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Ahead of the Curve:Ahead of the Curve:

Direct & Interactive Marketing Direct & Interactive Marketing in a Digital Worldin a Digital World

Mark Van Clieaf

MVC Associates InternationalToronto • Tampa • London • Johannesburg

416-489-1917 / [email protected]

© Copyright 1999, MVC Associates International

Ahead of The CurveAhead of The Curve

• Global Macro Trends & Issues Impacting Marketers

• Client Side Challenges

• Trends in Traditional Direct Marketing

• Trends in C-Commerce ( Customer Care )

• Trends in D-Commerce ( Digital Direct Marketing )

• Trends in E-Commerce ( Smart Cards, Bill Presentment, etc)

• Trends in F-Commerce ( Fulfillment & Logistics )

• Defining Customer Relationship Management & Branding

• Changing Industry Landscape

• Appendix - Information Sources


Global Population Distribution Global Population Distribution Shifts Dramatically Shifts Dramatically

Population(billions)

0

0.5

1

1.5

2

2.5

3

3.5

2000 2050 2100 2150

Asia excluding China and India

Africa

India

China

Latin America and the Caribbean

Europe

Northern America

Oceania

Source: United Nations MVC Associates International

Internet Proliferates Faster Than Any Internet Proliferates Faster Than Any Communication Medium in HistoryCommunication Medium in History

4

13

38

0 10 20 30 40

Net

Television

Radio

Source: U.S. Department of Commerce

Years to reach 50 million people

MVC Associates International

OECD Countries Lead in OECD Countries Lead in Secure Server GrowthSecure Server Growth

Source: OECD

0

20

40

60

80

100

120

140

Uni

ted

Sta

tes

Icel

and

Aus

tral

ia

New

Zea

land

Luxe

mbo

urg

Can

ada

Sw

itzer

land

Sw

eden

Fin

land

Uni

ted

Kin

gdom

Nor

way

Aus

tria

Irel

and

Den

mar

k

Ger

man

y

Net

herla

nds

EU

Are

a

Bel

gium

Fra

nce

Spa

in

Japa

n

Cze

ch R

epub

lic

Italy

Por

tuga

l

Gre

ece

Hun

gary

Kor

ea

Pol

and

Turk

ey

Mex

ico

1997 1998 1999

Secure Servers per Million Inhabitants


Western Europe, Net adoption over the past year exceeded IDC’s expectations.

The region is now expected to spend $430 billion online in 2003 – pretty impressive when compared to the $708 billion forecast for the U.S.

Worldwide Internet PopulationWorldwide Internet PopulationMore Than Doubles in 3 yearsMore Than Doubles in 3 years

Copyright ©1999, The Industry StandardMVC Associates International

Broad Band Internet Access Only Hits Broad Band Internet Access Only Hits

13 - 18 % in US by 200213 - 18 % in US by 2002

0

1

2

3

4

5

6

7

8

9

1997 1998 1999 2000 2001 20020

2

4

6

8

10

12

14ISDN

Wireless (2GHz)

DSL

Cable Modem

Satellite

Wireless (20+GHz)

Line 7

%

High-speed data connections as a % of total online

%

Source: Forrester MVC Associates International

Interactive Handheld Devices Interactive Handheld Devices Grow Rapidly WorldwideGrow Rapidly Worldwide

Source: International Data Corp

194 Million Units 500 Million Units

Cell Phones - Worldwide

1997 2002

$2.3 Billion Sales $7.2 Billion Sales

Personal Digital Assistants - Worldwide

1999 2003


Internet Shifts Purchasing PowerInternet Shifts Purchasing Powerto the Consumerto the Consumer

• Reduces consumer search cost for information

• Reduces value of the brand that was information based

• Connects consumers with the most relevant vendors in a timely fashion

• Extracts as much value for consumers as possible

• Price will become a commodity factor and re-define its role in the purchase decision


Governments Step up Interest in Governments Step up Interest in Direct Marketing & E-CommerceDirect Marketing & E-Commerce

