Download “Without Customers there is no business”

“Without Customers there is no business”
LIST SELECTION
List - is a collection of names and addresses of prospects
and customers who could be the target of an offer to
purchase a product or service.
Lists are the PLACE in the Marketing Mix - Product, Price,
Place and Promotion.
The list/lists a firm selects for its direct marketing effort is the
single most important factor in determining the success or
failure of any direct marketing campaign.
TYPES OF LISTS
1. House List - existing customers - these lists have the
highest responsiveness rates to your offers because they
have responded to you in the past.
The House List is the most valuable list to the direct
marketer.
2. Response List - contains information on consumers or
businesses that have product purchase histories from
competitors.
Response Lists are available from:
 List Owners - a firm makes its customer list available to
the commercial list rental marketplace
 List Manager - manage and market the list owners list
for a fee
 List Broker - a third party agent who rents mailing lists the broker works primarily for the list user intermediaries.
For Response Lists, three key factors determine usage
success: RFM - Recency, Frequency, Monetary
RFM values define a firms best customers, those who are
likely to purchase again because they have bought most
recently, bought most frequently or have spent the most
money.
Things to ask before renting/purchasing a list:
1. Who has used it?
2. Were their offers similar to mine and what was the
response?
3. Were their results favorable?
4. How clean is the list?
 In 12 months as many as 25% of the addresses on a
customer list could change.
3. Compiled Lists - are put together from numerous sources
such as telephone books, directories, voter lists, subscriber
lists, census bureau data, etc. These lists do not necessarily
include mail-order buyers.
Business compiled lists - business directories, yellow pages,
NAICS codes, etc.
Compiled lists are used to saturate a specific demographic or
geographic segment.
The problem with compiled lists is names do not necessarily
include mail order responsive customers.
Frequently lists are combined
Merge - Purge - merging lists together then purging duplicate
names and addresses.
This saves money on wasted postage.
Also, improves company image - don’t look like and idiot
because have mailed to the same person three times.
List Rental Agreements - usually only for an agreed to
number of uses. Frequently a firm must get approval for what
it is going to mail.
Seeding or Salting is the placement of fictitious names and
addresses into the list so mailings can be monitored. This
ensures the list is not used more than the agreed to number
of times.
List Segmentation - decide to mail to only a portion of the list
instead of the whole list.
Segment Criteria:
1. Demographics - age, income, gender, ethnicity,
occupation, achieved educational levels
2. Psychographics - lifestyle characteristics
3. Mail - order characteristics - RFM
4. Physical Characteristics - of the list itself, size of names,
deliverability, format, etc.
Statistical techniques are used to determine purchase
probability and predict segment response rates.
DATABASE MARKETING
Database Marketing - the process of creating information
records about individual customer’s orders and inquiries,
which are used to analyze patterns for more effective
targeting of product and service offerings.
* promote the benefits of brand loyalty to customers at risk
from competition
* identify which customers are most likely to buy new
products and services
* support low cost alternatives to traditional sales methods
Billions of pieces of information can be processed in minutes
to determine which customers should get particular
messages in endless, unique sequences of contacts over
days, weeks or years.
Uses of Databases
A database can be subdivided into segments
1. Select specific market segments - increases productivity
and lowers costs
2. Frequent communication can garner/encourage repeat
purchases
3. Cross selling - when a firm owns several businesses that
share a common database they can enjoy greater sales and
lower costs. Sell current customers something related or
unrelated.
4. Competitive superiority - offer better
merchandising/service
5. Profile existing customers and target new similar
customers
6. Market research allows for the development of new
products and services and better targeting because of media
preference.
Strengths of Database Marketing
1. It is measurable. Responses are counted
2. It is testable. Different things can be tested, product,
brochure, medium, target market, etc.
3. It is selective. Communicate only with specific customers
4. It is personal. Communicate only the details each
customer cares about
5. It is flexible. Time the offers for when I think I will get
greatest response.
Weaknesses of Database Marketing
1. It is expensive to create and manage a database
2. It is difficult and time-consuming to keep customer and
prospect records up to date
PRIVACY ISSUES
Most personal information is obtained from secondary
sources, where information is accessible without the
individual’s knowledge.
People suffer from a psychological sense of insecurity by
violation of a person’s right to choose the time and place of
social interaction.