MARK 2038 Data Base Marketing Strategies II Week

MARK 2038 Data Base Marketing Strategies II Week 7 Instructor: Santo Ligotti Email: sligotti@gbrownc. on. ca

Today’s Agenda List Management Digital marketing Overview of the Internet Three e-business strategies How to evaluate marketing web sites Housekeeping l Discuss Assignment #4 l Discuss Group Project

Objectives In today’s lecture you will learn: l List Management and the relevancy that list rentals play in enhancing 1: 1 Direct Marketing initiatives l How to search for lists and determine appropriate targets for either acquisition or retention strategies l Digital marketing l Overview of the Internet l Three e-business strategies l How to evaluate marketing web sites

It all starts with the list A list is a collection of names and addresses used by direct marketers to target offers. The list determines: l l l WHO will ultimately receive your message The total number of interactions possible for the campaign The total projected revenue from the campaign

List Types and Sources House Lists Internal Combined List Renter A Response Lists Renter B Renter C Compiled Lists

House Lists House List: an internal list compiled from internal customer records. l l l Can contain purchase data and purchase patterns A valuable asset House lists can be “bartered” (traded) with strategic partners

House List Sources accounting records shipping records of inquiries warranty cards survey research results

Response Lists Response List: an external list made up of individuals who have already exhibited a type of interaction desired by the firm. = “Another firm’s house list” Examples: l l Buyer lists Attendee/Membership/Seminar Lists Subscription lists Donor lists

Compiled Lists Compiled List: an external list that includes records without any previous indication of willingness to respond, but with some defined characteristics. Examples: l l l Consumer compiled list Consumer lifestyle-enhanced list Business compiled list (directories)

Example: Cornerstone Canada www. cstonecanada. com Overview l l Cornerstone provides creative prospecting solutions, and solutions for designing and executing database management strategies. They help initiate and sustain lasting relationships with your most profitable customers. Currently, they broker over 1, 400 lists containing over 265 million listings History l Founded in 1987, Cornerstone has constantly built on past successes to become Canada's largest prospecting and database management resource Check out their glossary of terms http: //www. cstonecanada. com/primer/glossary. asp Check out their industry primers for direct mail, email lists, and mergepurge services http: //www. cstonecanada. com/primer/

Discuss If you were purchasing a single response list for an upcoming direct mail campaign, which one would you choose? List A: bought a similar product l List B: bought within the category l List C: bought something by mail l

Affinity bought an identical product by mail bought a similar product by mail inquired about your product bought within the category bought something by mail any other action by mail

Affinity – Another Perspective Most Effective Least Effective • Active Customers (bought in last x months) • Inactive Customers (bought in > x months) • Former Customers • Select Prospects (high propensity to buy) • Other Prospects RFM

List Management The role of list managers Selection criteria Seeding Data hygiene

List Management Roles List renter: the list “buyer” List compiler: the company or person who compiles the list List broker (CORNERSTONE): an intermediary who: l l l Maintains list hygiene and suppression Provides recommendations, discounts, etc. Typically paid on a commission basis

Selection Criteria When was the list last updated? How deliverable is the list? (hygiene) What selections are available, and at what cost? What is the source of the list? Is the list owner a member of the CDMA? What is the rollout potential of the list compared to rollout fees? Size and turnover

Selection Criteria - Costs “Premium” lists contain: l l Recently verified contacts (30 -90 days) Proven mail-order buyers Contacts with highly detailed profiles Hard-to-find customer data “Bargain” lists contain: l l l Unconfirmed contacts Inquired instead of purchased Names/addresses only

Seeding: a common practice by list compilers/brokers of adding disguised names and addresses to monitor list usage.

Data Hygiene Data hygiene: business processes that maintain the usability of customer data. Reasons: l l l Non-standard/missing address data Incorrect Name Titles, Gender Duplication Inappropriate Gone away, died

Demonstration - Cornerstone You are the RESP Product manager at CIBC. RESP are Registered Education Savings Plan that encourage individuals to save for their child’s education with an added 20% contribution from the government. You need to encourage product uptake, but your database lacks information on which of your clients has children. You decide that external list rentals might help you augment your existing data base. You contact your list broker and ask for possible solutions What lists are available?

w Digital Marketing-Part I

This week Digital marketing Overview of the Internet Three e-business strategies How to evaluate marketing web sites Assignment 4 handout

The Internet What is the Internet? Who uses the Internet? Database marketing e-business strategies Related tactics

The Internet: a global network consisting of millions of interconnected corporate, government, organizational, and private networks. 1. 2. 3. 4. Computers With data Users who send and receive the data A technology infrastructure to move, create, and view or listen to the content.

Other Definitions intranet A private network running internally within a corporation + using Internet standards (HTML, browsers). extranet An intranet that value chain partners can partially access.

Other Definitions Web The portion of the Internet that supports a graphical interface for hypertext navigation with a browser.

