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Linking your database to the Internet Arthur Middleton Hughes Vice President / Solutions Architect KnowledgeBase Marketing, Inc. National Center for Database Marketing Fairmont Hotel San Francisco Monday July 12, 2004 8:30 – 11:15 AM What KnowledgeBase Does Agenda Introduction: How the Web has changed Database Marketing The Value of a Name Case Studies Using the web to build customer loyalty Using the web for customer service Premier Pages Database Marketing Pre 2000 Your database was built on a server or a mainframe. You got hard copy reports. You accessed the database by special software on a terminal. You had to be connected to the server or a main frame. A modern database Customer Transactions Marketing Database Inputs from Retail, Phone, Web Data Access And Analysis Software Appended Data Marketing Staff With the web it is much easier You have no need for a leased line. You need no software on your PC other than a browser and Excel You access your database through the web. Marketers Access The Database Through The Internet Marketing Database Data Entry Pre 2000 Customers called an agent on the phone Or sent data in by fax or mail Data was entered into the database by someone at a keyboard Data was updated periodically. Even when it was fast, it was slow. How data enters your database today Customers and telephone agents enter data directly to a micro web site. The site is on the server where your database resides. Customers do most of the work. The data is updated all day. It isn’t just fast, it is instant. Customers Update Their Preference Profiles Email says to click here Email thank you Database Pre-Populated profile Welcome back, Susan. Can you look over your profile and bring it up to date? Thanks… Customer communications pre 2000 The theory was 1:1 marketing, but… You made phone calls or wrote letters. Phone calls cost $3 - $7 each Letters cost $1.00 each. Communications were rare and expensive. Customer communications today Inbound, customers come to the web, and get instant information, and web responses or emails. Outbound, you can communicate with a million customers a day for almost nothing. 1:1 marketing can be a reality, if you have the right software and marketing strategy. Email Production Marketers use Campaign Management Tool to select households for email blasts Campaign Management Tool PC Reports Database Email Blaster Selected records are sent to email blaster. Promotion history with codes stored in database. Tracking Email Performance To get tickets, Click here Emails to customers & prospects Response MicroSite captures Response and Campaign code Reports on Return on Investment Reports through web compare outgoing emails and program response Database Reports Pre 2000 All databases produced hard copy reports. Many permitted marketers to use SQL or other software to do ad hoc queries Marketers did not know how to use SQL Most marketers were frustrated with their ability to get data Reports Today Marketers access their database through the web. There are standard reports that they can run and print on their PC printers There is English Language Ad Hoc software that they can access through the web, and print on their PC printers. Report Creation Programmers create the reports needed by the staff, and list a report catalog on the web site Programmer Database Report Catalog Media Show case Site Media Show case Global Nav Horror Online Sign Up Movies Homepage Site Pix Listserv (T) Movies Global Nav Meet the Parents Site Meet the Parents Global Nav Billy Elliott Site Billy Elliott Global Nav Grinch Site Grinch Global Nav Grinch Sw eepstakes (T) Family Man Site Family Man Global Nav Eye See You Site Eye See You Global Nav Head Over Heels Site Report Production Web Report Catalog Marketers choose reports via PC on web Reports printed on PC Printer Database Media Show case Site Media Show case Global Nav Horror Online Sign Up Movies Homepage Site Pix Listserv (T) Movies Global Nav Meet the Parents Site Meet the Parents Global Nav Billy Elliott Site Billy Elliott Global Nav Grinch Site Grinch Global Nav Grinch Sw eepstakes (T) Family Man Site Family Man Global Nav Eye See You Site Eye See You Global Nav Head Over Heels Site Campaigns Management Pre 2000 Marketers wrote memos to programmers who selected the names. Programmers prepared tapes that they sent to vendors. They sent hard copy reports to the marketers. Campaign Management Today Marketers use ad hoc web software to select names from the database. Selected names can be downloaded to the marketer through the web. Or the selected names can be downloaded to a vendor. Marketers create their campaigns. Access through Web Reports Through Web Campaign Manager Software Customer Database Email Blasting Software How Marketers Develop Marketing Campaigns Database Update Pre 2000 Input was entered on a PC and updated in batch from a diskette or tape. Many tapes arrived at once and were converted to a common format. For a big file, the process took a couple of weeks. Database Update Today Customers enter their own data directly through the web Other inputs arrive through the web and are converted through stored procedures. Relational database updates changed records only. The process is automatic and fast. Security: Access to web databases controlled by DBA Database Administrator assigns IDs and