One-To-One Marketing: Comment - Does the brave new world have room for the agency model?

This beggars the questions - can the large, cumbersome agency model work in this brave new world? And are agencies smart enough to afford the change?

External influences are already altering the one-dimensional business model. A new agency moves to town. New software changes the way clients work. A competitor sells for a different price. Clients ask for additional services. As a consequence, direct marketing operations are becoming more complex. And regardless of customer profitability, most agencies still try and run all services through one operation.

Ironically, where developments in technology make processes more uniform, a customised approach is becoming more important. This means having people who are skilled in the core values of direct marketing and yet who are bright and nimble enough to provide tailor-made answers.

Individual Asian markets also require additional customisation. Take the example of a soft tissue product which can be used as a face wipe in Korea, a napkin in Malaysia, a make-up remover in Japan and a handkerchief in Thailand. Each market requires a different sales approach or even different distribution.

In the future, decisions about what markets we serve and the ways that we serve them will become more important. Direct marketing agencies could start to look to Alfred Sloans' GM model of a product - "for every purse and purpose". The cleverer agencies have now begun to specialise or even to outsource some of their services. BOC group in the UK provides a different approach to customers based on behaviour-based segmentation. It discovered its customers are either 'price traders', who are motivated by cost, or 'volume traders', who are motivated by service. It has adapted its approach accordingly.

According to Booz, Allen and Hamilton, focus must be on three sources of service if agencies are to capture the benefits of smart customisation.

Firstly, don't overshoot the optimum level of complexity, as customisation starts to cut into margins. Keep an eye on growth and costs. Secondly, evolve towards virtuous variety - develop a deeper understanding of different segment needs to understand the unique requirements of each segment. And third, tailor business streams to provide most value to those segments at least cost.

This should lead towards an improvement in the direct marketing service and away from a belief that one approach is the best approach. Chief executive Bernd Pischetsrieder once said: "People may not want to buy a car, but they will want to buy a BMW." Pischetsrieder now works for Volkswagen.