Transcript Lifetime Value - Database marketing Institute

Integrating All Direct Marketing Channels to
Build Customer Loyalty
A BMW Case Study
Kay Madati, Relationship Marketing Manager BMW
Arthur Middleton Hughes
VP / Solutions Architect
KnowledgeBase Marketing
The DMA 84th Annual
McCormick Place, Chicago
Tuesday, October 30th 2001 10:00 AM – 11:15 AM
1
How brand marketing has evolved
•
1950 - 2000 Brands built by mass advertising
•
1985 - 2000 Database Marketing arrived, but not integrated with
mass advertising.
•
1996 - 2000 The Internet arrived, but not integrated with DBM or
mass advertising
•
2001 BMW brings them all together
2
BMW Buyers Not Necessarily Driven by
Price
• BMW customers want:
– A realization of the brand promise
• Performance, safety, technology, innovation
–
–
–
–
–
Recognition
Service
Information
Convenience
Helpfulness
3
How BMW Buyers Make Purchase
Decisions
Personal Profit from Purchase =
a (usefulness of product)
+b (perceived brand value)
- c (money cost)
- d (time or inconvenience)
4
Two kinds of database marketing
people
• Constructors
People who build databases
Merge/Purge, Hardware, Software
• Creators
People who understand strategy
Build loyalty and repeat sales
• You need both kinds!
5
Situation Analysis
•
In 2000, BMW built a robust customer and prospect database
designed to:
– Provide a comprehensive view of the automotive and financial services
BMW customer
– Deliver short term, incremental revenue through opportunistic marketing
programs
– Increase customer loyalty through understanding and ability to deliver
relevant, timely communication
– Secure BMW’s place in its customers’ lives by identifying which
households are good targets for additional BMW purchases
6
BMW Situation II
•
BMW now has a central system of measurement
– The BMW Report Center monitors communications and response
from prospects and customers
• Measurement includes cost per response and cost per sale
•
BMW now has the ability to view prospects as well customers in
its universe
– This allows BMW to view the full shopper-owner cycle from first
point of contact, through sale and cross sale
•
The new marketing database contains a broad range of
information on the BMW consumer
– Campaign, response, and financial service data
– 190 appended individual and household data points
7
BMW Situation III
•
Allowing a full view of the BMW customer delivers smarter
targeting and profit-generating up sell and cross sell
opportunities
– Which vehicle owners are best targets for credit cards?
– How can BMW card owners increase the lifetime value of the
vehicle owners?
– Where are the pockets of our most profitable customers?
– Which customers will deliver additional revenue through
financial services products after they have disposed of their
BMW?
8
BMW Database Marketing Goals
•
Improve the effectiveness of marketing programs in the years
2001 – 2003 in order to:
–
–
–
–
–
Return to BMW the cost of the database build
Pay for database maintenance going forward
Increase the revenue per customer over time
Increase the profit per customer
Increase the lifetime value of the combined BMW automobile and
financial services customer
9
How BMW measures return on
investment
•
Consistent measurement and enhancement of BMW marketing
programs
•
Ability to prioritize prospects and customers based on their likelihood
to buy
•
Identification of “low hanging fruit” – programs that can be quickly
implemented to generate revenue in the short term
•
Refinement of customer communications
•
Testing results against Control Groups
10
Controls and Measurement
•
Control groups measure the effectiveness of each program
– Non-mailed groups that are measured against the mailed groups
•
Reports on the BMW Report Center provide a consistent form of
measurement
– Cost per lead, response and sale measurement
– Cross-penetration of product purchases
11
Benefits to BMW
•
Increased communication effectiveness
–
Integrated database used by all groups
•
Increased efficiency – The right information to the right customer at the
right time
•
Reduced communication expense
–
Fewer pieces mailed with higher effectiveness
•
Increased customer participation
•
Increased customer satisfaction
•
Increased corporate and center profits
•
A higher level of data from and about BMW customers
12
Relationship Marketing Strategy
The Database
•
All programs are built on a state-of-the-art customer relationship
management database which provides:
– More information on owners and prospects than BMW has ever
assembled before
– Powerful tools to support BMW loyalty and prospect conversion
programs
– Automated communication that supports the Owner Experience
14
2001 Database Marketing Goals
•
Increase customer loyalty
•
Increase prospect conversion to sales ratio
•
Increase vehicle sales through existing customers
•
Maintain existing BMW household records
•
Keep communication costs down while increasing effectiveness
•
Develop a consistent process of program measurement
15
BMW Relationship Marketing
Objectives
•
Use the marketing database to realize a communications dialogue
with both our prospects and our customers
•
Systematic use of customized information to attract and retain
customers
•
Facilitate mutually beneficial and relevant information exchanges
•
Increase owner loyalty and customer acquisition rates
•
Strengthen BMW brand perception at the individual customer
level
16
Core Communications Program
•
Consumer Communications
–
–
–
–
–
–
Welcome Kit
Loyalty Communications
Prospect Prioritization/Extending the Dialogue
BMW Magazine Enhancements
BMW Owner’s Circle
Financial Services Programs
•
•
Credit Card & Banking Customer Acquisition
Cross Sell and Up Sell Marketing
– Opportunistic “Quick Win” Programs
17
The old welcome kit was:
•
A static kit
•
Information on
– BMW, the Brand
– BMW, the Company
– BMW, the Products
•
It welcomed people to the brand, but offered no real taste of the
BMW Experience
18
The new BMW welcome kit
•
A personal welcome kit – that owners realize was created just for them
•
It arrives within the first 30 days
•
It is a dialogue opener, an invitation to the BMW experience that extends
over a full year
•
Each of the kit pieces enhance your perception of the BMW Brand and the
Experience
•
Multiple calls to action which lead you deeper into the Experience
•
It inherently fosters the collection of information needed for further
relationship dialogue
19
The Database Supports the Welcome
Kit
•
Weekly feed of new owners from the database
•
Rapid record cleanup for mailing
•
Weekly fulfillment of corrected names, addresses and data to the
welcome kit program
•
Monthly maintenance of the database which supports all owner
and prospect
communications
20
Welcome Kit Fulfillment Process
•
Task: Provide individual customer data for personalized welcome
kit fulfillment
Strategy:
– Provide new owner personalized fulfillment information on a weekly
basis
– Recover key information requested
– Maintain owner files based on collected information for future
programs
– Identify customers by model, financial status, and preparatory
segmentation (i.e. loyalty, activity, etc.)
