2cafbd6b6a2f24db7dc5565d52e18ada.ppt
- Количество слайдов: 44
Why Databases Fail Nine deadly mistakes that will ruin your chances for success. Houston Direct Marketing Association Thursday, October 14, 2004 Arthur Middleton Hughes Vice President / Solutions Architect Knowledge. Base Marketing, Inc.
What Knowledge. Base Marketing Does 2
Mistake: Lack of a Marketing Strategy n Building a database is easy n Making money with a database is hard n Most people don’t know that 3
How to develop a strategy n Collect data on your customer’s purchases, demographics and lifestyle n Build a database that permits ad-hoc analysis n Construct a lifetime value table n Figure out what motivates your customers 4
Two Kinds of Database People n Constructors People who build databases Merge/Purge, Hardware, Software n Creators People who understand strategy Build loyalty and repeat sales n You need both kinds! 5
Examples of Profitable Strategies n User Groups n Newsletters n Surveys and Responses n Loyalty Programs n Customer and Technical Services n Membership cards and status levels n Event Driven Communications 6
Event driven communication: Dear Mr. Hughes: Ridgeway Fashions Leesburg, VA 22069 I would like to remind you that your wife Helena’s birthday is coming up in two weeks on November 5 th. We have the perfect gift for her in stock. As you know, she loves Liz Claiborne clothing. We have an absolutely beautiful new suit in blue, her favorite color, in a fourteen, her size, priced at $232. 00. If you like, I can gift wrap the suit at no extra charge and deliver it to you next week, so that you will have it in plenty of time for her birthday. Or, I can put it aside so you can come in to pick it up. Please call me at (703) 754 -4470 to let me know which you’d prefer. Sincerely yours, Robin Baumgartner, Store Manager 7
Basic Strategy Rule: Put yourself in customer shoes n Say: “What would I want to be on this database? What’s in it for me? ” n If you can’t come up with a good answer, the database will fail 8
Mistake: Focus on Price instead of Service n Database marketing builds loyalty. n Discounts do not build loyalty. n Do not use the database to provide discounts. n Use the database to provide dialog, recognition and service. 9
Customers today seek more than low prices n Recognition n Service n Information n Convenience n Helpfulness 10
Example: Quaker Direct n Budget: $18 Million. Coupons to 20 million “targeted households. ” n Quaker goal: “real one-to-one bonding with consumers”. n Cost: four times as much as FSI’s. n Why failed: Coupons do not build relationships. 11
Example: Kraft Crystal Light n Million club members receive quarterly newsletter. n Catalog: Watches, mugs, jogging suits, with Crystal Light emblem. n Theme: fitness, exercise, weight loss, diet. n Why succeeded: Club based on valid idea, not just on discounting product. 12
Mistake: Failure to use tests and controls n Database marketing is accountable n Everything you do can be measured n You must set up control groups that do not get your new communications n Key measurements: response rates, return on investment, profits, lifetime value. 13
Example: Western Union n Preferred customer card sent to everyone who had used WU 3+ times n Worked well, but after 2 years, WU asked, “How has this boosted profits? ” n Agency did not have a control group. n Profits could not be verified. n Agency lost the account. 14
Example: Citicorp Reward America n Frequent shopper program for supermarkets n Goal: sign up 40% of all chains fast n Profit idea: sell data to manufacturers n Budget: $200 million -- 174 employees 15
Failure: Citicorp Reward America n Program cancelled. Employees fired. Why? n Manufacturers didn’t buy the names. n Computers choked on the data. n Failure to test on small scale first. 16
Mistake: Too big and slow n Database should be built in six months or less. n DB Marketing builds loyalty and sales -- but only when it is up and running. n If your plan requires more than a year, maybe your plan is too complicated. n Start small. Build Small. Learn as you go. Add to it later. 17
How a database builds relationships n. Hold information on customers n. Add new data every day: Surveys, Promotion history, Points Transaction history, Lifetime value, RFM n. Create a relational database that you can build inexpensively n. Update it as often as required – several times a day if needed. n. Use it to create communications 18
Mistake: Failure to use the Web n Your database contains customer information: purchases, preferences, contact names, etc. n Customer service has to have this info when they talk on the phone. n Your web site must have this info when you receive customers as visitors. 19
Using a database to personalize 20
Provide recognition! Welcome Back, Arthur! 21
Immediate Feedback! 22
30 seconds later: Email 23
Retail Email Success n Video chain sent email newsletters to 170, 000 customers about movies n 16, 000 asked for but got no emails n Test group total sales over 6 months were 28% higher than the control group n Emails can be a powerful sales boost 24
Catalog Email Success n Cataloger selected 40, 000 who had bought on the web. n 20, 000 got emails saying “watch mailbox for our new catalog” n 20, 000 got only the catalog. n Sales to the test group were 18% higher than the control group. 25
Mistake: building in-house n Marketing databases are unlike any other IT function. n DB requires special skills and software n There are scores of vendors with experience in building marketing DBs n In-house will take far longer and cost far more. 26
What to do? n Send an RFP to find a vendor that understands you and has experience n Get it going fast and at lower cost. n Once it is up and running, you can migrate it inside. n But even then, you should not do it. n Why? Because you should concentrate on marketing: building profits from it. 27
Mistake: Treating all customers alike n Loyal customers are more profitable than new or disloyal customers n Loyalty can be built and maintained n $1 million retention budget spread over 1 million customers is $1 per year. You can’t build much loyalty for $1 n $1 million spread over 100, 000 is $10 per year. You can build loyalty with that 28
Segment by profitability & focus your attention Profitability Segment 29
Marketing to Customer Segments Your Best Customers 80% of Revenue Your Best Hope for New Gold Customers 1% of Total Revenue GOLD Move Up These may be losers Spend Service Dollars Here Spend Marketing Dollars Here Reactivate or Archive 30
Mistake: Failure to develop a retention program n Most companies are set up for acquisition n Few have a specific retention program. n $1 spent to retain customers returns more profit than $1 of acquisition 31
Retention = Communications n People like to hear from you. n Personalize your communications. n Use email, direct mail, phone calls n Set aside control groups so you know that your communications are working 32
Key retention strategy: cross selling 33
Concentrate retention $$ on where you need help 34
What proves that database marketing works? • Manufacturer of lighting products • Catalog sent to 45, 000 contractors • Previous policy: wait for the orders • Test: pick 1, 200 customers, split into test of 600 and control of 600 • Two person pilot program build relationship with test customers to see the results 35
Change in the number of orders after 6 months 36
Change in the Average Order Size 37
Total revenue gain: $2. 6 million over six months 38
This stuff works! n Building a relationship with customers can be highly profitable n Using a database to recreate the old family grocer is a winning strategy n Relationship marketing is the way to go 39
Mistake: Lack of a forceful leader n Success requires directing the activities of many internal and external units n The Web, MIS, Customer Service, Tech Support, Telemarketers, Service Bureau, Direct Agency, Fulfillment, Market Research n Database Marketers must be leaders 40
Summary: The Nine Mistakes n Lack of a Strategy n Building In-House n Focus on Price n Treating all customers alike n Lack of tests & controls n Too big and delayed n Lack of a retention program n Lack of leadership n Failure to use the web 41
Rules for success n Put yourself in your customer’s shoes n Build a lifetime value table n Build a database team n Think small, and think fast n Keep your eye on the bottom line 42
Thank You
Books by Arthur Hughes From Mc. Graw Hill. Order at www. dbmarketing. com Contact Arthur: arthur. hughes@kbm 1. com 44
2cafbd6b6a2f24db7dc5565d52e18ada.ppt