• Privacy of Customer Information

• Educational Access / Censorship

• Taxation of Internet and Global E-commerce transactions cross-border

• OECD undertakes major initiatives

• European Commission - study of direct marketing and E- commerce by the European Federation of Direct Marketing


Globalization vs AmericanizationGlobalization vs Americanization

• “What we are experiencing is not just globalization, but rather the Americanization of the Global economy”

• “2/3 of global advertising takes its cue from the US”

• “to keep increasing earnings and return on capital employed you have no choice but to spread your business around the world”

• “China will surpass Japan this year as our # 1 Asian market”

• “the power of globalization is about leveraging knowledge that can be shared, and the US is at this time, where we are creating the most knowledge, including how to use the internet to reshape industries”


Martin Sorrell, Chairman WPP Group PLC

• Marketing Metrics & Performance

• Understanding the Customer Experience

• Marketing & the Internet

• Members: Fortune 500 including 3M, Bank of America, Bristol Myers, Chase, Coke, Kodak, Fidelity, GM, IBM, Kraft, Motorola, P&G, SBC, Sears, Unilever, Volvo, BCG, Andersen, McKinsey, Mercer, Y&R

(Key Research Priorities)

Marketing Science InstituteMarketing Science Institute


Center For Marketing Center For Marketing & Technology& Technology

• The boundary between marketing & technology is dissolving

• Effects of new distribution channels on branding and customer loyalty

• Tools to forecast lifecycles of new technology products

• Members:– Carlson Wagonlit, Cellular One, IBM, UPS, Visa, Y&R


E-Commerce vs. E-Business E-Commerce vs. E-Business Strategy OptionsStrategy Options

• E-Commerce (selling online through the internet)

• E-Business (transforming the value chain and becoming a customer led enterprise through the internet)

– Spin-off E-Business subsidiary as a pure play

– Integrate E-Business with existing company operations

– Transform completely into an E-driven enterprise


Growing Shareholder ValueGrowing Shareholder Valueand Linking to Customer Valueand Linking to Customer Value

• Analysts need to be educated about new metrics to monetize the

customer base (inaccurate valuations)

• New Customer Metrics Required– Depth of Relationship

– Breadth of Relationship

– Duration of Relationship

– Revenue & profitability of relationship

– Future profit potential of the relationship

– LTV

• Measures at the individual and customer portfolio level to drive shareholder value


North America

Source: DMA-US, FEDM, CMA

Canada4%

US96%

Europe

UK 21.0%

Germany37.2%

France15.2%

Italy9.4%

Netherlands7.2%

Spain4.9%

Sweden2.2%

Denmark1.5%

Finland.1%

Ireland.4%

Global Direct Marketing ExpendituresBy Geography


$185 billion US in 1998 $41 billion US in 1996

North AmericaNorth America Europe Europe

Telemarketing38%

Direct Mail24%

Other Media/ Online

8%

Newspaper10%

Magazine/ Radio

8%

DR TV12%

Direct Mail58%

Telemarketing12%

DirectAdvertising

30%

Global Direct Marketing Global Direct Marketing Spending By Channel / MediaSpending By Channel / Media

© Copyright 1999, MVC Associates InternationalSource: DMA-US, FEDM, CMA

C-CommerceC-Commerce(Marketing Principles change

from outbound communications to in/out-bound customer care)

Phone IVR E-mail Web Teleweb ITV PDA’s

• Business rules databaseBusiness rules database• Customer profile databaseCustomer profile database• Interactive history databaseInteractive history database


D-CommerceD-CommerceThe Web has Many UsesThe Web has Many Uses

0

10

20

30

40

50

60

70

80

90

100

61.4%

73.6%

60.1%65.9%

35.4%

8.7%

52.4%

Education

ShoppingPersonal Info.

Entertainment

Work

Communication Other

% of Users% of UsersMillions

0

100

200

300

400

1995 1996 1997 1998 1999 2000 2005

55

205

98

150

26

250

350

Source: Nua Internet Surveys

How Many Online WorldwidePrimary Uses of the Web (1998)


Asia-Pacific Net Penetration will Asia-Pacific Net Penetration will QuadrupleQuadruple

The Net population in the Asia-Pacific region and Japan alone will quadruple, reaching 80 million by 2003.

