1. Electronic Marketing Arthur Middleton Hughes Vice President / Solutions Architect KnowledgeBase Marketing, Inc. NCDM Sunday December 5, 2004 8:30 a.m. - 11:15 a.m. Gaylord Palms Orlando

2. What KnowledgeBase Marketing Does

3. Marketing Database Data Access And Analysis Software Customer Transactions Marketing Staff -Access By Web Inputs from Retail, Phone, Web How a modern database system works Appended Data Website

4. Electronic Marketing No longer a novelty Everyone must do it It is mainstream marketing

5. Where is your web shop? In should not be a separate department or in IT. It should be part of marketing or customer service Because it is the basis for electronic marketing

6. The web is the greatest direct marketing vehicle ever invented

7. Web sales are not great By 2007, sales will be 2.9% of retail Add travel and that is 4.4% Growing by 26% per year, but it started from nothing.

8. Why is the web important? Affluent people – Those with incomes of $100K or more access web daily Purchasing research – all affluent buyers research the web before they buy anything major: houses, PCs, vacations, cars… Reviews – Movies, restaurants, theatre Most of this does not show up as web sales.

9. An Information Medium So the internet is not a sales medium It is a research and info medium It is not yet a great advertising medium like TV or Radio or Print People who are on the internet already have in mind what they want. They use Google to find it.

10. What do you need to have? A search box

11. Most search boxes are inadequate Keep track of what people enter in the box. Update your database constantly to keep up with your customers Make it easy to find what you have. And, perhaps, add stuff that they want and you don’t now sell

12. What do you need to have? A Search Engine Strategy

13. It is not hard to be on top

14. The DMI Website $90/Month

15. 140 Published Articles

16. How Google Does it The Spider – visits millions of web sites, follows links within the site, stores them The Index – copy of all pages found by the Spider. The Search Engine – sifts through the Index to find matches to your query, and ranks them.

17. Shopping Cart You must have one, even if you do not sell on line. Provide white papers Provide catalogs Provide articles Goal: find out who people are, and communicate with them

18. On Line Etiquette Screen: Thank you for your order Email: Thank you for your order Your order was shipped: Track # Did your order arrive OK? Corner grocer used to do this Before the web, we could not afford it

19. Now, this is recognition! Welcome Back, Arthur!

20. Immediate Feedback!

21. 30 seconds later: Email

22. Transaction Message Rules 1. Avoid being mistaken for SPAM 2. Be a customer service representative 3. Prevent customers from telephoning If you fail the first rule, you will fail the other two.

23. How do you know you need these messages? Set up a control group of customers that do not get the messages. Compare their retention and sales rate with customers that get the messages Figure out the boost to Lifetime Value

24. Provide what the customers want 2002: Hewlett Packard site did not have toner for their LaserJet 4 Printers. Today HP site has supplies for all HP products. They have learned!

25. Let customers register without hassle New York Times used to require you to register. It was a nuisance. They have wised up

26. Provide Live Help Once a novelty. Now essential. Live text. One agent handles 4 or more Which company has life help? Microsoft? IBM? HP? Chrysler?

27. Newsletters

28. Newsletters are skimmed Due to SPAM, few read any newsletters Most are deleted. The others are only skimmed. Newsletters must be:  Informative  Convenient  Timely

29. What people look for in newsletters Prices and Sales Personal Interests and Hobbies Events, deadlines, dates. Relevance in the past is not enough. How relevant is your newsletter today?

30. Not a useful news- letter

31. How to use electronic marketing Insist on capturing emails. Build and maintain a database of customers, past customers, and prospects Make the web very, very easy to use. Use web communications to build loyalty and repeat sales

32. What Harrah’s Casino Did For years, Harrah’s sent regular mail to woo customers with cheap hotel rooms Then it linked the database to the web allowing customers to book hotel rooms at a discount, capturing emails. Sept 11, 2001 occupancy fell by 25% Massive emails with bargain offers raised it to 100% by Sept. 20.

33. What Bank of America Did Was spending $100 million annually on paperwork for retirement program enrollment. Changes took months. Moved all programs to the web. Saving about $50 million annually. Most processes now take only a few minutes instead of months.

