Marketing in CRM © 2006 Brian Broadway

"The purpose of business is to create and keep a customer." Theodore Levitt, The Marketing Imagination

Lester Wunderman said:

“People don’t want quarter inch drill bits. They want quarter inch holes.”

The Underlying Premises

Premise 1

 the single most important asset of your company is . . .

Your Customers!

Average Sales Example

$1,200 $1,000 $1,062 $800 $600 $453 $400 $310 $113 $192 $200 $105 $145 $84 $44 $0 D ec ile 1 D ec ile 2 D ec ile 3 D ec ile 4 D ec ile 5 D ec ile 6 D ec ile 7 $229 D ec ile 8 D ec ile 9 D ec ile 1 0

Premise 2

 not all customers are created equal The Pareto Principle

DIET COKE

3% 0% % of Sales 84% 13% 8% 8% 8% 76 % % of Households Annual profit $59.15

$9.15

$2.11

$0

Premise 3

 it costs more to acquire a new customer than to keep an existing customer

The Reason to Focus on Relationships

Cost Reputation Products Service/Support Expectations None Relationship 0 0.05

0.1

0.15

0.2

0.25

Why customers stay loyal

0.3

The Ad Spend Disconnect*

Internet Magazines Radio Newspapers TV 0% 10% *The Economist, April 2, 2005 20% 30% 40% Time Spent Ad Spending

Concepts and Definitions

Marketing Concept

 Satisfying want or need (at a profit) of customers  Satisfying through mutually beneficial exchange

The Evolution of Customers* Time Frame Managerial Mind-set Interaction Communication Persuading Groups of Buyers

1970s-1980s Customer is an average statistic Market Research One-way, targeted groups

Transacting with Individual Buyers

Late 1980s to early 1990s Customer is an individual statistic Shift from Selling to helping Databased communication

Bonds with Lifetime Customers

1990s *Co-opting Customer Competence, Prahalad & Ramaswamy, HBR on Customer Relationship Management

Customers as Co Creators

Beyond 2000 Customer is a person Provide for customers based on observations Relationship marketing Customer is individual & part of social group Co-developers Active dialogue

Permission Marketing

Definition  permission marketing  Marketing centered around obtaining customer consent to receive information from a company.   Coined and popularized by Seth Godin, opposite of traditional permission marketing is the interruption marketing friends, and friends into customers." . Permission marketing is about building an ongoing relationship of increasing depth with customers. In the words of Seth Godin, "turning strangers into Permission marketing has been hailed as a way for marketers to succeed in a world increasingly cluttered with marketing messages

1to1 Definition

 Focused on the individual customer, one-to-one marketing is based on the idea of an enterprise knowing its customer. Through interactions with that customer the enterprise can learn how he or she wants to be treated. The enterprise is then able to treat this customer differently than other customers. However, one-to-one marketing does not mean that every single customer needs to be treated uniquely; rather, it means that each customer has a direct input into the way the enterprise behaves with respect to him or her. http://www.1to1.com/Glossary.aspx#O

CRM

Customer Relationship Marketing is a practice that encompasses all marketing activities directed toward establishing, developing, and maintaining successful customer relationships. The focus of relationship marketing is on developing long-term relationships and improving corporate performance through customer loyalty and customer retention.

Why Have a Relationship?

•Customers expect: • excellence in products • excellence in service •A Competitive Advantage • excellence in building and maintaining customer relationships

Interactive/CRM vs Traditional Marketing*

 Interactive Marketing  Direct selling to individuals  Medium is the marketplace  Marketing controls process through to delivery  Ads used to generate response  Customers assume more risk  Products delivered direct to consumer  Traditional Marketing  Mass selling to broad groups  Retail is the marketplace  Marketing loses control at distribution (channels)  Ads used to build awareness  Customers perceive less risk  Consumer must deliver themselves to the product *Contemporary Direct Marketing, Spiller & Baier

Segmentation

Key Concepts of Marketing Strategy

There are three components of a traditional marketing strategy:

Marketing Strategy Segmentation Targeting Positioning

Segmentation

Segmentation divides the market into useful sub-units of similar consumers based on: – Demographics – Geography – Psychographics – Cognitive and behavioral attributes

Bases for Segmenting Consumer Markets

 Demographic and socioeconomic  Age, gender, marital status, household size, household lifecycle; religion, race/ethnic group, nationality, income, occupation, education, social class, asset ownership  Geographic  Country, region, population density, population size, climate

Bases for Segmenting Consumer Markets (cont’d)

 Behavioural and situational  User status, loyalty status, usage rate, purchase occasion, buyer readiness  Psychological and psychographic  Personality, motivation and needs, consumer attitude, lifestyle  Benefits sought  Time-savers, self-improvement

Interactive/CRM Segmentation

 Behaviour  Purchases, payments, media used by customer  Collected Information  Surveys, preferences,  Analysis by Modeling  Regression, neural networks, etc

Target Marketing Strategies Market Segmentation Strategy Market Focus Mass marketing Multi segment Marketing Niche marketing (single segment) Customer similarities Unique customer characteristics Unique product/ service features Target Market(s) Full market coverage Two or more segments Premium price markets Strategy Example Pepsi and Coca -Cola in global markets Selling both sports cars and family sedans Cutting edge, high tech personal videophones One to one marketing (single segment) Highly specialized needs and wants Mass customization micro markets Custom homes, cars, tailored clothes NB: A traditional approach

Interactive Marketing Media

Interactive Marketing Media

 Direct mail  Telemarketing  E-mail  Web sites  Broadcast  Print

The Basics of Direct Mail

Types of Direct Mail

 addressed mail  unaddressed mail  co-op envelope, including card decks

Benefits of Direct Mail

 personal (if addressed)  highly selective  highly responsive  excellent testing vehicle  most flexible of DM media

Disadvantages of Direct Mail

 relatively expensive  requires long lead times  exacting technique with many pitfalls for the unwary

Relative Value of Components

Creative 25.0% List 40.0% Offer 35.0%

The Basics of Telemarketing

Definition of Telemarketing

 a systematic, targeted and professional medium used to generate a measurable response

Types of Telemarketing

 Inbound  800/900 numbers  Outbound  proactive sales and/or follow-up

Applications of Telemarketing

 Inbound  fulfil literature requests  sales lead generation  dealer location  order taking  promotional messages  market research Key Characteristics - reactive, 24x7 service, consumer/business

Applications of Telemarketing

 Outbound  direct mail follow-up  credit card marketing  market surveys  marginal account management  lead qualification  database maintenance  etc

Do's and Don'ts

 Do's  plan  test  involve ALL appropriate departments  train TSR's  develop reports  Dont's  expect immediate paybacks  take shortcuts  'wing it' without a script  forget to test

Kobs’ 7 Principles*

 Know the target audience  Get off on the right foot  Develop “natural tone” copy  Encourage dialogue  Anticipate questions/objections  Close, close, close  Don’t wear out your welcome *Contemporary Direct Marketing, Spiller and Baier, pg. 181

The Basics of e-mail

Pros and Cons

 Pros  Speed  Flexibility  Low Cost  Cons  Viewed as SPAM  Service provider filters  Intrusive

E-mail Considerations*

 Must examine, measure and test:  ‘from line’  Subject line  Filtering  Day/time of delivery *From 24.7 Canada CMA Handouts, May 2004

E-mail Metrics*

 Successful events  Open rates  Click through rates  Opt-out rates *From 24.7 Canada CMA Handouts, May 2004

The Basics of Internet Marketing*

*this section from Paerson, 2005 Contemporary Direct Marketing , Spiller and Baier,

Internet Evolution

 brochureware  customer interactivity  transaction enabler  one-to-one relationship  real-time organizations  communities of interest (COINs)

Pros and Cons

 Pros  wide reach  convenient  selective  low cost  creative  interactive  flexible  Cons  limited reach  privacy  security  ethical issues  no tech support • consumer control

Web Metrics

 hits  pages  visits  users  identified users  navigation path

Web Goal

 A sticky site  to enable a “mutually beneficial exchange”