database marketing Database Marketing Defined Loyalty as Competitive Advantage DBM is Incremental in Nature DBM is a complete framework for Marketing

Transcription

1 Database Marketing Defined database marketing DBM is a complete framework for Marketing Research, Segmentation, Contact, Measurement any activity which creates and exploits a direct relationship between you and your customer as an individual. Source: Bird (1989) as cited in T ap p, A. ( ) P rincip l es of D irect and D atab ase M ark eting, p. 8 1 Discovering and satisfying needs: Which customers are profitable now? Which customers could be more profitable over time? Why are my customers leaving? What channels do customers prefer to buy through? How do I know when and what products to 2 DBM is Incremental in Nature Goal of DBM are to make incremental improvements in: customer retention response rates referrals cross-sales frequency of sales average order sizes Loyalty as Competitive Advantage Competitive advantage is actualized from engaging your customer in a learning relationship. The more effort a customer invests in this rel ationship, the g reater their stak e in mak ing the rel ationship w ork. i.e., going to a competitor = reinv enting th e rel ations h ip. With each interaction, to become more knowledgeable about the individual customers and their preferences. 1

2 M Impact of Loyalty on Switching Costs Loyalty HH II GG HH LOW LOW P rice PP rr oo mm oo tt ii oo nn Trade Promotion AA dd vv ertis ing SS ww itching CC osts LL oy al ty MM kk tg DD atab ase MM kk tg DD irect MM kk tg HH II GG HH Database Marketing Management The analysis, planning, implementation, and control of database marketing programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. eas ure res ults I mp lemen t S trateg y Customer Relationship Formulate S trateg y S et O b j ec ti v es 5 1/20/ Pearson Education Canada Inc. 6 Summary of Key Differences This Week Mass Marketing Directed at many Generic Highly visible to the competition No clear desired action Increases awareness Results are difficult to measure Database Marketing Targeted Customized Less visible to the competition A clear call-to-action Increases interaction Results are highly measurable 1. Homework review 2. The Four Cornerstones of DBM How to identify customers individually How database technology supports DBM The difference between acquisition and retention marketing strategies Why loyalty programs work 7 8 2

3 The Four Cornerstone G oal: T o treat d i f f eren t c us tomers d i f f eren tly T ech nol ogy s u pport How? Identifying Customers Individually By developing a system to identify customers as individuals at every interaction that separates one customer from another. C us tomi z e p rod uc t / s erv i c e Feedback L o o p I n terac t ( an d rememb er) The Four Cornerstone The Four Cornerstone U n t i l a c o m p a n y c a n r e m e m b e r s o m e p o r t i o n o f i t s c u s t o m e r s, i t i s i m p o s s i b l e t o l a u n c h a D B M p r o g r a m. T ech nol ogy s u pport 1. C o l l e c t t o m b s t o n e d a t a 2. A d d c u s t o m e r p r o f i l e d a t a 3. T r a c k p u r c h a s e t r a n s a c t i o n s o v e r t i m e - w h a t t h e y b u y, w h e n t h e y l a s t p u r c h a s e d, h o w o f t e n t h e y p u r c h a s e, h o w m u c h t h e y s p e n d ( R F M ). 1. P r i o r i t i z e y o u r e f f o r t s s t a r t i n g w i t h t h e m o s t v a l u a b l e c u s t o m e r s 2. T h e n, t a i l o r a n d g r o u p e f f o r t s b a s e d o n t h e n e e d s o f t h e s e c u s t o m e r s. 3

4 The Four Cornerstone The Four Cornerstone F e e d b a c k p r o v i d e s l e a r n i n g, r e l a t i o n s h i p g e t s s m a r t e r w i t h e v e r y n e w i n t e r a c t i o n. G e n e r a t e e f f i c i e n t i n t e r a c t i o n s. E v e r y i n t e r a c t i o n s h o u l d t a k e p l a c e i n t h e c o n t e x t o f a l l p r e v i o u s i n t e r a c t i o n s. I n terac t ( an d rememb er) C u s t o m e r t e l l s y o u w h a t t h e y w a n t a n d y o u a c t o n i t. C us tomi z e p rod uc t / s erv i c e Feedback L o o p I n terac t ( an d rememb er) Question How do you deliver personalized customer experiences if you re a company dealing with hundreds of thousands of customers? In other words, how do companies like The Bay, Bell Canada, Air Canada, CIBC etc. treat their different customers differently? Database Defined database a collection of data, especially one that can be accessed and manipulated by computer software. Provides the collective memory - names, addresses and other profile data 4

5 Relational Database Management System A method of storing an unlimited amount of data about customers in a way that makes it easy to retrieve it, modify it, add to it, create new fields, etc. A relational database consists of fields, tables, and records. Field: the smallest structure of the relational database, e.g. last name, date, dollar amount, product number. Table: the main structure: represents a single specific subject which can be either an object or an event. Object: Customers. Campaigns. Orders. Records: unique instances of the subject of the table S ou rc e: Exporting a List from the Database 1. Q u ery th e datab as e 2. M atc h ing rec ords ( l is t) 3. O u tp u t rep ort to f il e 19 Identifying Customers Companies use two methods to identify customers: Internal Data Sources Customer profiles recorded during course of doing business Examples: banking, telephone, doctor s office, Dell Computer, L.L. Bean, credit card companies, insurance, hotels External Data Sources Prospect profiles gathered using a third party such as a list broker This requires more work to identify good prospects Examples: Toy companies, CPG, apparel 5

6 Technology Strategies Then vs. Now Databases are flat files located on a mainframe computer Databases are maintained by IT, outside suppliers with no direct access by marketers Lists are output using detailed reports and programming Data appends were rare (adding additional info to a customer s file) Most databases are relational located on PC s Marketers access customer data directly Customers also update their own profiles via the Web Marketers export customer lists directly Many third parties will append descriptive data such as demographics, lifestyle 21 What kind of consumer data to collect? Tombstone data Name, address, telephone #, address Profile data Demographics: age, gender, income, HH size, etc. Lifestyle and leisure interests Recency, frequency and monetary transaction history (i.e. purchase behavior) Promotional response data Source of order, inquiry or referral Intentions - plans to purchase Internal Data Sources Homework for Next Week Customer relationship management (CRM) systems Leads databases Accounting records Shipping records Records of inquiries Warranty cards 23 Reading: 1:1 with Hundreds of Thousands of Customers Create a list of the possible 27 questions a smoker is asked when they call number to enroll in the program. Be prepared to rationalize your questions next week. 24 6

7 Homework review Next Week Cornerstone Two Differentiate The segmentation process Overview of customer profiling and data mining Four common customer profiling methods Introduction to value segmentation 7