Transcript Linking04 - Database marketing Institute

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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Regular promotions
Low cost items
Last Minute Specials
Retention Messages
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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
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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
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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
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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
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A company sold sporting goods created
a member club.
When DB was built they learned that:
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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
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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
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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
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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
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Recognition
Reaching out
Customer service
Supplier Relationships
Information
Ordering parts and replacements
Building personal relationships
Communicating
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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?
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Cost of all of the above? Nothing!!!
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Now, this is recognition!
Welcome Back, Arthur!
Immediate Feedback!
30 seconds later: Email
The big Web winner:
Customer Service
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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
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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
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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
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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
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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
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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
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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
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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:
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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
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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
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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
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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!
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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]