34. What Ryder System Did $5.3 Billion company, terrible web site 10 clicks to track a shipment. No search mechanism. Revised site. Now each shipment is only one click away. Super fast searches. Result: many new customers who need to track their shipments every day.

35. Personalization Link your database to your web site Use it plus cookies to modify the content of your website and newsletters

36. Hewlett Packard Personalizes 4.5 million HP e-newsletters sent out per month. Each personalized by recipient’s profile Choose from hundreds of white papers And 87 different HP product lines Four marketing teams: consumer, small business, public sector, enterprise

37. Does personalization pay off? HP proved with control groups that they got 3 to 10 times higher response rates with personalization than their previous newsletter of the month

38. Emails for Cross Sales Airways Communication ran a personalized email campaign for First Annuity to 400 Annuity Brokers using ExactTarget programs Investment $8,000 In 60 days the campaign produced $1,000,000 sales from nine new contracts Program now used by Sun Life and National Western Life

39. Boosting Attendance Churchill Downs increased attendance by 3% (over a control) by sending emails Retention rates up 8% over control using dynamic emails

40. Contacting Agents Kestler Financial Group contacts 5,500 independent insurance agents New emails offer personalized help to agents in attracting business Results: Open rates 50% click through up to 24% Monthly sales increase $5.5 million

41. Susan: If you want to have some friends come to Hawaii with you, list them here and if they decide to go, we will give each of you a 10% discount on your trips. Dudley Foulke dudleyf@hotmail.com Helena Errazuris micifuz2@aol.com Arthur Hughes ahughes@computersrategy.com Dear Helena: Rick and I are going to Hawaii on August 7 th. We thought it would be great if you could come with Us. We are staying at the Maui Surfside which is a great deal. To find out about it Click here! Hope you can Join us! Susan Database Viral Email results in more emails and data capture Viral Marketing

42. HP On Line Survey Competitive Advantage Through Advanced Technology  Hewlett Packard tested an on line survey to promote their network printers.  Direct mail drove responders to a web site that contained the survey. Responders received $10 in Pizza Hut coupons.  The survey provided a special HP offer for network printing solutions, product links, and e-subscription information.

44. Universal Music eMarketing Campaign  UMG tested an e-marketing strategy to increase record sales of a new album release for Lucinda Williams  The campaign delivered more than a 960% increase to the Lucinda Williams fan base  Reached nearly 200,000 fans and prospects with email communications  Won DMA Gold Echo Award in 2002

46. Web Focus Groups

47. What Works: Email Marketing

48. Where else can you get these results in 3 days?

49. Get customers to join a club A company sold sporting goods created a member club. When DB was built they learned that: Club members bought 11 times more than non club members. In two years, 81% of club members became multi-buyers.

50. Club members conversion

51. Email Marketing Test Objective: understand incremental sales from catalog plus emails Method: Send three different catalogs to test and control group with and without emails. Measure: increased sales and reduced costs from use of emails.

52. Winter Email Newsletter

53. How the test was conducted Randomly selected 2 panels of 20,000 All purchased on line before 2003 All received 3 catalogs: Winter, Winter Remail and Spring. Second panel also received three email newsletters: two after the catalog arrived, one during the catalog mailing.

54. Winter Remail Email Newsletter

55. Results – Email & Catalog vs Catalog Only Email group had total increase in sales of 18% over catalog only. Email increased number orders by 6% Average order size increased by 11.8% Variable operating cost per order decreased by 44% for online orders. Emails increased promo cost by 11.2%

56. Spring Email Newsletter

57. Total contribution* increase Increase in sales and decrease in operating expense resulted in: Increase in total contribution by 43% Increased contribution per order increased by 35% Response rate increased by 5.9% * Contribution includes income from S&H plus sales

58. Conclusion on Multi-Channel Marketing Increased sales from the catalogs Increased average order size Decreased variable operating expense Increased total contribution Email to those who furnish opt-in address is a powerful marketing tool.