More than one Web 1. The Web that most users access from PCs: l l 2. Low-bandwidth content High-bandwidth content Subsets of the Web with content specially designed for unique devices: l l Web TV Personal digital assistants (PDA) Cell phones Text-only browsers

Diffusion of Technology Or Media Fragmentation, as we talked about last week, means that the internet has had to evolve to be a true 1: 1 medium Users demand not only accessibility, but customizability, it’s no longer okay to just have a great looking web site; people want something that makes them feel its their own space So the internet evolution moves from 1 to many, to 1: 1 A difficult task, but a necessary exercise

Internet Users* 15. 7% of the global population is connected = 1. 02 billion users Source: Internet World Stats

Internet Users-Canada* 67. 9% of the Canaian population is connected = 21. 9 million users Source: Internet World Stats

Internet Users: demographics 88% of connected users live in developed nations

Internet Users: demographics (millions)

Internet Users: demographics

Internet Use in Canada and Ecommerce in the New Economy Statistics Canada publishes the HOUSEHOLD INTERNET USE SURVEY (HIUS) on a regular basis The last published report was for 2003 data There was no report published for 2004 There will be a report in 2006 reflecting 2005 statistics at the individual level

Internet Use in Canada and Ecommerce in the New Economy In 2003, based on the last survey l l 3. 2 Million Canadian households actively participated in ecommerce In total they placed 21. 1 million orders, and spend over $3 billion dollars This represented a 25% increase from 2002 Recent statistics from STATS CANADA show that: l l Business to Consumer e-commerce sales were $8. 5 billion (an increase of 183. 3% from 2003) Business to Business e-commerce sales were $19. 8 billioin

Internet Use in Canada and Ecommerce in the New Economy E-Commerce sales in Canada, 2004, by selected sectors Wholesale trade $6. 14 Billion Manufacturing $4. 23 Billion Transportation/Warehousing $4. 61 Billion Retail Trade $2. 95 Billion

E-Customers: their demographics Younger l l l Most users are 18 -34 years old 35 -44 year olds are not far behind Age 55 and older use it the least More Affluent l Households with aboveaverage income (80% of Canadians with incomes of $80 k or more per year) use it.

E-Customers: How they live Time-pressured Information-overloaded Mobile, yet connected Customized entertainment Expanded working hours Diminished job stability and loyalty Rise in entrepreneurial interests

E-Customers: How they shop online Self-serve Anywhere, anytime Access to more products Emphasis on immediate fulfillment of needs and expectations Strong desire to have a 1: 1 experience, and they demand it E-business is not just regular business

E-Business: Major Applications 1. E-communications l 2. E-commerce l 3. Messaging prospects and customers Selling, logistics, data sharing online E-care l Customer service and fulfillment

Businesses Find it Compelling Many firms have greatly reduced marketing and fulfillment costs via electronic order processing, billing, and e-mail. An “infinitely scalable” transaction channel

Barriers to Entry Web site development Hardware and software Rapid obsolescence Learning curve

The New Environment Marketers found customers Customers find marketers

The New Environment Marketers found customers Customers find marketers Local competition International competition just a click away

The New Environment Marketers found customers Customers find marketers Local competition International competition just a click away Price was more static, controlled Price is more dynamic

The New Environment Marketers found customers Customers find marketers Local competition International competition just a click away Price was more static, controlled Price is more dynamic Interruption-based Permission-based

“Companies are learning to let customers come behind the counter and figure things out for themselves. ” - Arthur Middleton Hughes

Strategic Implications 1. Marketers who grasp what Internet technologies can do will be better poised to capitalize on information technology.

Strategic Implications 2. New communication opportunities exist to reach customers beyond the telephone, television, postal mail, or other media. 3. Internet technologies can be integrated into existing marketing strategies, or used to redefine the way marketing is conducted.

Is ALL e-marketing direct marketing? Direct marketing only occurs when messages are: Personalized (1) ______, Measurable (2) ______ and Interactive (3)_______.

Common E-Business Models B 2 C B 2 B C 2 C

Common E-Business Models Pure play (Amazon. com) Enterprise “Click and Mortar” (Future. Shop, HBC. com) Online exchange (e. Bay) Portal (Yahoo!, MSN) Metamediary (yourshops. ca)

E-Business Models: Commitment PURE PLAY: A company devoted to only one line of business

Pure Play Example – Netflix In the USA, Netflix www. netflix. com rents DVD movies by mail: l l Þ Customer sets up a “queue” of movies they want to rent. Customer rents 3+ DVDs at once —no return deadlines or late penalties. After viewing a movie, customer slips it into a prepaid return envelope to mail it back to Netflix. A few days later, they receive the next DVD on their list. Netflix builds relationships one at a time through customer-driven personalization and convenience.

Typical Strategic Goals Develop e-marketing infrastructure 2. Promote web site as an additional point of contact, not a replacement 3. Migrate customers to the Web 1.

Final Points Next week, no class, intercession week 2. Assignment #4 due June 27 th, 2006 3. Work in your group projects 4. I will post a detailed marking scheme early next week 1.