21
The Loyalty Situation
•
BMW customers are fiercely loyal to their brand
•
Loyalty can be measured: it is the repurchase rate
•
Successful loyalty is a two way street
•
Customer loyalty can be strengthened by relevant personal
communications
•
BMW Loyalty initiatives cover the entire ownership experience
– Welcome Kit, Newsletters, BMW Magazine, Multiple Vehicle Owner
programs
22
Owner Communication Goals
•
Increase BMW profits through:
–
–
–
–
•
Increased repurchase by existing owners
Increasing the number of BMW’s per household
Increased sales of BMW previously owned vehicles
Increased use/purchase of BMW FS products
Each program effectiveness measured by control groups:
– Control Group: Owners who are not sent the communications
– Test Group: Owners who get the communications
23
Loyalty Building Newsletters
•
General Goals:
–
–
–
•
To 3 and 4 year BMW owners. Goals:
–
–
–
•
Immersion in the BMW Experience
Promotion of Owner’s Circle
Purchase of BMW accessories
Increase the repurchase rate
Multiple BMWs in each household
Widespread use of BMW Financial Services products
To new BMW owners, Goals:
–
–
Purchase BMW financial services products
Capture information about their preferences, lifestyles, automobile interests, etc.
useful for further dialog
24
Newsletter Strategy
•
Ongoing collection of news and information of interest to BMW owners
•
Owner surveys to determine preferences for:
–
–
–
•
News, information, and topics
Communication Channel (email or print)
Frequency
Begin with a printed newsletter to gather email addresses
–
Move to email newsletters as quickly as possible
•
Multiple offers to generate owner response
•
Promote the use of Owner’s Circle
25
Newsletter Content
•
New products
•
Roadside Assistance
•
BMW awards
•
Servicing requirements
•
Sports stars that drive BMWs
•
BMW Insurance
•
Ratings by leading car
magazines
•
BMW credit cards
•
BMW Accessories
•
Why the BMW engines are
superior
•
Driving Events
•
The history of BMW
•
BMW trade in prices
•
Event calendar
•
BMW Owner Clubs
•
Magazine reprints
•
Owner’s Circle
•
Sponsorships
•
World news featuring BMW
•
BMW Brand Values
26
BMW Magazine Strategy - Before
•
BMW publishes a high-value magazine to its owners in the first
two years after their purchase
•
Because of its universal distribution, the magazine can be more
than a magazine
– It can be a data collection tool for further personalized
communications
27
Magazine Strategy Today
•
Capture additional information on customers
–
–
•
Email Addresses
Purchase Intentions: owners identifying themselves as entering the purchase
cycle
Allow BMW owners to purchase merchandise
–
Provide direction to BMW Online Store for purchase
•
Push registration on Owner’s Circle
•
Each program effectiveness measured by control groups:
–
–
Control Group: Owners who are not sent the communications
Test Group: Owners who get the communications
28
Goals of the Prospect Management
System
•
Increase prospect conversion to sell more BMW automobiles
•
Provide a steady flow of “qualified” leads to BMW Centers
•
Make communications interactive
•
Continually improve the conversion rates by better prospecting
– Measure the conversion rate by Center, Region, Prospect Lifestyle,
Income
29
Automated Database Processes
•
Prospects developed from all contact sources:
– Telephone, Direct Mail, Auto Shows, Events, Internet
•
Rapidly qualified and scored
•
Centers receive qualified leads electronically within 48 hours of
receipt
•
Prospects get BMW message within 48 hours
•
Every lead tracked electronically, with daily, weekly, & monthly
reports for BMW management on the web
30
Testing and Implementation Strategy
•
Scoring models for incoming prospect requests determine priority
–
–
Focus on priority A & B prospects
Moving to lower priorities as the systems proves itself
•
Fully integrated creative implementation in both electronic and paper
media as well as events
•
Test scoring models against anticipated response and adjust as needed
•
Utilize a 5% control group for a period of one year for reporting
comparisons
31
Measurements of the Prospect
Program
•
Sales
•
Response
– To electronic vs. paper
– Predetermined vs. Relational
– Offers and incentives
•
Modeling success
•
% prospect conversion (historical)
•
Media preference automated system
•
Cost of program
•
Cost of sales
32
Measuring success through the dealers
•
Scored leads sent to each dealer
•
Conversions are measured monthly
•
Each dealer conversation ratio calculated
•
Program success measured by comparing dealer to dealer
conversion ratio
•
Dealer, Market, Region and National average conversion ratios
create measurable benchmarks
•