In fact, Singapore now ranks above the North American and Scandinavian countries as the most Net-savvy nation on Earth.

Date IssueCopyright ©1999, The Industry Standard MVC Associates International

Balance of the World ConnectsBalance of the World Connects


China’s Net Population DoublesChina’s Net Population Doubles

Increased competition between ISPs has led to lower prices.

This has caused the number of Internet accounts in China to double during the first half of this year, with most traffic headed for the World Wide Web.


Africa Dials InAfrica Dials InAfrica’s rural geography has traditionally left it behind the global technology-adoption curve.

New data from researcher Sangonet shows that Net users can be found across the continent.

49 of the 54 countries and territories in Africa now have Internet access in the capital cities. In fact, the Web population in Kenya, Botswana, Egypt, Ivory Coast, Malawi, Morocco and Tunisia more than doubled in the past year.

Source: Nua Internet Surveys from Sangonet, January 1999


Worldwide Internet Ad Spending Worldwide Internet Ad Spending Grows To $33 Billion By 2004Grows To $33 Billion By 2004

Europe

Germany $92 $202 $730$397 $1241 $1,861

United Kingdom $81 $177 $597$347 $955 $1,414

France $33 $71 $243$135 $425 $679

Scandinavia $26 $49 $153$94 $222 $355

Other Europe $35 $81 $313$165 $538 $852

Total Europe $286 $621 $2,169$1,217 $3,589 $5,480

Netherlands $11 $25 $89$51 $142 $213

Finland $8 $15 $46$28 $66 $106

1999 2000 2001 2002 2003 2004North America

Total North America $2,831 $5,410 $12,740$8,773 $17,482 $22,589

United States $2,805 $5,358 $12,587$8,680 $17,244 $22,244

Canada $26 $52 $154$93 $238 $345

* Totals may not equal sum of rows due to rounding ($ millions)

MVC Associates InternationalSource: Forrester Research

Worldwide Internet Ad Spending Worldwide Internet Ad Spending Grows To $33 Billion By 2004Grows To $33 Billion By 2004

($ millions)

Total worldwide $3,336 $6,502 $16,675$10,948 $24,113 $33,075

Latin America

Total Latin America $51 $121 $517$259 $949 $1,647

Brazil $30 $69 $283$145 $509 $890

Mexico $11 $28 $127$61 $241 $422

Other Latin America $10 $24 $107$54 $199 $334

Asia/Pacific

Australia $23 $51 $171$99 $273 $404

China $8 $16 $100$40 $220 $440

Other Asia/Pacific $9 $23 $90$48 $161 $272

Japan $117 $234 $789$459 $1,262 $1,944

South Korea $5 $13 $48$25 $86 $145

Taiwan $4 $10 $38$20 $68 $116

Total Asia/Pacific $166 $1,235$346 $691 $2,070 $3,322

Rest of world $2 $4 $8 $14 $23 $37

* Totals may not equal sum of rows due to rounding

© Copyright 1999, MVC Associates InternationalSource: Forrester Research

On-Line Spending by CategoryOn-Line Spending by Category

Jupiter Communications says consumer-goods advertisers will increase their share of Internet media dollars.

More than half of marketers surveyed by Forrester say their online ad spending will come on top of current media budgets.

However, some marketers plan to fund Net ads by slashing traditional media: 33 percent will cut their TV budgets.

Date IssueCopyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International

Expert Insight: Leveraging TV-Net Expert Insight: Leveraging TV-Net SynergiesSynergies

TV drives traffic to Web sites. Overall, 24 percent of Internet users have accessed a URL they saw advertised on TV, which makes TV almost as important as word-of-mouth advice.

“Media junkies” provide new marketing opportunities. Over 8.5 million media junkies in the U.S. report going online while watching TV. Such viewers are more likely to use advance technologies such as Shockwave and chat. By developing online content for these viewers, networks can extend their brands and test methods for blending interactive and broadcast content. The bottom line: Marketers who continue to view

TV and the Internet as competitors will miss the

opportunity to take advantage of the ways they

work together.


