Direct and Database foundations

Direct-Response Medium/ In What Ways Is The Internet A Direct-Response Medium/ Channel? And Why Does It Matter?

DIRECT/INTERACTIVE MARKETING

Why did P&G Resort to DM for Cheer Free and Clear Why did P&G Resort to DM for Cheer Free and Clear? (Long before the Internet)

How Did P&G Benefit? Branded Soap Opera Samples, Coupons Offer Or go live to another P&G brand site to show other examples of direct-response activities, including email list building Branded Soap Opera Samples, Coupons Offer

The Basic strategies

Strategy Elements Offer List (or Other Targeting Mechanism) Media Creative Execution Service and Support

All Direct-Response Promotions Key execution element All Direct-Response Promotions Have a Clear CALL TO ACTION.

Actions Desired on the Internet To Keep the Visitor on the Site Longer To Get The Visitor to Request More Information (To Inquire) To Make a Sale

What is the Call to Action? The Incentive?

A trusted Brand is key to Direct-Response success

Importance of Front vs. Back end Front End Back End All Activities Leading to Sale Branding Marketing Advertising Website or Retail Display and others All Post-Sale Activities Fulfillment Customer Service Customer Support/Help

Good Back End > Satisfied Customer Satisfied Customer > Higher CLV

Customer Lifetime Value The Net Present Value Of the Customer Revenue Stream Minus the Cost of Acquiring and Servicing the Customer

Customer Lifetime Value Net Customer Revenue (How Many Years Out?) Deduct Acquisition Cost from Y1 Revenue - Cost of Goods Sold = Gross Margin - Cost of Servicing = Customer Revenue x Cost of Capital (Adjusted for Risk) = NPV of Revenue Stream of Customer

The process

Lifetime value, supermarket customer

Add a retention program

Targeting Increases CLV

How Do I Acquire MORE Customers Acquisition Cost has Big Impact on CLV How Do I Acquire MORE Customers Like My BEST Customers?

Marketers Interested in Value of Another Acquisition Channel A Facebook Fan Another Acquisition Channel Is It Best? We don’t know the answer to the question. It is good for certain demographics; could turn out to be best for a segment like Millennials that is a heavy Facebook user http://jobs.aol.com/articles/2012/01/10/study-millennial-use-facebook-work-and-personal-blurred/ In any event, no one acquisition channel is likely to ever be sufficient.

Value includes referrals, more The video on the value of a Twitter follower http://mashable.com/2011/12/26/twitter-court-followers/

Value to brand Fans Spent $71.48 More Than Non-Fans Fans 28% More Likely to Continue Use Fans 41% More Likely to Recommend Fans More Likely to Be Favorable to Brand

Testing to find What Works Many Test Designs A/B Split is Simplest Change Only One Element Any Change in Outcomes Due to Change Test ‘Big Things’ Test Execution Test New vs. Control Test Version A vs. Version B The Test and Target product demo http://www.omniture.com/en/products/conversion/test-and-target

Testing direct response programs Recipe A – The Control Recipe B – The Test

The Test New Creative Execution Outcomes Smaller Product (Hero) Image Move Content ‘Above Fold’ (Smaller Images) White Background Outcomes Revenue per Visitor 15.82% Average Order Value 13.3% Click-Throughs

The business response? CONTINUE TESTING!

The Testing Process

Complex experimental design

The database imperative

Harrah’s Closed Loop database marketing system There is history/description and other good graphics at www.terry.uga.edu/~hwatson/Harrahs.doc

Enabling technologies, processes

Database for analysis & execution

Next step - Mining the database “Automated Extraction of Hidden Predictive Information from Databases” “Automated PREDICTION of Trends and Behaviors” Also Described as Pattern Detection

Datamining at harrah’s 26% of Patrons Generate 82% of Revenue Not Stereotype ‘High Rollers’ Middle Aged, Middle Class Slot Players Responded Better to Free Chips than to Traditional Free Rooms/ Meals/ Shows Satisfied Customers Spending 24%/yr Dissatisfied Customers Spending 10%/yr

Datamining in the NBA (From Basketball decisions to business decisions) Stafford’s full presentation, with background and additional data slides, is at http://www.slideshare.net/jrstafford/ncdm-datamining-case-study-2010-3563095.

Hierarchy of database marketing continuing, iterative process over time The Nike ID site is the customization opportunity mentioned in the text and students like it www.nikeid.com If you are looking for something different, Zazzle has a more diverse product offering of products students can relate to http://www.zazzle.com/custom/tshirts

summary Generic Strategies – Acquisition > Conversion > Retention/Value Growth Direct Response Different from Brand Marketing Offer, List, Media, Creative, Customer Service/Support Call to Action, Incentives Common DM Tools – Front End/Back End; CLV/Calculation & Strategy; Testing Database Marketing, Data Mining Continuous, Iterative Process Gather, Analyze, Execute, Test, Make Decisions, Repeat