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Americans are now used to calling a toll
free number in response to promotions. By now everyone is sick of voice
response (“For a menu of options, push 7”).
And everyone is really tired of being put on hold (“Your call
is very important to us. Please stay on the line…”)
So what is next? Micro sites.
More than 60% of US households now have
Web access. For business, the number is more than 90%.
It is now possible to ask customers to contact you through the
Internet, with a response rate that increases daily.
What companies have yet to understand is how to set up a
micro-site for web response.
Too many companies direct their
respondents to their company web site. What a mistake!
Company web sites are developed by a committee chaired by IT.
They are usually expensive to build, and offer the visitor a
thousand options all at once. To see what I mean, click on www.sears.com. This is a great site. But, on one page you have more than 200
choices. What if you called a toll free Sears operator, and when she
answered, she began to read off all the things on the Sears.com landing
page. You would hang up
after 30 seconds.
This is where micro sites come in. We
know from direct marketing experience that if you offer people two
choices instead of one, your response is reduced. How about 200
choices?
If you are promoting a wide screen TV in
your direct mail piece, TV or print ad, give your customers the address
of a micro site which you have created. Put your wide screen TVs on that
page – AND NOTHING ELSE. You
can, of course provide financing options, a store directory, and a link
to your company web site. But make it very easy for people to select the
wide screen TV that they want, entering their name and address and
credit card right on the page. Let them order from the micro site, or
print out the page on their printer so they can take it in to the
dealer.
Why are these micro sites so powerful?
Customers love it because they never get put on hold. They can access
the site 24/7/365. You will love it because the cost per order is about
five cents, instead of five dollars. You can measure how many people
come to the site, what they click on, and what they do. If it is not
working, you can change it right away.
Access to these micro sites can be
customized. If you send your customers an email promoting your product,
the email can say “To see a wide screen TV in action click here.”
When they click, the micro site can say, “Welcome Susan. Take a
look at this TV”. How does the site know that it is Susan? Because you
sent the email to Susan, and you have a lookup database.
If you are sending a direct mail piece
to Susan, tell her to respond to www.YourStore.com/GRV2.
The GRV2 is your database code for Susan’s database record.
With four characters you can keep up to 1.5 million names in your
lookup table.
What all this means is that real one to
one marketing has now arrived. Using a micro site, you can correspond
with each customer, addressing her by name, and putting on the site just
what she wants to see, and what you want to show her. Micro sites can
have a live operator button, if she wants to chat with a sales
associate. They should provide your toll free number in case she wants
to hear a human voice. But
they should be so good that she does not need to go anywhere else.
Your micro site should be equipped with
collaborative filtering. When your toll free operator sells Susan a wide
screen TV, she is supposed to ask her whether she wants a DVD player to
go with it. She gets a cross sale rate of 20%. Your web site could be
better than a live operator. Not only should you offer the customer the
next best product, but to be better than a live operator, you can show
and demonstrate that product on the micro site.
Direct mail is a direct response
vehicle. It is so much more powerful if it leads the customer to a micro
site which begins a real dialog which has a variable cost to you of
absolutely zero.
A few cautions: No flash pages. Just the
facts, Mam. Make the page load instantly. To be sure your micro site is
working right, test it on a home PC with a dial up 28 baud modem.
Most of your customers have that. If it does not come up right
away on an ordinary home PC, you will lose your customers.
Your micro site is linked directly to
your database. You will know on an hourly basis how your promotion is
doing. You can find that
out from your toll free operators, but it is a nuisance to call them
every hour. With a micro site, you can get hourly data and no one minds.
What does a micro site look like? To see
one that we used recently, click here.
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Where
to find the slides
Propensity
to leave
Develop
a Microsite to allow customer to use the web to respond to
your promotions
Determine
your Gold Customers
Use
RFM to identify who will respond to your promotions
Customer
lifetime value
Next
best product
Creating
your marketing database
Link
your customer service to your marketing database
Strategies
for using next best product
Emailing
append
Emailing
your customers
Determining
the profitability of each customer
Contact
Arthur
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DMA
Annual Follow-up
Arthur
Hughes
At
the DMA annual conference that we attended together in San
Francisco, a number of people asked me about the database
marketing techniques that I recommended in my speech. Since there
was such interest, I thought that I would pass on some ideas that
you might use in implementing some of these techniques.
