building bridges reach your customers and keep them coming back keynote address to the ucea arthur...
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Building BridgesReach your customers and
keep them coming back
Keynote Address to the UCEAArthur Middleton Hughes
Hyatt Fisherman’s Wharf
San Francisco VP / Solutions Architect
KnowledgeBase Marketing
What KnowledgeBase Marketing Does
Lack of Marketing Strategy
To develop a relationship program, you still have to put individuals into groups, and develop products and strategies that will keep them loyal. That, in my opinion is where companies have the most difficulty.
Even when you say to them, “I can help you to identify your key customer segments.”
They respond, “Well, great. But tell me, what to do with them once they are identified. How do I manage each segment?”
SciencesMarketers are not yet sophisticated enough to know what to do with the
information. -- Stephen Shaw - Spectrum Decision
Two Kinds of Database People
Constructors People who build databases
Merge/Purge, Hardware, Software Creators People who understand strategy
Build loyalty and repeat sales You need both kinds!
Customers today want:
Recognition Service Information Convenience Helpfulness
Marketing to Customer Segments
GOLD Spend Service Dollars Here
Spend Marketing Dollars Here
Reactivate or Archive
Your Best Customers - 80% of Revenue
Your Best Hope for New Gold Customers
Move Up
1% of Total Revenue These may be losers
Compared with newcomers, Long term customers: Buy more per year Buy higher priced options Buy more often Are less price sensitive Are less costly to serve Are more loyal Have a higher lifetime value
Retention is a measure of loyalty
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Percentage Retained
from Previous
Year
1 2 3 4 5
Years as a customer
Retention pays better than acquisition
($62)
$48
($80)($60)($40)($20)
$0$20$40$60
New Customer 3rd YearCustomer
Annual Profit
Examples of Profitable Strategies
Newsletters Surveys and Responses Loyalty Programs Customer and Technical Services Friendly, interesting interactive
web site Event Driven Communications
Event driven communication:
Dear Mr. Hughes:
I would like to remind you that your wife Helena’s birthday is coming up in two weeks on November 5th. We have the perfect gift for her in stock.
As you know, she loves Liz Claiborne clothing. We have an absolutely beautiful new suit in blue, her favorite color, in a fourteen, her size, priced at $232.00.
If you like, I can gift wrap the suit at no extra charge and deliver it to you next week, so that you will have it in plenty of time for her birthday. Or, I can put it aside so you can come in to pick it up. Please call me at (703) 754-4470 to let me know which you’d prefer.
Sincerely yours,
Robin Baumgartner Robin Baumgartner, Store Manager
Ridgeway Fashions
Leesburg, VA 22069
How the Web is changing Customer Relationships Recognition Reaching out Customer service Information Ordering services Building personal relationships
Now, this is recognition!
Welcome Back, Arthur!
Immediate Feedback!
30 seconds later: Email
Conclusion: the web is here The web is now like the telephone. It is not an option. It is the way business is being
conducted, and will be conducted You can’t sell profitably on the web You can help people to order
services and provide super customer service
Where is your web shop? In should not be a separate
department. It should be part of customer
service, registration, marketing and information
It should be linked to other sites: local government, chamber of commerce, local businesses.
What can you do? 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
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.
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.
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.
What RCI is doing Time Share Marketing Company Call center cost $48 million per
year. Revamping web site to make it
better than a live operator Result: saving will be $17 million
per year.
Why use the web? You save $6 every time a person orders
on the web instead of the phone or mail You can build relationships with
communications and provide more info on the web than you can in a phone call
You can use the web for confirmation of registration, and reminders that would be prohibitively expensive any other way
Eliminate the hassle Aaron: Here are the books needed
for Marketing 101. To have them sent to you right away, click here.
Aaron: Here is your schedule for your courses this semester together with a map. If you need a parking permit, click here.
Thank you letters Send a personal letter to everyone who
has registered. Thank you, Arthur, for registering for
Marketing 101. Email or Hard Copy? Test half one way
and half the other. Next term see if there is a difference in the sign up rate
Is the difference enough to pay for the cost?
Personal Profiles Why are they taking a course?
What is their life goal? How do you fit in to their future plans?
Every student should complete a web personal profile.
Then you use the profile in all future communications.
How to get the information Use the web. Customers do all the work. It costs you nothing to receive it
and store it.
Completing the personal profile
Welcome, Aaron.Can you updateyour personal
profile here….?
Database
Thank You Email
Used in all
communications
What data to keep Name, address,
email Age, income,
occupation What courses has
she taken? Who paid for them?
Her life educational plan: long range goals
Family situation Why is she taking
courses? What are her objectives?
Next best course for her
The Mathematics of email Even at a 1% response rate, email
marketing is very powerful.
Quantity Rate AmountMessages 100,000 $0.03 $3,000Response 100,000 1.0% 1,000 Sales 1,000 $70 $70,000
Getting them to use the web You know it will save you $10 to
$20 person per year. So you can afford to incentivize
people to use the web Registration on the web--$10
cheaper Buying books on the web, no
shipping costs.
Customer Segmentation Use the profile to create customer
segments: Students looking for a degree Retired looking for something to do Retraining for a new job
Your communications should reflect the segment and their goals.
Create segment managers
Business Rules The database is ideal for implementing
business rules. You must create them. Set up the database to send automatic
communications: Thank you Time to register for a new course Update your profile Schedule changes Resell your used books
Reaching the right audience Profiling your existing customers
Where do they come from? What do they do? Why are they attending? How well off are they? What do they want to do next? Who is paying? Them or the boss? How old are they?
Getting lists 80% of the success of any
promotion is the audience. (Not the copy, not the timing)
Half of all American households never buy anything by mail.
So, a mail-responsive list will do twice as well as a compiled list.
New Movers People who move are 3 – 4 times
more likely to respond than people who have not moved recently.
Pay for and use a list of new movers into your community.
Recent attendees Someone who has just enrolled for
a class is more likely to respond than anyone else.
When to approach them? Now. Don’t wait.
Use tests to see what works Test a personal letter vs. a course
catalog 10,000 get a personal letter or email 10,000 get a catalog If the letter is done well, it will out-pull
the catalog by a significant percentage
Don’t take my word for it, you can test it yourself.
How to conduct tests. Put a unique code on each catalog
and each email. When they register, ask for the code. Use your database to match
registrants with those sent catalogs and emails.
You can become very accurate in your promotions
Conclusions We are entering a new age of
customer communications. This will be a very profitable age
for UCEA members. Make the web the center of your
registration process. Make email your primary customer
communications vehicle.