In fact, the latest analyst forecasts predict that U.S. Internet ad spending will total between $4.7 billion and $6.5 billion in 2000.

Forrester Research predicts a $22 billion year for the industry in 2004.

Total Overall Media Spending Total Overall Media Spending is Growingis Growing


Loyalty Programs OnlineLoyalty Programs OnlineBut not Re-inventedBut not Re-invented

• MVC Loyalty Program Research - 1998– Launched due to competitive issues NOT good business case

– No true understanding of long term financial impact on profits and balance sheet liability

– Failed to differentiate segments based on customer economic value Acquisition not retention focus - really promotional points

– Mix of hard and soft benefits not well researched and way too complicated

– Subsidized already loyal customers

– Failed to use modeling and customer information to customize reward & recognition, communications and create one to one relationship


Opt-In E-mail Takes OffOpt-In E-mail Takes OffHow important is e-mail to your sales and marketing strategy?

Very unimportant 6%

Unimportant 24%

Important 32%

Very important 38%

Percent of 50 companies interviewed


Opt-In E-mail Plays Key Role Opt-In E-mail Plays Key Role In Marketing StrategyIn Marketing Strategy

Other

Market research

Alerts/reminders

Advertising/marketing

Product releases

Newsletter

Promotions and discounts

4%

8%

24%

28%

34%

48%

66%

What are you using outbound e-mail for?

Percent of 50 companies interviewed(multiple responses accepted)

Source: Forrester Research MVC Associates International

E-mail Will Deliver Transactive ContentE-mail Will Deliver Transactive Content

Customer servicetransactions• Order form• One-click buying• Service request form• Account information

Product content• Features• Upgrades• Pricing• Specials

Marketing interactivity• Events calendars• Alerts• Feedback• Polls/surveys• Rewards Programs

T I

C

TransactiveContent

Send Reply


Personalized E-mail Requires Help Personalized E-mail Requires Help From Outside ExpertsFrom Outside Experts

DeliveryPersonalization

Content management

Profile database

Businessrules

Web server

Analysis

Outbounde-mail servers

Inbounde-mail servers

Responses

Data distribution hub

Data analysis servers

Datamarts

Outsourcers:ViantProxicomSapient

Comments:Systems integrators have the technical acumen necessary to build this complex infrastructure

Outsourcers:Digital Impact E-DialogResponsys.com

Comments:E-mail service bureaus provide server farms, broad bandwidth, and campaign testing

Outsourcers:Bronner Slosberg HumphreyFoote, Cone, & Belding

Comments:Database marketers provide data mining skills to identify patterns in customer responses; findings refine offers, profiles, and business rules

Internet

Outgoing messages


Advertising Dominates $20 Billion Advertising Dominates $20 Billion In Interactive TV RevenuesIn Interactive TV Revenues

01,0002,0003,0004,0005,0006,0007,000

1999 2000 2001 2002 2003 2004

AdsCommerceSubscriptions

Ads 1 15 216 1,188 3,429 6,177

Commerce 0 52 233 1,233 2,490 3,838

Subscriptions 0 2 10 31 47 72

Total $1 $69 $459 $2,452 $5,966 $10,087

Enhanced broadcast

Revenues(millions)

$

* Excludes video on-demand and pay-per-view


Interactive TV Revenues Divert Interactive TV Revenues Divert $ 11 billion in advertising$ 11 billion in advertising

Affiliates

Cable andsatellite

operators

Producers

Networks

EPG$3.2B ads

$1.1B commerce

Enhanced broadcast$6.2B ads

$3.4B commerce$0.1B subscriptions

Web on TV$1.6B ads

$1.9B commerce$1.8B subscriptions

Guide vendors

Consumer electronics

Media sites

Commerce sites

Web-on-TV vendors

TV promo ads

Web ads

Outdoor

TV ads

Direct marketing

Premium channels

Portal ads

Web ads

Commerce sites

ISPs


Marketers Use An Array Of Online Marketers Use An Array Of Online SystemsSystems

Which external marketing services do you use?

