has been banging the drum for a long time that companies need to go beyond marketing to segments to build true one-to-one relationships with their customers. But that message has been greeted with a lot of skepticism over the years from both CPG manufacturers and retailers whose go-to-market strategies have been built around the notion of finding as many customers as possible for a finite assortment of products, what many refer to as push oriented retailing.

RSR’s own research over the past several years bears that skepticism out. For example, in 2008, retailer respondents to our study on loyalty programs showed that only a little over ¬º of retailers wanted to use customer data to provide personalized communications.

And a year later, when the Recession was in full swing and retailers were scrambling merely to retain their current customer base, the needle for personalized communications barely moved.

Consumers as Collaborators

In San Francisco, the keynote speaker contended that technology is fundamentally changing the dimension of business competition from share of market to share of customer. What that means, according to the author, is that rather than focusing solely on how many customers can be found for a finite group of products, retailers and manufacturers need to start looking at how to find more products per customer.

What has changed in Don Pepper’s message since 1997 is that the strategy is no longer characterized as an either/or go-to-market choice for retailers. To be effective, retailers must adopt both strategies (according to the author, the approaches “are not opposites, but perpendicular to each other “). A good example of this is affinity marketing to best customers, i.e. offering specials for add-on products when a best customer picks this-or-that to purchase.

All well and good, and not particularly startling… except for one big change that has happened in the marketplace in the last two years. That change has been instigated by the rapid adoption of consumer technologies, particularly smart mobile devices and social media. Those technologies have created the opportunity for consumers and retailers to collaborate in a two way dialogue, and according to Peppers, the ability to do that will determine retailers’ and manufacturers’ long term value. Said the author, “consumers are leaving digital footprints all over the place “, and it’s up to retailers use those footprints to get to know their customers, understand their needs better, and interact with them.

It’s a Matter of Trust

RSR’s forthcoming report on social media in retail will show that top-performing retailers understand that consumers want to connect with each other and see an opportunity to facilitate that dialogue through the Brand. Those top performers seem to be saying that building trust by facilitating a dialogue between interested parties — and listening — triggers many operational benefits, such as seeing early demand signals from insights into customer lifestyle preferences, as a way to continuously validate their brand value offering (in his keynote at DemandBetter 2011, Peppers also stated that customer sentiment can be used to predict demand).

The relationship between transparency and trust is reiterative. New consumer-facing technologies have created transparency (for example, price transparency); real transparency can increase a customer’s trust in the retailer which triggers more interaction; interactions generate greater transparency. The author stated that the prerequisites for trust are (1) good intentions, and (2) the competence to act on those intentions.

Social media’s emerging role in creating this circle of trust will be important for many retailers. The forthcoming RSR study shows that one of the differences between how Winners view social networks vs. others, is that non-winners see social media in much the same way as they see traditional media — yet another pipe to shove marketing messages at consumers with. Top winners on the other hand show sensitivity to the fact that consumers are looking for a two-way dialogue with other like-minded people, and retailers may get to participate, but only if consumers trust them.