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Marketing in CRM
© 2006
Brian Broadway
"The purpose of business is to
create and keep a customer."
Theodore Levitt, The Marketing Imagination
Lester Wunderman said:
“People don’t want quarter inch drill bits.
They want quarter inch holes.”
The
Underlying
Premises
Premise 1
the single most important asset of your
company is . . .
Your Customers!
Average Sales Example
$1,200
$1,000
$1,062
$800
$600
$453
$310
$400
$113
$200
$84
$105
2
3
$192
$229
$145
$44
$0
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10
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Premise 2
not all customers are created equal
The Pareto
Principle
DIET COKE
Annual profit
% of Sales
84%
13%
3%
0%
8%
8%
$59.15
$9.15
8%
$2.11
76 %
$0
% of Households
Premise 3
it costs more to acquire a new
customer than to keep an existing
customer
The Reason to Focus on
Relationships
Cost
Reputation
Products
Service/Support
Expectations
None
Relationship
0
0.05
0.1
0.15
0.2
0.25
Why customers stay loyal
0.3
The Ad Spend Disconnect*
Internet
Magazines
Time Spent
Radio
Ad Spending
Newspapers
TV
0%
10%
*The Economist, April 2, 2005
20%
30%
40%
Concepts and Definitions
Marketing Concept
Satisfying want or need (at a profit) of
customers
Satisfying through mutually beneficial
exchange
The Evolution of Customers*
Persuading
Transacting
Groups of Buyers with
Individual
Buyers
Bonds with
Lifetime
Customers
Customers
as CoCreators
Time Frame
1970s-1980s
Late 1980s to
early 1990s
1990s
Beyond 2000
Managerial
Mind-set
Customer is an
average statistic
Customer is an
individual
statistic
Customer is a
person
Customer is
individual &
part of social
group
Interaction
Market Research
Shift from
Selling to
helping
Provide for
customers based
on observations
Co-developers
Communication
One-way, targeted
groups
Databased
communication
Relationship
marketing
Active
dialogue
*Co-opting Customer Competence, Prahalad & Ramaswamy,
HBR on Customer Relationship Management
Permission Marketing
Definition
 permission marketing
Marketing centered around obtaining customer consent to
receive information from a company.
 Coined and popularized by Seth Godin, permission marketing is the
opposite of traditional interruption marketing. Permission marketing
is about building an ongoing relationship of increasing depth with
customers. In the words of Seth Godin, "turning strangers into
friends, and friends into customers."
 Permission marketing has been hailed as a way for marketers to
succeed in a world increasingly cluttered with marketing messages
1to1 Definition
 Focused on the individual customer, one-to-one
marketing is based on the idea of an enterprise knowing
its customer. Through interactions with that customer
the enterprise can learn how he or she wants to be
treated. The enterprise is then able to treat this
customer differently than other customers. However,
one-to-one marketing does not mean that every single
customer needs to be treated uniquely; rather, it means
that each customer has a direct input into the way the
enterprise behaves with respect to him or her.
http://www.1to1.com/Glossary.aspx#O
CRM
Customer Relationship Marketing is a practice that
encompasses all marketing activities directed toward
establishing, developing, and maintaining successful
customer relationships. The focus of relationship
marketing is on developing long-term relationships
and improving corporate performance through
customer loyalty and customer retention.
Why Have a Relationship?