Measurementaudience

Third-partyad server

Ad network

Rich media ad delivery

Email servicebureau

Affiliateprogram

Promotional services

Campaign analysis

70% 14%

58% 6%

34% 8%

44% 12%

34% 10%

22% 8%

36% 6%

20% 30%

Use TodayWill Addby 2002 Examples Definitions

Provides site audience demographic data

Delivers and tracks banners across multiple sites

Sells ads on content sites

Creates and delivers interactive banners

Delivers and tracks email marketing messages

Administers and tracks affiliate networks

Operates incentive and loyalty programs

Determines campaign ROI

Media Metrix, Nielsen Net Ratings

AdKnowledge, DART for Advertisers

DoubleClick, 24/7 Media, Flycast

Enliven, Thinking Media

Digital Impact, NetCreations, Echo Mail

LinkShare, BeFree

Netcentives, coolsavings.com, Webstakes

Avenue A, Millward-Brown


Marketers Use An Array Of Online SystemsMarketers Use An Array Of Online SystemsDo you contract these marketing services

directly, through your agency, or create them in-house?

Through an agency

Purchased direct

Created in-house

Audience measurement

Third-party ad server

Ad network

Rich media ad delivery

Email service bureau

Affiliate program

Promotional services

Campaign analysis

77%

50%

33%

37%

23%

7%

17%

20%

41%

38%

14%

30%

32%

24%

41%

14%

3%

3%

0%

0%

78%

43%

57%

14%

Percentages based on responses from 50 marketers interviewed (multiple responses accepted)

MVC Associates InternationalSource: Forrester

Digital Marketing ComplexityDigital Marketing ComplexityRequires Marketing Systems Integrators / ASP

to Play Four Roles

Connect Collect Analyze Distribute

Marketers

Sites

Market services

What works

What doesn't t

Integrated marketing database

Log files

Campaign performance

Affiliateprograms

Promotionaloffers

Email response Purchase

historyMVC Associates InternationalSource: Forrester Research

Broadband EnviromercialsBroadband Enviromercials

3

Color

Blue

Blue

XL

One

Size

Qty.

Green

BoardWear.com

$10 OFFyour nextpurchase

Click Here

ENTER THE CONTESTAnd Get . . .

ON TOUR NOW . . . NEW RELEASE

Buy The CD!

(Entertainment, Information, Digital Marketing, Online Purchase)


This increased European activity will help drive global e-commerce growth from $50 billion last year to $1.3 trillion by 2003.

That’s 26 times 1998 spending levels.

Date IssueCopyright ©1999, The Industry Standard

Worldwide E-Commerce ClimbsWorldwide E-Commerce Climbs


E-Commerce 15 % OECD E-Commerce 15 % OECD retail sales by 2005retail sales by 2005

Toy-giant Mattel will spend $50 million to launch an e-commerce venture that the company says will bring in $60 million this year, at gross margins greater than those of its traditional business.

Sound good? An OECD policy group has compiled over 150 pages of economic reasons why governments and businesses worldwide should pay attention to the ramifications of digital commerce.

Date IssueCopyright ©1999, The Industry Standard

Traditional system 8.0 1.08 2.22 to 3.32 400-700 15.00

Telephone-based 0.54 5.00

Internet-based 1.0 0.13 0.65 to 1.10 200-350 0.20 to 0.50

Savings (%) 87 89 71 to 67 50 97 to 99

US$ per Transaction

Airlinetickets Banking

Billpayment

Softwaredistribution

Term lifeinsurance policy

Cost Drivers of E-Commerce Cost Drivers of E-Commerce & Internet& Internet

Source: OECD MVC Associates International

Year

Amount InUS Billions

43109

251

499

843

7633188

10852

1331

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

1400

1998 1999 2000 2001 2002 2003

Business - to - Business

Business - to - Consumer

Region 2001 2005

B-to-B E-Commerce Worldwide(Millions)

B to B E-Commerce Spreads Globally & 10 x B to C

Middle East $45.1 $120.3

Africa $40.9 $125.0

South America $45.9 $153.8

Europe $990.5 $3,422.1

Asia Pacific $1,185.6 $11,174.1

North America $47,027.7 $595,149.1

Worldwide $49,335.8 $610,144.4

US - E - Commerce


Source: Computer Economics

CEO’s Make E-Commerce & CEO’s Make E-Commerce & E-Business Strategic PriorityE-Business Strategic Priority

Just two years ago, most businesses didn’t have an Internet strategy at all. Those that did let IT managers plan it.

