Direct Response Marketing

Chapter 11

The Importance of Databases in IMC Planning

Can be used for identifying and building relationships with customers through:

Data-driven Programs Data-driven communications Direct response offers

Types of Databases

Operational database Customer transactions Follows accounting rules

Marketing database Current customer information Former customer information Prospect information

Mail Catalogs Telemarketing Mass media Alternative media Internet E-mail

Methods of Direct Response Marketing

F I G U R E 1 1 . 1 4

Methods of Direct Marketing

F I G U R E 1 1 . 1 0

24%

16%

46%

55%

17%

22%

29%

8%

10%

21%

24%

16%

73%

77%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Outbound telemarketing

Inbound telemarketing

E-mail to prospects

E-mail to customers

Search engine optimization

Search engine marketing

Direct response-Internet

Direct response-TV

Direct response-radio

Direct response-promotions

Catalogs

Statement stuffers

Direct mail to prospects

Direct mail to customers

% of Companies Using Particular DM Methodology

What’s Happening? Hey Denton this company is really cool. The

only have 2 products; One is green product and the other is super innovative.

Watch the video on there as well.

http://www.origaudio.com/ http://

www.fastcompany.com/magazine/144/remember-when-bad-products-happen-to-big-companies.html?partner=homepage_newsletter

Direct Marketing

Direct connections with carefully targeted individual consumers

Message must appeal to target group Major problem is large volume of direct mail

received by both consumers and businesses. Intended to cultivate lasting customer

relationships Immediate and interactive in many cases A strong database allows precise targeting of

small groups

Direct Marketing, con’t

Can be used as a supplement to existing channels of communication or stand-alone

Fastest growing form of marketing

Database Driven Marketing Programs

Permission marketing Frequency/loyalty programs Customer relationship

management

Steps in Developing aPermissions Marketing Program

Obtain permission from the customer. Offer the consumer a curriculum over

time. Reinforce the incentive to continue the

relationship. Increase the level of permission. Leverage the permission to benefit both

parties.

Source: Seth Godin, “Permission Marketing: The Way to Make Advertising WorkAgain, Direct Marketing, (May 1999), Vol. 62, No. 1, pp. 41-43.

Maintain sales, margins, or profits. Increase loyalty of existing customers. Induce cross-selling to existing

customers. Differentiate a parity brand. Preempt the entry of a new brand. Preempt or match a competitor’s

frequency program.

Source: Grahame R. Dowling and Mark Uncles, “Do Customer Loyalty ProgramsReally Work?” Sloan Management Review, (Summer 1997), Vol. 38, No. 4, pp. 71-82.

Frequency Program Objectives

F I G U R E 1 1 . 9

Reasons Retailers Develop Loyalty Programs

Source: A.C. Nielson, Santella & Associate

Promotes consumer loyalty 90%Increases “best shopper” sales 65%Gain consumer information 65%Maintain market share 42%Enhance image 29%Respond to competition 10%

Reason for program Indication %

Reasons Consumers Opt into an E-mail Frequency Program

F I G U R E 1 1 . 7

24%

40%

38%

37%

41%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Friend recommended

Already customer

E-mail required toaccess content

Found site randomly

Sweepstakes orchance to win

Percent of Respondents

Customer Relationship Management

Customer Driven Database Technology Interactivity through websites, call

centers, and other means of contacting customers

Mass customization technology

Foundations:

Customer Relationship Management

Two measures of CRM include Lifetime value Share of the customer

CRM can be successful if: Firms differentiate customers in terms of their needs

and their value to the selling company Focus on relationships, not sales Be customer-driven, not technology-driven Customize some aspects of the goods or services

being offered to the customer