Above average dealers manage their leads better
33
Prospect Program Communications
Strategy
•
Direct Mail and E-mail integrated communication plan
– Alternating content delivery mediums
– Each reinforcing the one that came before it
•
Use of database information to drive customization and relevance
•
Each communication introducing a new piece of the BMW Experience
•
All communications tie in to web activities
•
Integration with off-line and online marketing activities
•
Prospects given the opportunity to opt-out at any point
•
Prospects removed from program if they purchase a vehicle
34
Program Communications Objectives
•
Immerse and invite the prospect into the BMW Experience
•
Reinforce the initial contact with BMW
•
Educate as to the depth of the Brand
– Products and Services
•
Point the prospect towards a test drive and the dealer
•
Reinforce core marketing communication objectives about:
– Brand Values
– Brand Heritage
– Product attributes
– The BMW Ownership Experience
35
Program Content Objectives
•
New products
•
BMW in the News
•
BMW Technology and Innovation
•
BMW Safety
•
The history of BMW and BMW Brand Values
•
Event invitations
•
Test drive incentives
•
BMW gifts
•
Magazine reprints
•
BMW Financial Services products
36
Prospect System Benefits
•
Sell more cars by:
–
–
–
–
–
Immediate Scoring of Prospects
Immediate electronic Center notification of leads
Immediate communications with the prospect
Continually engage the customer in the Experience
Provide more information on the depth of the Brand
•
Reduce the cost per car sold
•
Provide Management with accurate & timely knowledge of the
prospect and sales process
•
Increase the overall effectiveness of future prospecting programs by
learning from this one
37
Quick Wins: X Factor Situation
•
The BMW Database offers a huge opportunity to utilize
information to refine BMW programs
•
X Factor programs are built on data mining, and deliver:
–
–
–
–
Highly effective marketing programs
Incremental revenue opportunities
Low cost per sale
Increased customer/prospect contact and satisfaction
38
X Factor Initiatives
•
The Loyalty and Prospect Programs, combined with the database, offer
great potential for creative, interactive X factor programs:
–
–
–
–
–
–
–
–
Contests
Programs for Women/Minorities
Special Events
Referral Programs
Certified Previously Owned Cars
Second BMWs in every home
Lifestyle Programs
Congratulatory Mailings to 3+ BMW Owners
39
X Factor: something new every quarter
Q1
CPO Program
Q2
Q3
Q4
Owner Referral
Car Birthday
Launch
Plus improved reporting, query
development
and a half dozen new ideas
to be developed and implemented during
the year
40
X1 Women’s Program
•
Identify ways to build relationships with female owners:
– Bring them to the Brand, and keep them longer
– Appeal to their unique needs
– Recognize the purchasing power and influence that automotive
marketers typically ignore
•
Provide tools that reduce pre-dealer visit anxiety
•
Tailored communications that highlight what women are looking for
– Live chat support by females
– Develop a network of female sales reps
41
X2: Certified Previously Owned
Program
•
Identify households that are prime prospects to purchase a second
BMW
– Analyze multiple purchase households
– Target groups most likely to purchase a CPO vehicle
• Households with teenagers or young adults
• Identify seasonality – graduation, etc.
•
Test the program on current BMW owners, then roll out to prospects
42
X3: Series 7 Launch
•
Identify those current owners who are most likely to purchase a
new 7 Series BMW
•
Invite these special people to be among a small group who are
allowed to preview the new 7 series
– Appeal to their appreciation of inclusion by asking for their feedback
and opinion
– Allow them to be among the first to test drive
– Notify them periodically of the status of the vehicle
43
X4: Mini Launch
•
Identify those current owners who are most likely to purchase the
MINI
•
Create a unique lifestyle message to these owners
– Appeal to the early adapter
– Focus on active lifestyles
– Get them to preview on the web and opt in to marketing messages
44
X5: Birthday Cards
•
Develop a program that uniquely appeals to the BMW owner
– Communicate the personality of the brand
– Reinforce the relationship that the BMW owner has with their car
•
At the anniversary of purchase, send an e-card to owners
– Direct them to a micro site to get an e-birthday gift
45
Summary: BMW has put it all together
•
Database provides the central focus for:
–
–
–
–
–
Owner loyalty communication programs
Prospect communications
Opportunistic “Quick Win” Programs
Measurement of success
Building BMW Brand Loyalty
46
Thank You