After a year of interviews, surveys and case studies with executives from around the world, the Economist’s Intelligence Unit and Booz-Allen & Hamilton found that CEOs now strongly believe in the Internet Economy to add to the bottom line, fuel growth, improve customer satisfaction and increase efficiencies.


Emerging Electronic Emerging Electronic Payment SystemsPayment Systems

• Credit Cards– 92 % on-line transactions paid by credit card ( source bizrate.com )

• Smart Cards– Amex - the Blue Credit Card with free home readers

– Microsoft - Smart Card for Windows

– Pilots worldwide

– will converge with wireless

• Electronic Checks

• Digital Cash


20%

4%

4%

4%

4%

10%

16%

27%

65%31%

4%

0 10 20 30 40 50 60 70

Percent of 51 Card Issuers Interviewed

Loyalty Programs Loyalty Programs # 2 application for Smart Cards# 2 application for Smart Cards

Stored Value

Loyalty Program

Internet Security

Micropayments

Transit

Secure Electronic Transactions

Ticketing

Electronic Benefits Transfer

Telephone

Other

Undecided


F-Commerce (Fulfillment & Logistics)F-Commerce (Fulfillment & Logistics)The Next Big E-Business PlayThe Next Big E-Business Play

• Build, buy, drop ship, outsource

• Will be a key determinant of the branded customer experience

• Walmart decided NO/GO for online Xmas because fulfillment / logistics not ready


Customer Relationship Management Customer Relationship Management CRM / E CRMCRM / E CRM

• Has become a catch-all term for many

• Most enterprises do not really understand the organizational / change management / metric issues of true implementation

• Forrester Research suggests Web will assist in technology migration around legacy systems

• The web is fragmenting marketing applications for CRM / e-CRM because technology vs client driven ( separate suppliers/ datamarts for e-mail/affiliate programs/call centres/promotions/ banners etc )


Focusing on the CustomerFocusing on the Customer

• Economist / Andersen Study - 200 Co’s

– Only 18 % currently organized around customer type

– 49% plan to build customer centered org’l structures

– 33 % planning to re-design product / service development, delivery, customer ID & after sales service

– use of customer life-time sales measures will grow by 83 %

– use of customer-retention measures will increase 57 %


Organization Organization Product / Customer / Channel Product / Customer / Channel

Goal & Marketing Investment AlignmentGoal & Marketing Investment Alignment

CurrentCurrentEnterprise / Product GoalsEnterprise / Product Goals

FutureFutureCustomer GoalsCustomer Goals==

1 and 3 Year Goals1 and 3 Year Goals• ROE

• ROA

• Fee / Revenue by Product

• Contribution Margin by Product

• SG&A / Expense Ratio

• EBIT

• Free Cashflow / EVA / SVA

Translate / Translate / AlignAlign DevelopmentDevelopment

AcquisitionAcquisition

Win-BackWin-Back

Se

gm

en

t A

Se

gm

en

t BS

eg

me

nt C

Revenue / Cashflow

H M L

© Copyright, MVC Associates International, 1998

The Killer B’s• From the 4 P’s to the Killer B’sFrom the 4 P’s to the Killer B’s

• BrandingBranding– shifts from product to enterprise brandingshifts from product to enterprise branding

– shifts from snap shot awareness / image to positioning and degree of involvement over the customer rel’shp life-shifts from snap shot awareness / image to positioning and degree of involvement over the customer rel’shp life-cycle & share of walletcycle & share of wallet

• BundlingBundling– creates new value propositions that deepens rel’shp i.e. meta-level product mgmt creates new value propositions that deepens rel’shp i.e. meta-level product mgmt

– creates competitive advantage with some customer segmentscreates competitive advantage with some customer segments

• BondingBonding– executes the Brand Promise at each “Moment of Truth” - Branded Customer Experienceexecutes the Brand Promise at each “Moment of Truth” - Branded Customer Experience

