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MARK2038
Data Base Marketing Strategies II
Week 7
Instructor: Santo Ligotti
Email: [email protected]
Today’s Agenda
List Management
Digital marketing
Overview of the Internet
Three e-business strategies
How to evaluate marketing web sites
Housekeeping
 Discuss Assignment #4
 Discuss Group Project
Objectives
In today’s lecture you will learn:
 List Management and the relevancy that list
rentals play in enhancing 1:1 Direct Marketing
initiatives
 How to search for lists and determine appropriate
targets for either acquisition or retention
strategies
 Digital marketing
 Overview of the Internet
 Three e-business strategies
 How to evaluate marketing web sites
It all starts with the list
A list is a collection of names and addresses
used by direct marketers to target offers.
The list determines:



WHO will ultimately receive your message
The total number of interactions possible for the
campaign
The total projected revenue from the campaign
List Types and Sources
House
Lists
Internal
Combined
List
Renter
A
Response
Lists
Renter
B
Renter
C
Compiled
Lists
House Lists
House List: an internal list compiled from
internal customer records.



Can contain purchase data and purchase patterns
A valuable asset
House lists can be “bartered” (traded) with
strategic partners
House List Sources
accounting records
shipping records
records of inquiries
warranty cards
survey research results
Response Lists
Response List: an external list made up of
individuals who have already exhibited a type
of interaction desired by the firm.
= “Another firm’s house list”
Examples:




Buyer lists
Attendee/Membership/Seminar Lists
Subscription lists
Donor lists
Compiled Lists
Compiled List: an external list that includes
records without any previous indication of
willingness to respond, but with some defined
characteristics.
Examples:



Consumer compiled list
Consumer lifestyle-enhanced list
Business compiled list (directories)
Example: Cornerstone Canada
www.cstonecanada.com
Overview


Cornerstone provides creative prospecting solutions, and solutions
for designing and executing database management strategies.
They help initiate and sustain lasting relationships with your most
profitable customers.
Currently, they broker over 1,400 lists containing over 265 million
listings
History

Founded in 1987, Cornerstone has constantly built on past
successes to become Canada's largest prospecting and database
management resource
Check out their glossary of terms
http://www.cstonecanada.com/primer/glossary.asp
Check out their industry primers for direct mail, email lists, and mergepurge services
http://www.cstonecanada.com/primer/
Discuss
If you were purchasing a single
response list for an upcoming direct
mail campaign, which one would you
choose?
List A: bought a similar product
 List B: bought within the category
 List C: bought something by mail

Affinity
bought an identical product by mail
bought a similar product by mail
inquired about your product
bought within the category
bought something by mail
any other action by mail
Affinity – Another Perspective
Most
Effective
Least
Effective
• Active Customers
(bought in last x months)
• Inactive Customers
(bought in > x months)
• Former Customers
• Select Prospects
(high propensity to buy)
• Other Prospects
RFM
List Management
The role of list managers
Selection criteria
Seeding
Data hygiene
List Management Roles
List renter: the list “buyer”
List compiler: the company or person who
compiles the list
List broker (CORNERSTONE): an intermediary
who:



Maintains list hygiene and suppression
Provides recommendations, discounts, etc.
Typically paid on a commission basis
Selection Criteria
When was the list last updated?
How deliverable is the list? (hygiene)
What selections are available, and at what cost?
What is the source of the list?
Is the list owner a member of the CDMA?
What is the rollout potential of the list compared
to rollout fees?
Size and turnover
Selection Criteria - Costs
“Premium” lists contain:




Recently verified contacts (30-90 days)
Proven mail-order buyers
Contacts with highly detailed profiles
Hard-to-find customer data
“Bargain” lists contain:



Unconfirmed contacts
Inquired instead of purchased
Names/addresses only
Seeding
Seeding: a common practice by list
compilers/brokers of adding disguised
names and addresses to monitor list
usage.
Data Hygiene
Data hygiene: business processes that
maintain the usability of customer data.
Reasons:






Non-standard/missing address data
Incorrect Name
Titles, Gender
Duplication
Inappropriate
Gone away, died
Demonstration - Cornerstone
You are the RESP Product manager at CIBC.
RESP are Registered Education Savings Plan
that encourage individuals to save for their
child’s education with an added 20%
contribution from the government. You need
to encourage product uptake, but your
database lacks information on which of your
clients has children. You decide that external
list rentals might help you augment your
existing data base. You contact your list
broker and ask for possible solutions
What lists are available?

Digital Marketing-Part I
This week
Digital marketing
Overview of the Internet
Three e-business strategies
How to evaluate marketing web sites
Assignment 4 handout
The Internet
What is the Internet?
Who uses the Internet?
Database marketing e-business
strategies
Related tactics
The Internet
The Internet: a global network consisting of
millions of interconnected corporate,
government, organizational, and private
networks.
1.
2.
3.
4.
Computers
With data
Users who send and receive the data
A technology infrastructure to move, create, and
view or listen to the content.
Other Definitions
intranet
A private network running internally
within a corporation + using Internet
standards (HTML, browsers).
extranet
An intranet that value chain partners
can partially access.
Other Definitions
Web
The portion of the
Internet that
supports a graphical
interface for
hypertext navigation
with a browser.
More than one Web
1.
The Web that most users access from PCs:


