Transcript PPT 2
Building Databases, Selecting Customers, and Managing Relationships Chapter 2 Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Please Note: Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Opening Vignette Tidewater Exterminating Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer Database Defined A customer database is a list of customer names to which the marketer has added additional information in a systematic fashion. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall A Customer Database is… The heart of all direct and interactive marketing activities. The key to developing strong customer relationships and retaining customers. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Primary Objectives of a Customer Database 1) 2) 3) 4) 5) 6) To get to know customers better To sell different products or services to existing customers To introduce new products or services To distribute information about an upcoming event or sale To introduce new employees To keep customers satisfied and happy Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Highly satisfied customers Tend to be more loyal customers Generate more profits over their lifetime of patronage Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall The Reasons Why Loyal Customers Generate More Profits Loyal Customers … 1. Increase their spending over time 2. Cost less to serve than new customers 3. Generate word-of-mouth advertising or referrals 4. Are less price sensitive than new customers Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall An Example of How Loyalty Programs Are Driven by Customer Databases McDonald Garden Center Garden Rewards Program Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Types of Source Data To Collect To Build A Customer Database Customer’s Name Address Telephone Number E-Mail Address Demographics Psychographics Past Purchases (Transaction Data) Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Database RFM Analysis: Recency/Frequency/Monetary Evaluates customers with respect to their transactions over time *20 points per each variable *weights will vary *See example in text Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Database Maintenance: Creating Match Codes An abbreviated name/address record Allows each record to be matched with other records A match code is generated for each name on the list Example Address Ann Stafford 9330 West Arlington Rd Alexandria, VA 22301 Derived Match Code 82301SAF9330ALI8A3 Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Database Maintenance: Merge/Purge A process using match codes to identify and delete duplicate names and addresses Keeps house lists from being duplicated Can remove names that requested no solicitations Can identify “multibuyers” Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall The Need for Database Maintenance Lists are perishable Constant control and maintenance is required Includes identifying and eliminating any duplicate records Three categories of database maintenance activities are needed Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall 3 Categories of Database Maintenance Activities 1. Change of address investigations 2. Nixie removal 3. Record status updates Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Change of Address Should be requested through the U.S. Postal Service (National Change of Address Service - NCOA) Promotions that are mailed out to improper addresses may result in a financial lost Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Nixie Removal Defined – mail that has been returned by the Postal Service because it is undeliverable as addressed Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Record Status Updates Transaction data Marital status Deaths Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Database Security Information Privacy Proper Database Storage List Marking – “salting” or “seeding” Direct Marketers must safeguard their customer database and discourage theft. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Common Uses of a Customer Database 1. 2. 3. 4. 5. 6. 7. 8. Profile Customers Retain Best Customers Thank Customers For Their Patronage Capitalize on Cross-Selling/Continuity Selling Develop A Customer Communication Program Perform Marketing Research Generate New Customers Send Customized Offers …and MORE!! Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Example of a Customized Offer Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Performing Database Analytics Data Mining Defined: The process of using statistical and mathematical techniques to extract customer information from the customer database to draw inferences about an individual customer’s needs and predict future behavior. Online Analytical Processing (OLAP) Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall What’s the Secret to Database Analytics? For Marketers to… 1. 2. Be able to identify their “most” and “least” valuable customers; Clarify demographic and behavioral statistics that apply to each population. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Database Enhancement Defined – Refers to adding and overlaying information to customer records to better understand and describe the customer Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Reasons To Enhance a Database 1. Learn more about the customer 2. Increase the effectiveness of future promotional activities targeted to current customers 3. To better prospect for new customers who are similar to current customers Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Common Data Collected for Data Enhancement External 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Geographic Address Telephone Number Gender of Head of Household Length of Residence Number of Adults at Residence Number of Children at Residence Income Occupation Marital Status Make of Automobiles Owned Internal 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Age Gender Income Marital Status Family Composition Street Address E-Mail Address Length of Residence Size of Household Type of Housing Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer Relationship Management Defined: A business strategy designed to identify and maximize customer value. To identify “touch points” between the business (company) and its customers and prospective customers. To target customer needs to maximize the customer’s experience and overall customer satisfaction. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Full-Circle Marketing (Kurt Ruf) Full Circle Marketing Marketing in the New Economy External Data Providers Demographic Data Lifestyle Data Prospect Lists Demand Data On-line/Off-line Data Data Mining Data Cleansing Postal Processing Campaign Mgmt. Database Mgmt. Data Analysis c ar se Re Channels an Pl h Back office apps. Central Marketing/ Relationship Database Te st Customer Internal/Web Front office apps. lid Va ate Client Interfaces Mail House Tele-marketer e-mail engine CRM e-mail Fax Phone Direct Mail OLAP tools, report tools, data transfer Direct Wireless Client Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer Value Customers should be viewed as an investment Without customers there is no business If a marketing effort results in the acquisition of new customers who will generate value over time the action is desirable Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer Value Hierarchy Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Lifetime Value of A Customer (LTV) Calculated as the discounted stream of net revenues that a customer will generate over the period of his or her lifetime of patronage with a company. The information needed to calculate LTV is derived from transactions recorded in a customer database. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall One-on-One Personalization Micro-targeting – is one-on-one personalized marketing based on advanced, precise psychographic and lifestyle data. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Partner Relationship Marketing (PRM) Defined: Where companies work closel with partners in other companies or departments to generate greater value to customers. Marketers cultivate relationships with prospective partners just as they do with prospective customers. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall Case Study Smithfield Foods Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall