1. Database and Direct Response Marketing
Chapter 11
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Chapter Objectives
How can a marketing team match a database program with an IMC program?
What is meant by “database-driven marketing communications?”
Name the ways a company’s database can be used to create permission marketing, frequency marketing, and customer relationship management programs.
Which direct response marketing programs are most effective and least effective?
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3. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Levi-Strauss
1853, Bavarian immigrant
Four principles
Empathy
Originality
Integrity
Courage
Primary brands: Levi’s, Dockers, Levi Strauss Signature
Brand erosion
Database marketing program
Five target groups – promotions offered
Online shoppers – fashion messages
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Chapter Overview
Database marketing
Building a data warehouse
Database coding and analysis
Data mining
Database-driven marketing
Communications
Programs
Customer relationship management
Direct response marketing
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5. Developing Loyal Customers
Recognition
Relationship
Rewards
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Database Marketing
Database
Identify customers
Build relationships
Database analytics
Data-driven programs
Data-driven communications
Direct response marketing
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7. Tasks in Database Marketing
Building a data warehouse
Database coding and analysis
Data mining
Data-driven marketing communications
Data-driven marketing programs
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8. Building the Data Warehouse
Operational database
Customer transactions
Follows accounting rules
Marketing database
Current customer information
Former customer information
Prospect information
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9. The Marketing Data Warehouse
Customer names and addresses
addresses
Record of visits to the firm’s Web site
History of every purchase transaction
History of customer interactions
Customer survey results
Preferences and profiles supplied by the customer
Response history from marketing campaigns
Appended data
Database coding through customer analyses
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10. Database Coding and Analysis
Personalized communications
Marketing campaigns
Common forms of coding
Lifetime value analysis
RFM analysis
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11. Lifetime Value Analysis
Individual lifetime value
Customer segment lifetime value
Key figures
Revenue and costs
Retention rate
Visits or purchases per time period
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RFM Analysis
Recency
Divide database into 5 equal parts based on date of last purchase.
Code 5 to 1 with 5 the last 20% to purchase.
Frequency
Divide into 5 equal parts.
Code 5 to 1 with 5 being the most frequent
Monetary
Divide into 5 equal parts
Code 5 to 1 with 5 being the highest expenditures
Codes range from 555 to 111.
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Data Mining
Build profiles of customer groups.
Prepare models for predicting future behaviors.
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14. Internet Communications
Low cost
Available 24/7.
Metric analysis
If the message was read
Time it was read
How much time was spent
Customers access to additional information
Build a bond with customers.
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15. Data-Driven Communications
Identification codes
Customer IDs/passwords
Personalized greetings
After-sale communications
Customer profile information
In-bound telemarketing
Trawling
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16. Data-Driven Marketing Programs
Permission marketing
Frequency/loyalty programs
Customer relationship management
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17. Steps in Permission Marketing
Obtain permission
Offer a curriculum over time.
Reinforce incentives to continue the relationship.
Increase level of permission.
Leverage the permission to benefit both parties.
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18. Successful Permission Marketing
Ensure recipients have granted permission
Make s relevant
Customize program
Track member activity
Empowerment
Reciprocity
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19. Frequency Programs Objectives
Maintain sales, margins, or profits.
Increase loyalty of existing customers.
Induce cross-selling to existing customers.
Differentiate a parity brand.
Preempt the entry of a new brand.
Preempt or match a competitor’s program.
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20. Principle in Building Frequency Programs
Design the program to enhance the value of the product.
Calculate the full cost of the program.
Design a program that maximizes the customer’s motivation.
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21. Customer Relationship Management (CRM)
Database technology
Customize products
Customize communications
Many CRM programs failed
Built on two primary metrics
Lifetime value
Share of customer
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22. Developing a CRM Program
Identify customers.
Differentiate customers
Lifetime value
Share of customer
Interact with customers.
Improve cost efficiencies
Enhance effectiveness
Customize goods and services.
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23. Reasons CRM Programs Fail
Implementation before customer strategy.
Rolling out the CRM program before changing the organization to match the CRM program.
Technology-driven instead of customer-driven.
Customers feel like they are being stalked instead of wooed.
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24. Direct Response Marketing
Direct Marketing Association
Prospecting  60%
Customer retention  40%
Dell Computers
Catalog
TV and radio ads
FSI inserts
Web site
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25. Methods of Direct Marketing
Direct mail
Catalogs
Direct response promotions
Alternative media
Telemarketing
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Direct Mail
Most common form of direct marketing
Types of lists
Response list
Compiled list
Advantages
Target mailings (consumer, b-to-b)
Measurable
Driver of online sales
Disadvantages
Clutter
Costs
Digital direct-to-press
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Catalogs
Long-term impact
Low-pressure sales tactics
First stage in buying cycle
Database
Specialty catalogs
Business-to-business
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Direct Response Media
Television
Radio
Magazines
Newspapers
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Internet
Direct response to ads
Cost-effective
Builds relationships
Personalization of communication
Customization of offer
Search engine ads
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Alternative Media
Package insert programs (PIPs)
Ride-a-longs
Statement stuffers
Card packs
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Telemarketing
Inbound telemarketing
Cross-selling
Outbound telemarketing
Cold calling
Database
Prospects
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32. International Implications
Differences in technology
Laws and regulations
Local customs
Infrastructure
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