59. Web Migration Regular catalog customers are gradually migrating to using the web. What happens when they do? Average order size goes up Items per order goes up Cost per order comes down

60. Web migration gains

61. Conclusion Web migration is good for your customers and good for you Find a way to promote migration

62. Retailer Example Video retailer sent email newsletters to 170,000 customers for 6 months. Control group of 14,000 got no emails Retail sales to test group was 28% more than to those without emails.

63. Digital Neighborhoods You can get customers online behavior appended to your database.

64. 17 Digital Segments

65. Letting customers into your warehouse Use the web to let them rummage through your files and records You can save money, and increase customer loyalty and participation

66. How Amazon saves millions

67. How Fedex Saves Millions

68. Time Share Company Receives 7.5 million phone calls per year at 500 person call center Cost per call is $6.50 or $48 million per year. Web transactions cost $0.10 6% of transactions now go through the web site. Proposal: improve the web site so more calls can go there.

69. Method: Personalization For the web to replace a live operator, it must be as good as a live operator. Personalization, and intelligent response to the customer’s input. Time required to improve web site: 14 months. Cost of web improvement: $1.8 million

70. Dollar savings through increased web use

71. How the savings can be achieved Make the web experience so rewarding that customers will prefer it to a phone Call. Make users empowered by functions available to them. As soon as the enhanced web functionality is up and running, run programs to drive customers to the web sites

72. How to measure web success Get a base line for existing transactions Determine the cost of each transaction After transactions begin to shift to the web, determine how many have shifted Measure your savings.

73. The database must support your website That may mean updating every hour

74. Hourly Updating Records

75. Flip to the updated database

77. Trawling the database for events: Transactions and sales Survey Results Responses to Promotions Changes of Address New Customers Cancellations, returns, credit problems Outgoing promotions Telemarketing results Web site activities Emails Direct mail Inbound phone calls Birthdays

78. Automated Communications to a customer who: Is about to have a birthday or anniversary Had an unusually large transaction Reached a milestone with the company Has a problem that should be addressed Should be offered a “next best product” Should be thanked for what she has done Should be reminded of an upcoming birthday of a friend or relative Should be offered a loan Has just moved to a new home Has just gotten married

79. Automated communication

80. Why customers like to use the web

81. Why customers like it: My vacuum cleaner problem We have a Hoover with a MicroFiltration Bag. We wasted an afternoon going to six (yes six) stores looking for new bags. No luck. So we tried the internet.

82. Finding Hoover on the Web

83. Ordering a Micro-Filtration Bag for my Hoover

84. Letting customers come behind the counter A Marriott Example

85. Let’s try it. Let Marriott plan a meeting in Ft. Lauderdale

86. We want 3 rooms with 50 attendees, golf and pool

87. Here are the properties. Let’s try the North Marriott

88. Here are the conference rooms we need

89. Here is the hotel

90. And, here is the location. Let’s make a reservation!

91. The Marriott Web Site: 1,800 Hotels $10 billion revenue Marriott doesn’t own most of the hotels Internet team began in 1997 More interactive, the more business Meeting planners don’t need to visit the sites. All they want is on the web. Booking a room for a business traveler is very fast

92. Dell Premier Pages

93. Dell Premier Pages…

94. Benefits of Premier Pages

95. Dell Premier Pages 70% business, 30% consumer on web Premier pages: one page per company Builds brand loyalty Reduces phone calls Takes only 30 minutes to create a new Premier Page for a new customer.

96. Premier Page History Reports

97. Dell sales follow up IS director checked networking equipment on Dell site. Did not buy. Next week got Dell salesman call to help with networking purchases Customers like it.

98. Office Depot Premier Pages Office Depot Online discovered: on line customers spend 33% more than catalog customers Using a premier page system, Office Depot Online provided 85% of Bank of America’s office supplies

99. Bring back the old corner grocer:

100. Conclusion: You can do this! Invite your best customers into your company. Let them rummage through your warehouse. Let them look up technical data themselves Make them a part of your company. You will have them for life.

101. How to use electronic marketing Capture emails. Have a great website. Provide incentives to use your website. Update your database often. Link it to the website. Personalize your website and your email communications. Use control groups. Measure effectiveness

102. Books by Arthur Hughes From McGraw Hill. Order at www.dbmarketing.com Get slides: arthur.hughes@kbm1.com www.dbmarketing.com