•Customers expect:
• excellence in products
• excellence in service
•A Competitive Advantage
• excellence in building and maintaining
customer relationships
Interactive/CRM vs
Traditional Marketing*
Interactive Marketing
Direct selling to individuals
Medium is the marketplace
Marketing controls process
through to delivery
Ads used to generate
response
Customers assume more
risk
Products delivered direct to
consumer
*Contemporary Direct Marketing, Spiller & Baier
Traditional Marketing
Mass selling to broad
groups
Retail is the marketplace
Marketing loses control at
distribution (channels)
Ads used to build
awareness
Customers perceive less risk
Consumer must deliver
themselves to the product
Segmentation
Key Concepts of
Marketing Strategy
There are three components of a traditional marketing
strategy:
Marketing Strategy
Segmentation
Targeting
Positioning
Segmentation
Segmentation divides the market into useful
sub-units of similar consumers based on:
Demographics
– Geography
– Psychographics
– Cognitive and behavioral attributes
–
Bases for Segmenting
Consumer Markets
Demographic and socioeconomic
Age, gender, marital status, household size,
household lifecycle; religion, race/ethnic
group, nationality, income, occupation,
education, social class, asset ownership
Geographic
Country, region, population density,
population size, climate
Bases for Segmenting
Consumer Markets (cont’d)
Behavioural and situational
User status, loyalty status, usage rate,
purchase occasion, buyer readiness
Psychological and psychographic
Personality, motivation and needs, consumer
attitude, lifestyle
Benefits sought
Time-savers, self-improvement
Interactive/CRM Segmentation
Behaviour
Purchases, payments, media used by
customer
Collected Information
Surveys, preferences,
Analysis by Modeling
Regression, neural networks, etc
Target Marketing Strategies
Market Segmentation Market
Strategy
Focus
Target
Market(s)
Strategy
Example
Mass
marketing
Customer
similarities
Full market
coverage
Pepsi and Coca-Cola in
global markets
Multi-segment
Marketing
Unique customer Two or more
characteristics
segments
Selling both sports cars
and family sedans
Niche marketing
(single-segment)
Unique product/
service features
Cutting-edge, high-tech
personal videophones
Premium price
markets
One-to-one marketing Highly specialized Mass customization Custom homes, cars,
(single-segment)
needs and wants micro-markets
tailored clothes
NB: A traditional approach
Interactive Marketing Media
Interactive Marketing
Media
Direct mail
Telemarketing
E-mail
Web sites
Broadcast
Print
The Basics of Direct Mail
Types of Direct Mail
addressed mail
unaddressed mail
co-op envelope, including card decks
Benefits of Direct Mail
personal (if addressed)
highly selective
highly responsive
excellent testing vehicle
most flexible of DM media
Disadvantages of Direct Mail
relatively expensive
requires long lead times
exacting technique with many pitfalls
for the unwary
Relative Value of Components
Creative
25.0%
List
40.0%
Offer
35.0%
The Basics of
Telemarketing
Definition of Telemarketing
a systematic, targeted and professional
medium used to generate a measurable
response
Types of Telemarketing
Inbound
 800/900 numbers
Outbound
 proactive sales and/or follow-up
Applications of Telemarketing
Inbound
 fulfil literature requests
 sales lead generation
 dealer location
 order taking
 promotional messages
 market research
Key Characteristics
- reactive, 24x7 service, consumer/business
Applications of Telemarketing
Outbound
 direct mail follow-up
 credit card marketing
 market surveys
 marginal account management
 lead qualification
 database maintenance
 etc
Do's and Don'ts
Do's
 plan
 test
 involve ALL
appropriate
departments
 train TSR's
 develop reports
Dont's
expect immediate
paybacks
take shortcuts
'wing it' without a script
forget to test
Kobs’ 7 Principles*
Know the target audience
Get off on the right foot
Develop “natural tone” copy
Encourage dialogue
Anticipate questions/objections
Close, close, close
Don’t wear out your welcome
*Contemporary Direct Marketing, Spiller and Baier, pg. 181
The Basics of e-mail
Pros and Cons
Pros
Speed
Flexibility
Low Cost
Cons
Viewed as SPAM
Service provider filters
Intrusive
E-mail Considerations*
Must examine, measure and test:
‘from line’
Subject line
Filtering
Day/time of delivery
*From 24.7 Canada CMA Handouts, May 2004
E-mail Metrics*
Successful events
Open rates
Click through rates
Opt-out rates
*From 24.7 Canada CMA Handouts,
May 2004
The Basics of Internet
Marketing*
*this section from Contemporary Direct Marketing, Spiller and Baier,
Paerson, 2005
Internet Evolution
brochureware
customer interactivity
transaction enabler
one-to-one relationship
real-time organizations
communities of interest (COINs)
Pros and Cons
Pros
wide reach
convenient
selective
low cost
creative
interactive
flexible
Cons
limited reach
privacy
security
ethical issues
no tech support
• consumer control
Web Metrics
hits
pages
visits
users
identified users
navigation path
Web Goal
A sticky site
to enable a “mutually beneficial
exchange”