Marketing Guru Don Peppers and Tom H. C. Anderson Discuss Segmentation, CRM and State of 1 to 1 Marketing

Peppers & Rogers Group Marketing Guru, Don Peppers and Anderson Analytics’ Tom H. C. Anderson discuss consulting, segmentation, CRM, and the current condition of One-to-One marketing.

[Marketing Guru Round Table Discussion #5 ]

 

This Wednesday, I had a very interesting call with Don Peppers of Peppers & Rogers. I asked him a few questions about his practice and how Peppers & Rogers got started. Later we moved on to a more interesting discussion on Segmentation and CRM. Unfortunately, I just learned from an IT troll that the conference room recording service was not working properly…ARGH!!! So I’m just going to summarize a few of the ideas from my notes.

Inspiration & Ideas

I first asked Don about sources of inspiration. Don, like many marketing executives, is an avid reader. Some of his current favorites are “Why Stock Markets Crash” (he felt it was rather interesting how customers and investors behave similarly in certain situations), and “The Singularity is Near“. Additionally, first thing in the morning, often being on the road, he checks out websites including WSJ, Fox, and CNN.

Don’s favorite marketing Guru is Seth Godin. I had noticed that “Permission Based Marketing” did indeed sound very similar to “The One-to-One Future“. Don pointed out that he actually wrote the foreword to Seth’s book Permission Based Marketing. Don said that several years ago, Seth sent him a job advertisement that Seth had written which stated that having read “The One-to-One Future” was a job pre-requisite!

Don and I agreed that Seth Godin is rather good at conveying and naming marketing ideas and making them memorable. Perhaps this is why he was #1 in the recent Anderson Analytics–MENG Marketing Trends Survey.

History & Positioning

I asked Don how Peppers & Rogers Group got started and where they position themselves compared to other firms. Don explained that Peppers & Rogers is not positioned as a marketing consulting firm but a management consulting firm. One of their slogans is “Making the World Safe for Customers” (pretty neat slogan I thought).

Peppers & Rogers is involved in several types of management/marketing consulting engagements including change management and compete effectively against the McKinseys and Bains of the world. I pointed out that he had also competed against me on a segmentation study not too long ago ;). Interestingly, a key area of growth for Peppers & Rogers currently is EAME, especially the Middle East.

It all started back in 1993, with co-founder Martha Rogers and Don wanting to write a book. After writing “The One-to-One Future,” they were invited to several speaking engagements. After these speeches, someone in the audience would usually ask them if they consulted and they would reply, “Sure, what’s your question”. Initially, their biggest clients were technology vendors who were working on enterprise CRM technology and who were not only interested in their ideas but also wanted to leverage the authors’ notoriety to help sell their products and services.

At some point in 1999, wanting to serve a larger audience, Peppers & Rogers became a consulting company and terminated any exclusive agreements with these technology vendors (a slightly painful process). But this was a key component in being able to offer clients the best (neutral) advice. Don and Martha sought VC funding and subsequently hired Steve Skinner, from McKinsey Consulting, as CEO of Peppers & Rogers group and the rest is history.

Asking Don how accurate he thought “The One-to-One Future” had been in predicting things to come, almost 20 years ago, he answered that while it was very accurate, that this future has already come and gone. Now it’s not about connecting to individual customers but connecting to their entire networks! [An interesting idea I thought – perhaps in Anderson’s next segmentation study the number of connections customer have on LinkedIn and/or Facebook will be included as a variable?]

Segmentation, CRM, and One-to-One

We also discussed how Segmentation and CRM fit together. I pointed out a recent McKinsey study, which claimed that top performing companies don’t mix the two and use segmentation as a strategic tool and CRM as a totally separate tactical tool. Don seemed to agree with me that while it’s sometimes tricky, the two should be looked at together. We agreed that it’s partly semantics in terms of how people refer to various parts of segmentation and CRM.

Peppers & Rogers tries to avoid some of the common pitfalls of segmentation by acknowledging that customers can fall into two or more (even ten) segments. For instance, Don could fall into the “older father” segment and the “web savvy/enthusiast” segment. Instead, Peppers & Rogers say that regardless of the number of segments, a customer can fall into only one single “Portfolio”. These portfolios are “treatment strategies.”

I also asked Don about how Peppers & Rogers uses Segmentation and/or One-to-One marketing techniques in their own business. While they haven’t really segmented their own customers, as management consulting companies aren’t really doing mass marketing, they have implemented several of the One-to-One techniques Don and Martha have discussed in their books.

For instance, after every speaking engagement (Martha and Don do about 50+ a year) or major client engagement, someone from Peppers and Rogers group will follow up and ask how everything went and if the client/event manager felt everything went well and/or how things could have gone differently. Don refers to this as “Complaint Discovery”. I rather like the idea and have been thinking of doing something similar. Not sure what the best method or timing on something like this would be though.

Curious to hear your thoughts on Segmentation, CRM, and One-to-One marketing?

@TomHCAnderson