passwords to all users and controls which data reports each user can view. The value of a name How email names are used Regular promotions Low cost items Last Minute Specials Retention Messages Follow Up Messages Viral Marketing Newsletters Name Rental Regular Promotions Regular Promotion Sent Cost Each Promotion Cost Response Rate Responses Profit per response Profits Net Profits 8 Promos per year Annual Profit per name Mail 200,000 $0.50 $100,000 3.0% 6,000 $20.00 $120,000 $20,000 $160,000 $0.80 eMail 200,000 $0.04 $8,000 1.0% 2,000 $20.00 $40,000 $32,000 $256,000 $1.28 Low Cost Item Promotion Low Cost Item Promotion Sent Cost Each Promotion Cost Response Rate Responses Profit per response Profits Net Profits 8 Promos per year Annual profit per name Mail 200,000 $0.50 $100,000 3.0% 6,000 $8.00 $48,000 -$52,000 NA NA eMail 200,000 $0.04 $8,000 1.0% 2,000 $8.00 $16,000 $8,000 $64,000 $0.32 Last Minute Special Last Minute Special Mail Sent Cost Each Promotion Cost Response Rate Responses Profit per response Profits Net Profits Profit per name 50 Promos per year NA NA NA NA NA NA NA NA NA NA eMail 200,000 $0.04 $8,000 0.5% 1,000 $70.00 $70,000 $62,000 $0.31 $2.48 Retention Messages Birthday Cards Thank You Customer Surveys Service Reminders Monthly Summaries Gain From Email Retention Messages Gain from email Year 1 -$45.00 Control -$29.24 Test $15.76 Gain from use of email $3,152,000 With 200,000 Customers Year 2 Year 3 $46.23 $111.01 $83.22 $172.01 $36.98 $61.00 $7,396,776 $12,199,873 Retention Messages Retention Messages Sent Cost Each Promotion Cost Increased Retention Current LTV Increased LTV Total LTV Increase Net Profits 8 Messages / year Annual Name Value Mail 200,000 $0.50 $100,000 0.080% $111.01 $0.80 $160,000 $60,000 $480,000 $2.40 eMail 200,000 $0.04 $8,000 0.050% $111.01 $0.50 $100,000 $92,000 $736,000 $3.68 Follow up messages Thank you for your order Your order was shipped Did your order arrive on time and OK? Follow Up Messages Sent Cost Each Promotion Cost Increased Retention Current LTV Increased LTV Total LTV Increase Net Profits 4/12 per year Annual Name Value Mail 200,000 $0.50 $100,000 0.01% $111.01 $0.80 $160,000 $60,000 $240,000 $1.20 eMail 200,000 $0.04 $8,000 0.01% $111.01 $0.80 $160,000 $152,000 $1,824,000 $9.12 Viral Marketing Viral Email results in more emails and data capture Susan: If you want to have some friends come to Hawaii with you, list them here and if they decide to go, we will give each of you a 10% discount on your trips. Arthur Hughes [email protected] Helena Errazuris [email protected] Dudley Foulke [email protected] Dear Helena: Rick and I are going to Hawaii on August 7th. We thought it would be great if you could come with Us. We are staying at the Maui Surfside which is a great deal. To find out about it Click here! Hope you can Join us! Susan Database Viral Marketing Name Email Viral Marketing Mail Sent Cost Each Promotion Cost Response Rate Responses Emails Captured Emails Sent Success Rate Sales @$100 Sales Cost Per Sale Value of a name NA NA NA NA NA NA NA NA NA NA NA NA Send Send Send eMail 200,000 $0.04 $8,000 2.0% 4,000 1.5 6,000 8% 480 $48,000 $16.67 $0.24 Newsletters Newsletters Sent Cost Each Promotion Cost Response Rate Responses Average Sale Profit per sale Profit from newsletter Net Profit 12 per year Annual Profit per name Mail 200,000 $0.50 $100,000 2.00% 4,000 $100.00 $40.00 $160,000 $60,000 $240,000 $1.20 eMail 200,000 $0.04 $8,000 1.50% 3,000 $100.00 $40.00 $120,000 $112,000 $448,000 $2.24 Name Rental Value of Name Rental Rental Value Direct Mail Rentals Per Year 8 CPM $70 Revenue $0.56 Commissions $0.14 Net Revenue $0.42 Email 80 $70 $5.60 $1.40 $4.20 Total Annual Name Value Total Annual Name Value Regular Promotion Low Cost Item Promotion Last Minute Special Retention Messages Follow Up Messages Viral Marketing Newsletter Name Rental Total Annual Value Direct Mail $0.80 NA NA $2.40 $1.20 NA $1.20 $0.42 $6.02 Email Value $1.28 $0.32 $2.48 $3.68 $9.12 $0.24 $2.24 $4.20 $23.56 A few case studies Isuzu, Hewlett Packard, Universal Music, Web Focus Groups, Email Marketing, Getting customers to join a club. Isuzu Post Card Direct To sell their trucks, Isuzu developed 24 different postcards, each with a different case study of truck use such as Gardening, Plumbing, Moving. They set up a web site and used direct mail to get dealers to come to the site and order post cards for prospects developed by Isuzu. Dealer Direct Application HP On Line Survey Hewlett Packard tested an on line survey to promote their network printers. Direct mail drove responders to a web site that contained the survey. Responders received $10 in Pizza Hut coupons. The survey provided a special HP offer for network printing solutions, product links, and e-subscription information. Competitive Advantage Through Advanced Technology Universal Music eMarketing Campaign UMG tested an e-marketing strategy to increase record sales of a new album release for Lucinda Williams The campaign delivered more than a 960% increase to the Lucinda Williams fan base Reached nearly 200,000 fans and prospects with email communications Won DMA Gold Echo Award in 2002 Web Focus Groups What Works: Email Marketing Where else can you get these results in 3 days? Speech Email Follow Up Results on 3rd Day Delivered Viewed Clicked Do Not Mail 168 131 75 0 Download % Viewed % Clicked % Download 68 78% 45% 40% Get