Where to find the slides. If you are interested in the
presentation slide shows (in MS Powerpoint format), click on the
links below:
 How
to Sell the Next Best Product (1.8
MB)
Building
Relationships with Email (1.3
MB)
What
Works (and What Doesn't Work) in Database Marketing (1.0
MB)
If
you are interested in buying any of my books
or downloading the free RFM software that I mentioned in the talk,
please click
here. You can also download Lifetime Value
Tables.
You
will also need the free Adobe Acrobat Reader for a few of the
links below. You can get it here.
Propensity
to leave
Customer
attrition is a big problem in most companies. Customer retention
can be improved by communicating with them on a regular basis. But
communications can be expensive? Which customer should you send
messages to, and which should you leave alone? There is an easy
answer: concentrate on high value customers who are in danger of
leaving. How can you determine who these are? CSC helps customers
solve this problem in three ways:
- First,
we help customers to determine the lifetime value of their
customers so that they will know who the Gold customers are,
and who the worthless ones are.
- Second,
we use modeling to determine which customers are most likely
to leave. Every customer has an attrition score.
- Third,
using the first two indexes, we help clients create a
risk/revenue matrix that looks like this:
Spend
your resources on priorities A and B - 44% of your customer base.
Don't waste resources trying to retain worthless customers, or
very loyal customers who are not going to leave. Contact Chris Gilmartin at CSC (847/330-1313) today
to find out how CSC can create a risk revenue matrix for your
customers.
Develop
a microsite to allow customer to use
the web to respond to your promotions
For
the past twenty years, all successful direct marketers have
directed their customers to call toll free operators to respond to
their promotions. It works! It is profitable and easy for
customers. But it is expensive! Inbound calls can cost from $3.00
to $8.00. Today, many customers like to respond through the web.
Why? Because they never get put on hold listening to a voice
saying, "All our operators are handling other customers. Your
call is very important to us. Please stay on the line..."
People hate that.
Today 54% of the American public have access to the Internet, and
many prefer it. So, you give your customers an option: call us or
log on to our web site. How can you do this? It does not have to
cost an arm and a leg. CSC can set up a micro-site for each
promotion so that your customers can get instant action when they
log on. They can order products, respond to surveys, register and
be in touch immediately. What's more, it is very, very
inexpensive. Once CSC has set up a microsite, the cost of each
call is basically zero. You can save hundreds of thousands of
dollars per year. Furthermore, CSC recommends that you put a
"Live Agent" button on your microsite so that if they
want to talk to someone, they click on it and are instantly
connected with a live human being. For more information on
microsite development, click
here.
Determine
your Gold Customers
Who are your Gold customers? They are your best customers - the
top 20% who give you 80% of your revenue. You cannot afford to
lose these customers. You must work to retain them. There are two
problems: finding out who they are, and figuring out what to do to
make sure that they stay with you. CSC can help you with both
problems. To determine who your Gold customer are, we can work
with you to determine the lifetime value of each of your customers
and put that score into every customer's database record. It is
not as complicated and expensive as you might think. Once you know
who the Gold customers are, CSC can help you to develop retention
strategies to make sure that they are very happy and never go
away. We have a stable full of ideas that have been used in other
companies to keep the loyalty of their Gold customers.
Use
RFM to identify who will respond to your
promotions
When
you write to your customers, do you know which ones are most
likely to respond? If you are not using RFM, you probably don't.
Yet RFM is the most powerful predictive tool ever invented for
direct marketing. Furthermore, RFM is more than 50 years old. It
works! CSC has some modern RFM software that is now being used in
several hundred companies throughout the US and Canada. Using RFM,
CSC can code your customer database into 125 different RFM cells.
The cell code predicts the likelihood of response. Why is this
important? By mailing only to the more responsive cells, and
omitting those unlikely to respond, you can double your response
rates on any direct mail promotion. For more information, contact Chris
Gilmartin at CSC (847/330-1313).
Customer
lifetime value
Armed
with the profitability and the retention rate, you can determine
each customer's lifetime value and store that in each customer's
record. This is a very valuable process that can lead you to make
strategic decisions about how to treat different customer
segments, as I showed in the Risk Revenue Matrix. To get help in
creating the LTV for your customers, just click
here.
