© 2008 Thomson, a part of the Thomson Corporation. Thomson, the Star logo, and Atomic Dog are trademarks used herein under license. All rights reserved.

INTERNET MARKETING : INTEGRATING ONLINE AND OFFLINE STRATEGIES Customer Relationship Development and Management

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 3 GOOD ACQUISITION/CONVERSION Acquire Leads (High Potential, Unknown Potential) Drive Leads to Website (Product Page; Landing Page) 'Guide' Prospects Through Site (Personas, Paths) Recontact Program (Communications, Offers) Close Sale; Move to Retention Program TARGETED; POTENTIAL HIGH CLV

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 4 RETAINING CUSTOMERS IS CHEAPER THAN ACQUIRING THEM Average Firm Looses 50% Of Customer Base Every Five Years Reducing Defections Increases Profits Many Customers Who Defect Were Satisfied Extremely Satisfied Customers Are More Likely To Repurchase Satisfied Customer Tells Five People While Dissatisfied One Tells Nine

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 5 CLV FOR APPAREL PURCHASES Spent 67% More In Months than Referrals After 1 st Purchase; 7 Referrals After 10 Loyal Customers Would Buy Other Product Lines

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 6 ZAPPOS > CUSTOMER SERVICE 7.4 Million Customers  3.3 M. Made a Purchase in Last 12 mo. 75% of Orders > Returning Customers  They Order 2.5 Times More Often  They Have Higher Average Order Sizes 43% of New Customers from WOM

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 7 TRANSACTIONAL vs. RELATIONSHIP Transactional/MassMedia No Direct Contact with Customer No Ability to Identify and Track Relationship Often Owned by Channel (e.g. Retailer) Cost of Database /Gross Margin Relational Identify, Focus on Individual Customer Target Communication Growth in CLV On-Going Dialogue Seamlessly Satisfactory Customer Experience

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 8 PEPPERS & ROGERS CRM MODEL

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 9 ‘DING’ WIDGET 2 years 2 M Downloads $150M Sales

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 10 FOUNDATIONS OF CRM Sales Force Automation Marketing Customer Service

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 11 SALES FORCE PRODUCTIVITY Productivity Tools such as  Call Reporting, Order/Inventory Status Sales Lead Generation Programs Telemarketing Management Tools  Sales Forecasting, Reporting

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 12 Land’s End  Multiple Ways To Contact, “Virtual Dressing Room,” Newsletter, Languages, Custom Products, Co-Browsing and More Yellow Freight  Continuous Improvement of Products and Self- Service Options, My Yellow, My Pickup and More ASPCA  Supportive, Informative Content; Registration Page with Strong Incentives; Importance of Personalized RELATIONSHIP FEATURES

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 13 B2B

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 14 B2C

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 15 ASPCA INCENTIVES TO REGISTER Ability to Send ECards Weekly Newsletters State-by-State Animal Protection Information Access to Archives of Their Magazine ASPCA Rewards Program Special Offers from ASPCA Online Store

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 16 RESPONSE TO PERSONALIZATION

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 17 RELATIONSHIP MARKETING IS A PROCESS, NOT A PROJECT STRATEGIC IMPERATIVE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 18 THE CRM PROCESS

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 19 KEY CONCEPTS Targeting Personalization Customization

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 20 TARGETING AND PERSONALIZATION

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 21 PERMISSION-BASED TARGETING Home PagePreferences Page Figure 8-9

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 22 PERSONALIZING A WEB PAGE Figure 8-10

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 23 PERSONALIZING NEWSLETTER Figure 8-10

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 24 WHAT IS A COOKIE? TYPES OF COOKIES Session vs. Enduring Third Party vs. Site

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 25 TYPES OF PERSONALIZATION Rules-Based User-Controlled Information-Driven

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 26 British Supermarket Tesco Is A Leader In CLV-Driven Loyalty Programs Administered Through Their Web Site A GLOBAL LEADER

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 27 UNDERSTAND CUSTOMER BEHAVIOR Over 11 Million Club Card Holders Accumulate Points with Purchases  “Thank You” Vouchers 4 Times/Year  Redeem at Tesco, For Club Offers Newsletter Mailings  “Over 80,000 Offer Combinations In Each Mailing”

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 28 EACH CUSTOMER MEASURED EACH WEEK Source: Dunhumby

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 29 DRIVES MARKETING PROGRAMS Source: Dunhumby Tesco Targeted Media Coupons at Till Club Mailings / Trade Driver Kids Club, Healthy Living Lifestyle Mailings Mainstream, Finer Foods, Healthy Clubcard Statement

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 30 COOP PROMOTIONS WITH BRANDS Tesco

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 31 RECENT DEVELOPMENTS Tesco Fresh N Easy – US Profits Up (Apr 08) – Asia/ E. Europe Set up Full-Service Bank (Jul 08) - RBS

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 32 CRITERIA FOR LOYALTY PROGRAMS Be Easy To Use Provide Immediate Rewards Have Value To Customer Be Targeted To Behavior Change Be Affordable Have A Published Exit Strategy

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 33 WHY CRM PROGRAMS FAIL Initiative Launched without Comprehensive Strategy Not Integral to the Business Strategy Based on What Worked for Another Company Launched without Concern for Effective Enterprise and Customer Interfaces Considered an IT Project Instead of a Business Initiative Launched without Defined Objectives and Metrics Considered a One-Time Event Lack of a Customer-Centric Culture Lack of  Top Management Leadership  Employee Buy-In

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 34 THE CRM VISION

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 35 CUSTOMER PROFILES Affluent professionals who want the best technology and entertainment experience Active younger males who want the latest technology and entertainment Family men who want technology to improve their lives—practical adopters of technology and entertainment Busy suburban moms who want to enrich their children's lives with technology and entertainment Small-business customers who can use Best Buy's products and services to enhance the profitability of their businesses Source: Peppers and Rogers, 2005

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 36 CREATED PERSONAS The Segment  Busy suburban moms who want to enrich their children's lives with technology and entertainment The Persona – Detailed Description  "Jill“ - a soccer-mom type who is the main shopper for the family but usually avoids electronics stores. She is well-educated and usually very confident, but she is intimidated by the products at Best Buy and the store clerks who spout words like gigabytes and megapixels.

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 37 A “JILL” STORE “Profiling” “Feminine Side”

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 38 MORE PROFILES – MORE EXECUTIONS Fascinating Post – Leaked Internal Documents

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 39 CRM SUCCESS FACTORS Good Customer Data Quality Processes and Systems Organizational Resources and Commitment Software is Necessary, but not Sufficient

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 40 SUMMARY CRM Key To Enterprise Profitability Customer Lifetime Value Key Metric Transactional Marketing Doesn’t Meet Needs CRM (Sales Force Automation, Marketing, Customer Service) “A Process, Not A Project” Profiling, Targeting, Personalization Loyalty Programs Can Be Helpful Seamless Customer Experience  All Touchpoints Acquire Right Customers  Retain Them