– integrates all touch points - any time & any where - & links to channel preference, life-stage / lifestyleintegrates all touch points - any time & any where - & links to channel preference, life-stage / lifestyle

• BillingBilling– Creates pricing discovery mechanisms - auctions, etcCreates pricing discovery mechanisms - auctions, etc

– recognizes bundled pricing strategy / LTV / Riskrecognizes bundled pricing strategy / LTV / Risk

– recognizes preferred payment methods / emerging electronic payment optionsrecognizes preferred payment methods / emerging electronic payment options


Branding Takes on New Meaning

Recall

Customer Satisfaction

ROI on marketing expense

Share of Wallet

Current or life-time

profitability

Measurement

Advertising, Name

Development, Package

& Collateral Material Design, Trademark, etc

Engineering the total customer

experience including

processes, technologies &

training to ensure that each

customer touch point (call centre,

mail, retail, e-mail, website, etc) provides an

integrated experience

consistent with the brand & relationship

Tools for Branding

One way communications

developing single message, image & brand

perception

Two-way customer

dialogue tailored depending upon

stage of customer

relationship, customer segment,

and current and potential customer

profitability

MarketingCommunication

Strategy

Initiated by the marketer

Individual product /

service level

Static relationship

Initiated by the customer & or marketer

Enterprise level

relationship

Dynamic involvement depending

upon suite of products / services needed

Relationship Between

Customer & Brand

One dimensional and channel dependent

Fixed / Static

Linked to product benefit

Bundle of products /

services and channel

independent

Flexible and customized

to micro-segment / individual customer

needs

Linked to the brand

promise

Value Proposition

Linked to the Brand

Awareness, Knowledge

& Relevance

with the product

Customer Involvement & advocacy of the brand

promise

Branding Objective

Acquisition / Activation

Complete Customer

Lifecycle = Acquisition / Activation,

Usage Stimulation, Cross-Sell

new products / services,

Retention, Win-back

BrandingMass Marketing

Branding Micromarketingand CustomerRelationshipManagement

Marketing Element

Customer Development

Strategy


Customer Centric Business Strategy

Customer Portfolio

Organization

Information Technology

Strategy

Customer, Product, Channel, P&L Goal & Resource Alignment

Integrated Customer, Product, & Channel Compensation

Customer Processes

Customer Segments

Customer Information Mgmt

Customer Marketing Marketing Skills

Organization Capability

Mass Customized Product Attributes & Benefits (bundling & co-marketing)

Mass Customized Channel Access & Customer Contact Process Design

Value / Risk Based Pricing Strategy & Payment Options

Mass Customized Promotion to Create Trial

Value Proposition Development

Inbound / Outbound Contact Strategy & Goals

Coordinating & Sequencing

Targeting Models & Test & Control Tactics

Mass Customized Communications Strategy & Creative Development

Customer Information Mgmt & Campaign Tape Production

Customer Contact & Campaign Mgmt

Back End Analysis, Customer Learning, & Recommendations

Customer, Product & Channel Goal

Process Evaluation

Customer Portfolio Review & Recalibration of Models & Customer Insight

Evaluation & Measurement

Dynamic Customer Focused Test, Learn, & Value Creation

Campaign Centric Campaign Centric vs. Customer Centricvs. Customer Centric


Gartner Identifies LeadingGartner Identifies LeadingCRM SuppliersCRM Suppliers

(criteria open to debate)

Challengers Leaders

As of 7/99

Niche Players Visionaries

Ability to Execute

Completeness of Vision

Andersen ConsultingKPMG

Cap Gemini

CentrobeIBMNCR

TesseraAcxiom

McKinsey & Co Peppers & Rogers

AnswerthinkTSC/eLoyalty

CTPErnst & YoungDeloitte & Touche

PWC


The Waves of Customer CentricThe Waves of Customer Centric


Product P&L

Product P&L

Product P&L

&Starting

Customer Metrics

Customer Value & Duration, Product & Channel

P&L, EVA / SVA

Compen-Compen-sationsation

Product Brand Equity

Relationship Equity

Community Equity

Marketing Marketing ObjectiveObjective

NotIn

Place

Customer Processes,

CIM

Enterprise Wide

Customer Processes, Customer Segments,

CIM

Customer Customer Org DesignOrg Design

Batch, Points

&Rewards, Outbound

Batch (2 wks-24hr)