Next best product
As you know, the Next Best Product is determined by a combination
of factors: the customer's interest and qualification for the
product, the products that she already owns, her income and age,
the likelihood that she will respond to an offer for each possible
product, and the profit to you if she were to buy the product. We
can help you put all of this together into a neat package that can
be stored in every customer's database record each month. To learn
how we can help, click
here.
Strategies
for using the next best product
From
the Chrysler example you know there is no point of building a
database and determining LTV, Propensity to Leave, and Next Best
Product, unless you also have a customer communications strategy
that helps you to sell those products. We can help you develop
that strategy. We can also help by devising email programs,
similar to the one you are reading now, that can get customers to
respond and purchase the products. To learn how we can help with
email strategies, click
here.
Creating
your marketing database
Creating a marketing database that puts all customer data from all
products together into a household. This database is the basis for
all of the following steps. Most companies have already done this,
but if you do not yet have a marketing database, we can help
create and maintain one for you. To find out how, just click
here.
Link
your customer service to your marketing database
When your customers call you on the phone, do they talk to someone
who knows their name, and their purchase history, or do they talk
to someone who knows nothing about them. To have customer service
say, "Mrs. Williams! So glad you called. How do you like your
new skiing outfit?" is so much better than saying "May I
have your customer number please?" How do you get from here
to there? You need a customer database that includes transaction
history. CSC can help you create one if you do not already have
one. You need to have caller ID on your customer service line so
the operators can know who is calling and get their database
record up on their call screen. (ditto) You need to link the
screens that your CSRs see with your customer database so that the
caller ID brings up the full history at the very instant that the
call is answered.
Email
append
At CSC, we append various levels of permissioned email addresses
to company customer files. The cost varies by the size of the
file. We generally get about a 25% hit rate, meaning that we
cannot find emails for 75% of your names. But getting 25% can be
quite valuable, since the cost of sending an email is about 10%
the cost of the direct mail so you can send many more
communications. You pay only for the successful hits, not for the
failures.
CSC
has many vendors it can work with and each vendor uses a slightly
different type of permission with the email address. Given the
different vendors, email append pricing may vary. You send us your
file of names and addresses, and we send it back with the emails
appended. You get everything back. We keep nothing. We do not sell
or rent customer records. We do this only as a service, like a
bank, or an auto repair shop. To find out more about how we can
help you, click
here.
Emailing
to your customers
As I told you, we help our clients by sending emails to their
customers. You might, for example, experiment with sending emails
out before your next catalog mailing, saying, "Be sure to
look in your mailbox for our course schedule for next
term..." To be effective, you should keep track of who you
send the emails to, and who does not get them (the control group).
Then you can compare the registrations from those who got the
emails with those who did not get them to determine your lift. The
emails can be as personal as you want.
For example, the text could suggest the next course that they
should take (see Next Course below), or could refer to the last
time that they took a course, "We have not heard from you
since you took Business 102 last fall..." Anything that you
have in your records that can personalize the email will make it
more effective. To send emails, you send us a file of your
customers with their emails, any data you want used in the text
(i.e. Next Course or Last Course) for segmentation purposes, and
the content. CSC puts it all together for you and sends the email
on your behalf.
Determining
the profitability of each customer
A series of formulas are run on the database each month to
determine each customer's profitability. These numbers are put
into all customer's records. Then customers are segmented by
profitability to create the graphs I showed in the speech. We can
help with this process.
It
was fun talking to you at the DMA conference. I hope that our
paths cross again.
Arthur
Middleton Hughes
Vice President for Business Development
CSC Advanced Database Solutions
954-767-4558
ahughes@cscads.com
If you do not want to receive any more emails from me in the
future, just click
here to unsubscribe.
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Arthur Middleton Hughes is Vice President of The Database Marketing Institute. Ltd. (Arthur.hughes@dbmarketing.com) which provides strategic advice on relationship marketing. Arthur is also Senior Strategist at e-Dialog.com (ahughes@e-Dialog.com) which provides precision e-mail marketing services for major corporations worldwide. Arthur is the author of Strategic Database Marketing 3rd ed. (McGraw Hill 2006). You may reach Arthur at (954) 767-4558 .
The articles on this web site are available to the general public to read, enjoy and for limited business use. If you want to reprint more than one or two of them for resale or use in a business or educational environment, send an email to Arthur Hughes at arthur.hughes@dbmarketing.com. He will give you permission by return email. The cost, depending on the number of copies you want to reprint, is very inexpensive.
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