2.
Low-bandwidth content
High-bandwidth content
Subsets of the Web with content specially
designed for unique devices:




Web TV
Personal digital assistants (PDA)
Cell phones
Text-only browsers
Diffusion of Technology
Or Media Fragmentation, as we talked about last week,
means that the internet has had to evolve to be a true
1:1 medium
Users demand not only accessibility, but customizability,
it’s no longer okay to just have a great looking web site;
people want something that makes them feel its their
own space
So the internet evolution moves from 1 to many, to 1:1
A difficult task, but a necessary exercise
Internet Users*
15.7% of the global
population is
connected
= 1.02 billion users
Source: Internet World Stats
Connected Users
Worldwide
Connected
Not
Connected
Internet Users-Canada*
67.9% of the
Canaian population
is connected
= 21.9 million users
Source: Internet World Stats
Connected Users
Canada
Not
Connected
Connected
Internet Users: demographics
88% of connected
users live in
developed nations
Connected Users by
Nation Type
Underdeveloped
Developed
Internet Users: demographics
Latin
Americ a/Carribean,
79.9
(millions)
Australia/Oc eania,
17.9
North Americ a,
227.3
Asia, 364.3
Europe/ MidEast,
141.6
Internet Users: demographics
Other, 9%
Dutch, 2%
Portugese,
3%
French, 3%
Italian, 4%
English, 42%
Spanish, 7%
German, 7%
Korean, 5%
Chinese, 9%
Japanese,
9%
Internet Use in Canada and Ecommerce in the New Economy
Statistics Canada publishes the HOUSEHOLD
INTERNET USE SURVEY (HIUS) on a regular basis
The last published report was for 2003 data
There was no report published for 2004
There will be a report in 2006 reflecting 2005
statistics at the individual level
Internet Use in Canada and Ecommerce in the New Economy
In 2003, based on the last survey




3.2 Million Canadian households actively participated in ecommerce
In total they placed 21.1 million orders, and spend over $3
billion dollars
This represented a 25% increase from 2002
Recent statistics from STATS CANADA show that:


Business to Consumer e-commerce sales were $8.5 billion (an
increase of 183.3% from 2003)
Business to Business e-commerce sales were $19.8 billioin
Internet Use in Canada and Ecommerce in the New Economy
E-Commerce sales in Canada, 2004, by selected
sectors
Wholesale trade
$6.14 Billion
Manufacturing
$4.23 Billion
Transportation/Warehousing $4.61 Billion
Retail Trade
$2.95 Billion
E-Customers: their
demographics
Younger



Most users are 18-34
years old
35-44 year olds are not
far behind
Age 55 and older use it
the least
More Affluent

Households with aboveaverage income (80% of
Canadians with incomes
of $80k or more per
year) use it.
E-Customers: How they live
Time-pressured
Information-overloaded
Mobile, yet connected
Customized entertainment
Expanded working hours
Diminished job stability and loyalty
Rise in entrepreneurial interests
E-Customers: How they shop
online
Self-serve
Anywhere, anytime
Access to more products
Emphasis on immediate fulfillment of
needs and expectations
Strong desire to have a 1:1 experience,
and they demand it
E-business is not just regular business
E-Business: Major Applications
1.
E-communications

2.
E-commerce

3.
Messaging prospects and customers
Selling, logistics, data sharing online
E-care

Customer service and fulfillment
Businesses Find it Compelling
Many firms have greatly reduced
marketing and fulfillment costs via
electronic order processing, billing, and
e-mail.
An “infinitely scalable” transaction
channel
Barriers to Entry
Web site
development
Hardware and
software
Rapid obsolescence
Learning curve
The New Environment
Marketers found customers
Customers find marketers
The New Environment
Marketers found customers
Customers find marketers
Local competition
International competition just
a click away
The New Environment
Marketers found customers
Customers find marketers
Local competition
International competition just
a click away
Price was more static,
controlled
Price is more dynamic
The New Environment
Marketers found customers
Customers find marketers
Local competition
International competition just
a click away
Price was more static,
controlled
Price is more dynamic
Interruption-based
Permission-based
“Companies are learning to let
customers come behind the
counter and figure things out for
themselves.”
- Arthur Middleton Hughes
Strategic Implications
1.
Marketers who
grasp what Internet
technologies can do
will be better poised
to capitalize on
information
technology.
Strategic Implications
2.
New communication opportunities
exist to reach customers beyond the
telephone, television, postal mail, or
other media.
3.
Internet technologies can be
integrated into existing marketing
strategies, or used to redefine the way
marketing is conducted.
Is ALL e-marketing direct
marketing?
Direct marketing only occurs when
messages are:
Personalized
(1)
____________,
Measurable
(2) ____________ and
Interactive
(3)_____________ .
Common E-Business Models
B2C
B2B
C2C
Common E-Business Models
Pure play (Amazon.com)
Enterprise “Click and Mortar”
(FutureShop, HBC.com)
Online exchange (eBay)
Portal (Yahoo!, MSN)
Metamediary (yourshops.ca)
Level of business impact
E-Business Models:
Commitment
Business transformation
(competit ive advantage,
industry redefinition)
Pure
Play
Pure dot-com
(Amazon)
Enterprise
Effectiveness
(customer
retention)
Efficiency
(cost
reduction)
Business Process
Click and Mortar
(eSchwab, most retailers)
Customer
Relationship
Management
Activity
PURE PLAY: A company devoted to only one line of business
Brochureware
E-mail
Pure Play Example – Netflix
In the USA, Netflix www.netflix.com rents
DVD movies by mail:





Customer sets up a “queue” of movies they want
to rent.
Customer rents 3+ DVDs at once —no return
deadlines or late penalties.
After viewing a movie, customer slips it into a
prepaid return envelope to mail it back to Netflix.
A few days later, they receive the next DVD on
their list.
Netflix builds relationships one at a time through
customer-driven personalization and convenience.
Typical Strategic Goals
1.
2.
3.
Develop e-marketing infrastructure
Promote web site as an additional
point of contact, not a replacement
Migrate customers to the Web
Final Points
1.
2.
3.
4.
Next week, no class, intercession
week
Assignment #4 due June 27th, 2006
Work in your group projects
I will post a detailed marking scheme
early next week