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mcr2e_chapter_10_slides.pptxManaging Customer Relationships: A Strategic Framework
Chapter 10
The Payoff of IDIC:
Using Mass Customization to Build Learning Relationships
Course Title Instructor
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
1
Chapter 10 Preview
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Review IDIC Framework: Customize
How Can Customization Be Profitable?
Demand Chain and Supply Chain
Some Examples of Mass Customization
Technology Accelerates Mass Customization
Customizing Standardized Products and Services
Value Streams
Business Rules for Personalization
Culture Rules
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Action
Analysis
…customers as unique addressable individuals
…by value, behavior and needs
…more cost -efficiently and effectively
…some aspect of the company’s behavior, offerings, or communications
Identify
Differentiate
Interact
Customize
Review: IDIC Framework
COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED.
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The Profitability of Customization
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Mass customization is really mass configuration
Create and preproduce product and service modules
Configure modules to meet individual customer needs – producing thousands of possible configurations
For manufactured goods, if products are modularized, make to order can be more cost effective than make to forecast – no large inventory
4
Mass Production vs. Mass Customization
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
5
Four Types of Mass Customization
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Adaptive customization
Standard but customizable product customers alter themselves
Cosmetic customization
Standard product presented differently to different customers (personalizing backpack with name)
Collaborative customization
Customized product that results from individual customer dialogues, identifying which product offering best meets their needs
Transparent customization
Customized product or service offered without the customer necessarily knowing about it (personalized treatment at a hotel based on observing and remembering preferences)
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Competitive Advantage in Mass Customization
Adaptive and cosmetic customization
Easier for customers to get exactly what they want
Company does not remember preferences, so must start over every time
Less competitive advantage
Collaborative and transparent customization
Customers have less control over receiving exactly what they want
Company develops relationship with customer and remembers preferences, so interaction always begins where it left off
Greater competitive advantage
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Technology Accelerates Mass Customization
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Anything that can be digitized can be customized
Web technology allows customers to personalize products and services themselves, adding individualized value to the product offering
For competitive advantage:
Remember each customer’s unique specifications
Link all customer interactions with previous knowledge of that customer
Use this knowledge to drive production process
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Customizing Standardized Products and Services
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Configuring product or services around it
Bundling of multiple products and services
Packaging
Delivery and logistics
Ancillary services
Training
Service enhancements
Invoicing
Payment terms
Preauthorization
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Enhanced Need Set
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Enhanced needs set
Related products and services
Strategic alliances
Collaborative opportunities
Value streams
Product-Service
Billing, invoicing, cost control
Packaging, palletization
Logistics, delivery
Promotion, communication
Service operations
Core
Configuration
Size, fit, style
Features
Timing, frequency
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Value Streams
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Single-product companies (purchased infrequently) can create a value stream of related products and services
Benefits:
Increases revenue by expanding needs set
Builds interactive Learning Relationship
Examples:
Furniture company offering furniture cleaning subscriptions
Clothing store offering tailoring or dry cleaning services
Software systems company offering technical support, training, and upgrades
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Using Business Rules for Personalization
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Business rules: a reusable set of instructions that enable an organization to operate in a consistent yet flexible way
Can be frustrating when front-line employees cannot change them to benefit customer relationship
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Best Practices for Personalization through Business Rules
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Best practices:
Appoint one person or business unit to be responsible for individual customer relationships
Minimize the number of enterprise-wide rules
Use the simplest approach possible
Combine business rules with other approaches
Maintain a separate rule base
When no applicable business rules exist, an enterprise’s culture fills in the gap, for better or worse
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Mass ProductionMass Customization
Supply chain managementDemand chain management
Economies of scaleEconomies of scope
Make to forecastMake to order
Speculative shipping costsGoods presold before shipping
Inventory carrying costsJust-in-time inventory
Sheet1
| Mass Production | Mass Customization |
| Supply chain management | Demand chain management |
| Economies of scale | Economies of scope |
| Make to forecast | Make to order |
| Speculative shipping costs | Goods presold before shipping |
| Inventory carrying costs | Just-in-time inventory |