Product Purchase

Data, Customer

Value Scoring,

Outbound

Real Time, Integrated

Across LOB’s,

Inbound &

Outbound

CIMCIM

Product Feature / Benefit, Fixed

&Uniform

Mass Customized

Training, Service, Support

Customer Knowledge,

Ongoing Learning,

Anticipating Needs

Source of Source of ValueValue

Price, Delivery,

Convenience

Customer Support

Ease of Upgrade

over Time

Purchase Purchase DriversDrivers

Time of Sale

Annual Business

Plan

Period of

Contract

Life of

The Customer

Planning Planning HorizonHorizon

Product Centric

Product Centric

Product Centric

Migrating to Customer

Centric

Customer Centric

Business Business StrategyStrategy

Wave 1Wave 1

Frequency / Frequency / LoyaltyLoyalty

Wave 2Wave 2

Customer Customer Value Value

OptimizationOptimization

Wave 3Wave 3

Dynamic Dynamic Customer Customer

ManagementManagement

Corporate Development =Corporate Development =Industry Convergence acrossIndustry Convergence across

C-D-E-F Commerce C-D-E-F Commerce continuumcontinuum

• North America (Winterberry Group & other sources)

– Convergys emerges from merger of AT&T Customer Care & Matrix Marketing

– US Web acquires CKS and then Mitchell Madison (former McKinsey)

– Doubleclick acquires NetGravity, Abacus, Opt-in Email.com

– Y&R acquires Knowledge Base Marketing

– Federated Dept Stores buys Fingerhut

– Toys”R”Us.com buys Genesis Direct

– EDS acquires Neodata ( database & fulfillment ) creates Centrobe

– Venture Capital = 57 % deal activity

– Interactive Agency acquisitions slow as transactions focus on business solutions providers and internet consultancies


Expanding Existing Presence

Entering New Segments

US Future Acquisition IntentionsUS Future Acquisition Intentions

Source: Winterberry Group LLC

3%

5%

6%

6%

1%

2%

6%

5%

6%

7%

2%

1%

1%8%

4%7%

4%7%

3%10%

15%5%

36%26%

Internet/E-Commerc e

Database

Fulfillment

Direct Response Agency

Web Agency

Consulting

Teleservices

List

Computer Services

Promotion

Market Research

Printing

Lettershop

Software Provider

0%

0%

0%

0%

Expansion Plans By Segment

Sought-After Acquisitions By Media Channel

Internet / E-Commerce

Direct Mail

Telemarketing

Alternative Media

Catalog

DRTV

Magazine / Newspaper

Indifferent

27%

22%

13%

12%

10%

8%

6%

3%


“If You’re Not Confused,

You Don’t Know What’s Going On !”

Or

“Destroyyourbusiness.com”

Jack Welch, CEO, General Electric Corporation


AppendixAppendixInformation ResourcesInformation Resources

• USA, Direct Marketing Association• Canadian Marketing Association• UK, Direct Marketing Association• Federation European Direct Marketing• Forrester Research• Gartner Research• NUA Internet Surveys• International Data Corporation• The Industry Standard• Business 2.0• The Red Herring• Marketing Science Institute• The Center For Marketing & Technology• OECD• United Nations• Economist• Winterberry Group• Results International Consulting • MVC Associates International• etc


• Digital Darwinism - Evan Schwartz

• Blueprint to the Digital Economy - Don Tapscott & David Ticoll

• Customer.Com - Patricia Seybold

• Net Future - Chuck Martin

• Net Gain - John Hagel & Arthur Armstrong

• Futurize Your Enterprise - David Siegel

• Real Time: Preparing for the Age of the Never Satisfied Customer - Regis McKenna

• The Power of Now - Vivek Ranadive

• The End of Marketing as We Know It - Sergio Zyman

AppendixAppendixBooksBooks


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