Commentary & Analysis
VDP: Back To The Future
By Brad Lena In small towns and villages throughout 19th century rural America,
By WhatTheyThink Staff
Published: January 25, 2005
By Brad Lena In small towns and villages throughout 19th century rural America, 1:1 marketing was simply the way business was conducted. January 25, 2005 -- In our age, as in all ages, there is a vanity that we are "the" innovators. We create new markets and methodologies, possess greater acumen than the business people from previous eras. We develop elaborate theories to explain the dynamics of buying and selling. Personalized, 1:1 marketing, CRM, value cycle theory, relevance, etc. are asserted as new concepts. They are not. If they are not new, then what is? It is the ability to apply these concepts on a large scale via modern technology and markets and it's the future. But, before going forward, let's take a trip backwards to the business environment of the 19th Century and see what it can tell us about the role of VDP in today's marketplace. In small towns and villages throughout rural America, 1:1 marketing was simply the way business was conducted. Why? The conditions of the time relating to communication, transportation, the cost of goods and scope of market demanded that local proprietors possess an intimate knowledge of their customers' preferences and buying habits. Unwanted goods had an attendant cost that was either prohibitive or simply bad business. The proprietors knew what seeds individual local farmers wanted and when, what implements they preferred, likewise sundry goods, pantry items and bolts of cloth. Customer information was stored in databases called ledgers and notebooks. This information guided inventory selection and restocking. In addition they had CRM systems; the customer would directly tell the proprietor what other products they would be interested in. (Feeling any less cutting edge yet?) "scale" does not exclusively relate to volume but also to levels of complexity pertaining to variables, depth of data mining, product/service offerings and desired outcomes. Wisecracks aside, the business dynamic mentioned above is identified by Paul Numes and Brian Johnson in their book Mass Affluence: 7 New Rules of Marketing to Today's Consumer (Harvard Business Review Press), as "Individualized Selling" prevalent until the late 1800s. They note that this model was followed by Mass Marketing from 1875 to1975, Relationship Selling from 1975-2000 and then, Mass-Affluence Marketing in which one of the components is "highly relevant mass communications and promotions." I believe an argument could be made that this is merely 19th Century Individualized Selling enhanced by technology and on a much larger scale. What does all this have to do with those of us that create VDP products in 2005? We need to begin by understanding that "scale" does not exclusively relate to volume but also to levels of complexity pertaining to variables, depth of data mining, product/service offerings and desired outcomes. I tell my clients that, from a technological standpoint it's a question of what should we do rather than what can we do. In fact, focusing on the desired outcome is among the most important service we can render a client. Data and digital presses alone will not save the day. Striking the right balance between the business objective and the application of digital marketing technologies is imperative. Striking the right balance between the business objective and the application of digital marketing technologies is imperative. Data and digital presses alone will not save the day. Clients new to VDP will still apply "cost per piece" measurements rather than "cost per sale." (In addition to sales, other desired responses could be inquiries, transactions, registrations, requests, Internet hits, etc.) The higher unit cost associated with VDP often precludes its application to low dollar items, especially those having no other marketing objective such as retention, incentive, or value cycle considerations. Other factors include how much data is appropriative and when will it be considered a violation of personal privacy? These issues place an additional burden on the VDP provider beyond technological competence. It requires a provider who can offer consultative and creative services and envision the marketing product all the way down to the end user, the consumer. Approaching each VDP project with a blank slate as to how it will function and look, the level of variables, compatibility with other marketing channels, measurability, etc. is advisable. Once these determinations have been made, the VDP product is essentially reverse engineered to meet well-defined outcome/result criteria. So, is it a stretch to think VDP has a case of back to the future? Well, in terms of function, we have a lot in common with our 19th Century counterparts. Understanding the customer up close and personal in regards to their product preferences, what is relevant to them, listening to them and anticipating future needs are practices that do not change. The candle and the light bulb both serve to illuminate. The book and the computer both serve to inform. The 19th century proprietor and the 21st century VDP provider both serve the individual consumer through intimate, knowledge, understanding and business acumen whether it's one at a time or in the thousands.