customers to join a club A company sold sporting goods created a member club. When DB was built they learned that: Club members bought 11 times more than non club members. In two years, 81% of club members became multi-buyers. Club members conversion 80.5% 90.0% Conversion to MultiBuyers after two years 80.0% 70.0% 60.0% 23.4% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Goal Club Non Goal Club Cataloger Example Miles Kimball sent 20,000 emails with three different catalogs, and 20,000 with the three catalogs alone. Those who got the emails bought 18% more than those who got the catalogs alone. Retailer Example Video retailer sent email newsletters to 170,000 customers for 6 months. Control group of 14,000 got no emails Retail sales to test group was 28% more than to those without emails. New idea: Digital Neighborhoods You can get customers online behavior appended to your database. 17 Digital Segments The web is the greatest direct marketing vehicle ever invented How the Web is changing Database Marketing Recognition Reaching out Customer service Supplier Relationships Information Ordering parts and replacements Building personal relationships Communicating Screen: Thank you for your order Email: Your order has been received Email: Your order will be shipped Email: Your order was shipped Email: Was everything to your satisfaction? Cost of all of the above? Nothing!!! Now, this is recognition! Welcome Back, Arthur! Immediate Feedback! 30 seconds later: Email The big Web winner: Customer Service Hundreds of millions of dollars being saved today through use of the web Much bigger than consumer sales How the Web is changing Customer Service 1980s: toll free numbers Thousands of agents reading screens Heavy cost: phone call and agents 2003: let the customers get their own information No cost for phone or for agents Customers like it better! Letting them go behind the counter Open your entire company to your customers Let them find what they want themselves It is cheaper for you, and customers like it better. How Amazon saves millions How Fedex Saves Millions Case Study: Shift Customer Calls to the Web Current Situation Company receives 7.5 million phone calls per year at 500 person call center Cost per call is $6.50 or $48 million per year. Web transactions cost $0.10 6% of transactions now go through the web site. Proposal: improve the web site so more calls can go there. Method: Personalization For the web to replace a live operator, it must be as good as a live operator. Personalization, and intelligent response to the customer’s input. Time required to improve web site: 14 months. Cost of web improvement: $1.8 million Dollar savings through increased web use $17,052,811 $18,000,000 Annual Dollar Savings Through Personalization of the Web $16,000,000 $14,000,000 $10,315,500 $12,000,000 $10,000,000 $5,606,250 $8,000,000 $6,000,000 $4,000,000 $2,315,625 $2,000,000 $0 2001 2002 2003 2004 How the savings can be achieved Make the web experience so rewarding that customers will prefer it to a phone Call. Make users empowered by functions available to them. As soon as the enhanced web functionality is up and running, run programs to drive customers to the web sites How to measure web success Get a base line for existing transactions Determine the cost of each transaction After transactions begin to shift to the web, determine how many have shifted Measure your savings. Why customers like to use the web Why customers like it: My vacuum cleaner problem We have a Hoover with a MicroFiltration Bag. We wasted an afternoon going to six (yes six) stores looking for new bags. No luck. So we tried the internet. Finding Hoover on the Web Ordering a Micro-Filtration Bag for my Hoover Letting customers come behind the counter A Marriott Example Let’s try it. Let Marriott plan a meeting in Ft. Lauderdale We want 3 rooms with 50 attendees, golf and pool Here are the properties. Let’s try the North Marriott Here are the conference rooms we need Here is the hotel And, here is the location. Let’s make a reservation! The Marriott Web Site: 1,800 Hotels $10 billion revenue Marriott doesn’t own most of the hotels Internet team began in 1997 More interactive, the more business Meeting planners don’t need to visit the sites. All they want is on the web. Booking a room for a business traveler is very fast Dell Premier Pages Dell Premier Pages… Benefits of Premier Pages Dell Premier Pages 70% business, 30% consumer on web Premier pages: one page per company Builds brand loyalty Reduces phone calls Takes only 30 minutes to create a new Premier Page for a new customer. Premier Page History Reports Dell sales follow up IS director checked networking equipment on Dell site. Did not buy. Next week got Dell salesman call to help with networking purchases Customers like it. Office Depot Premier Pages Office Depot Online discovered: on line customers spend 33% more than catalog customers Using a premier page system, Office Depot Online provided 85% of Bank of America’s office supplies Bring back the old corner grocer: Conclusion: You can do this! Invite your best customers into your company. Let them rummage through your warehouse. Let them look up technical data themselves Make them a part of your company. You will have them for life. Books by Arthur Hughes From McGraw Hill. Order at www.dbmarketing.com Contact Arthur: [email protected]