archaic, one-size-fits-all strategies
March 27, 2000
BY MICHAEL KRAUSS
used to be a short but proud Keebler cookie Elf. At least, that’s
how I fancied myself years ago when I was a new product development
manager working at 1 Hollow Tree Lane in Elmhurst, Ill.
We did a lot
of collaborating as we worked to create Keebler’s flagship
chocolate-chip cookie brand, Chips Deluxe. We collaborated with
R&D on the product specifications, with manufacturing and
distribution and with the ad agency. We even collaborated pretty
well with the finance and the sales departments.
It took such
collaboration to bring our child—our product—to market,
and we delivered a good-tasting cookie with big, soft chocolate
chips (bigger chips than in Chips Ahoy, if memory serves me right).
Consistency was the key, tonnage was the name of the game and
customizing the product offer to individual buyers wasn’t
anywhere on our horizon.
there were voices in the wilderness who predicted we were missing
something in our product development efforts. If we’d listened
to Alvin Toffler and read Future Shock [ISBN# 0-553-27737-5] back
in 1970, we might have realized that customization and personalization
of the product offer would become significant.
and author Stan Davis laid the foundation and coined the term
"mass customization," which we thought to be an oxymoron
when his 1987 book, Future Perfect [ISBN# 0-201-11513-1], was
Joe Pine explained this phenomenon in his 1993 work, Mass Customization
[ISBN# 0-87584-372-7] and, of course Don Peppers and Martha Rogers
filled our marketing heads with the idea of The One to One Future
[ISBN# 0-385-48566-2] in 1993.
Back in 1997,
Clay Christensen’s, The Innovator’s Dilemma [ISBN#
0-87584-585-1] hit the charts. He plainly spelled out the impact
of today’s disruptive new technologies and why we marketers
thought we were doing everything right, but in fact were missing
the biggest opportunities in product development.
returned last year with his Experience Economy [ISBN# 0-87584-819-2],
suggesting that rich environments and consumer experiences are
the pathway to high margins and marketing success.
the rise of the Internet and today’s new technologies, it’s
possible to conceptualize, develop and deliver customized product
offers and experiences for individual buyers, just as this train
of authors exhorted us to do all along.
the technology making this feat possible was quietly invented
in 1968; that was the year the global publishing industry created
the ISBN (International Standard Book Number) system. By establishing
a unique labeling system for all books and published monographs,
the foundation for Jeff Bezos’ future fortune was laid.
It isn’t complex for a software program to examine a pool
of customers’ purchases by ISBN number. From relatively
small amounts of data, the system can make some pretty good recommendations,
helping online marketers enhance the buyer’s experience
while customizing their offerings to the individual.
director of the Software Agents Group at Cambridge, Mass.-based
Massachusetts Institute of Technology Media Lab, was thinking
along those lines when she founded Firefly Network, Inc. (www.firefly.net)
in Cambridge—one of the first companies to commercialize
software agent technology. (Firefly was acquired by Microsoft
in April 1998.)
in a recent Association for Computing Machinery Journal article,
"Firefly recommends products through an automated ‘word-of-mouth’
recommendation mechanism called ‘collaborative filtering.’
Firefly uses the opinions of like-minded people to offer recommendations
of such commodity products as music and books, as well as more
difficult-to-characterize products, such as Web pages and restaurants."
A former physics
department programmer at Philadelphia’s University of Pennsylvania
got the concept. Steven Snyder founded Minneapolis-based Net Perceptions
Inc. in July 1996. His clients (including CDnow, Egghead.com and
Ticketmaster) use collaborative filtering to learn from each customer
interaction to adjust marketing messages and product offers in
customized product offers to individual customers requires that
marketers think in new ways, discover and adopt new skills and
learn about a whole new set of marketing services suppliers. In
addition to buying advertising from Young & Rubicam, Giant
Step or Leagas Delaney, you may have to buy a whole new technology
platform from Firefly, Net Perceptions, Broadvision, Blue Martini,
Engage, LikeMinds or Vignette. Firms such as these have developed
sophisticated software for mining customer data and delivering
direct mail and database marketers—the forerunners of today’s
online marketers—coded into their applications a set of
decision rules, and these so-called rules- based systems assessed
you as a shopper. Based on a set of predetermined guidelines—defined
by the presumably prescient marketing manager—these sites
provided you with a set of customized product offers. The possibilities
for customizing offers using a rules-based approach is limited
only by the creativity of the marketing manager. And the problem
with rules-based systems is they are only as good as the individual
creativity of the marketing or product development manager or
team; these systems don’t take full advantage of the community’s
filtering, however, the marketing manager can better leverage
the power of the community of shoppers that come to a Web site.
Essentially, the marketing manager can engage the community in
determining future product offers.
A step ahead,
but while collaborative filtering applications have gained broad
acceptance, "There are limitations," says Bennet Harvey,
vice president of product management for Esurance.com, an online
personal lines insurance provider based in San Francisco.
we want to provide a totally customized product offer for each
and every shopper. Techniques like collaborative filtering have
their place, but solutions such as Net Perceptions’ tend
to be developed for particular vertical industries. They don’t
always travel well."
with these techniques, Harvey adds, is that "they serve up
offers based on assumptions of buyer similarity. At Esurance.com
… we don’t want to make offers based on other customers
serving as surrogates for the buyer."
are advocates on both sides of this argument, some things are
clear. First, the days of selling a one-size-fits-all product
offer—even if it’s for chocolate chip cookies—are
long gone. And, second, the new product development manager needs
to start collaborating with state-of-the-art technologists and
learn about these new techniques—especially those who live
and work, like I did, in a Hollow Tree.
is a partner with Diamond Technology Partners in Chicago.
He can be reached at firstname.lastname@example.org.