"The 20th century was about sorting out supply... The 21st is going to be about sorting out demand."

I saw a reference to this Wired article on Seth Godin's blog and it got me thinking.

In a time of fragmenting communications channels, customer insight, real knowledge of what your customers want from you becomes even more important.

When customers gather in increasingly small groups of like minded / common interest peers, you can no longer 'shout' at a large audience and let them sort themselves out. Interested to the left, disinterested to the right. Knowing where to find them and what to say when you do is the web n.0 challenge.

But it is not just understanding where the customers are. Customer insight is required to make sure you build trust then loyalty. You want loyalty because it is the driver of profits in a demand constrained world.

Marketing can build loyalty because there is a set of rules around gift giving that are fundamental to human societies. People receiving gifts feel an obligation to repay them. Anthropologists speculate that these rules are socially Darwinian as they allowed for food surpluses to be stored, in a time before refrigeration, through an obligation to repay in the future when times were tight.

If you are sceptical about the role of reciprocity in modern society consider the scandal currently raging in my home state of NSW Australia. Large political party donations by property developers with applications requiring political approval make most of us uncomfortable, because we believe the rules of reciprocity do hold. The public and developers believe the donations will be repaid with favours; only the politicians disagree.

The psychologists tell us that the 'gifts' we can give others in order to develop a relationship leading to loyalty are; money, goods, service, information, status and love. These gifts are increasingly personal in nature and decreasingly tangible as you go through the list.

This is important because gift giving rules generally require repayment in kind.

Give your customers money gifts (e.g. discounts) and they feel they have repaid the gift when they give you money; tangible, impersonal gift repaid in kind; no need for a lingering relationship.

Give your customers personal, intangible gifts and it gets interesting. You get repaid with loyalty and positive word of mouth; personal and intangible repayment.

This is easier said than done; the gifts of information and status to be personal ('particularist' is the technical term) require trust.

Trust takes time and interaction. Trust comes when the customer believes you have spent enough time with them to know who they are and have demonstrated your interest by making messages and offers relevant to them.

Relevance means an experience that recognises their preferences and needs (not just their value to you). It means listening and remembering. Write the play they want to see. 'The play went marvellously well. The audience was a complete success.'

Puts as back at the CRM and CEM mash-up.

* Oscar Wilde on the Importance of Customer Insight