The future of direct marketingThursday 2 February 2012, LBi London

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Introduction from chair

Chris Combemale,Chief Executive Director, DMA

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Silver sponsor

Event partner

Interact!•Twitter: #dmalbi @DMA_UK@LBiLondon•LinkedIn & Facebook groups•www.dma.org.uk

The future of direct marketingThe Importance of Lifetime ValueChris Combemale, Executive Director, DMA

The value of a customerWhere do you start?

Not all customers are equal

Rank these profiles for Value of thesubscriber

• Entered competition to win a holiday on-line 3 years ago – notclicked since

• One-time customer, last bought 2 years ago• Active customer, buys every 4 months• Active customer, buys once a year but top 10% for order value

Transactional Data

Frequency

Recency

Value

“Lifetime” alters value

• How long do customers stay active for?

• What revenue will they generate per year?

• Work this out for the whole database

• Then for customer segments

• That gives a lifetime value (LTV)

• What about different acquisition source?

Different Metrics, Different Conclusions

• Click-through rate

• New or repeat visitors

• Bounce Rate

• Engagement

• Micro-conversion

• Conversion to Sale

“All of the above is focusing on short termsuccess.

Even measuring “Visitor Conversion Rates” isakin to declaring success after a one night

stand.

Visit based conversion rates promotebad marketing behaviour.”

www.kaushik.net

How about adding these?

• First month sales

• 6 months sales

• 3 years sales

A Hypothetical Example

Best AverageCustomers Customers

Purchases per year 4 2Average Order Value £70 £50Annual Revenue £280 £100Gross Profit Margin 10% 10%Gross Profit £28 £10Acquisition Cost £8 £4Net Profit £20 £6

A Hypothetical Example Part 2

Best Average

Customers Customers

Life Expectancy 3 years 2 yearsRevenue Year 1 £280 £100Revenue Year 2 £220 £60Revenue Year 3 £180 £0Lifetime Revenue £680 £160Gross Profit Margin 10% 10%Lifetime Gross Profit £68 £16Acquisition Costs £8 £4Lifetime Net Profit £60 £12

»

Top Tips

• Remember the Pareto Principle• Acquire the right customers• Be willing to pay for them• Know what they look like, where they they came from, what

they want• Know lifetime value by lead source and by segment• Invest to keep them

Rethinking the traditional marketingmodel: from campaigns toconversationsJames Young, Digital Marketing Manager, Global Marketing,Sony EricssonPipa Unsworth, Global head of CRM, LBi Group

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Rethinking thetraditional marketingmodel: fromcampaigns toconversations

James Young - Digital MarketingManager, Global Marketing, SonyEricssonPipa Unsworth - Global Head ofCRM, LBi Group

SONY ERICSSON BRIEF

• Video content to build brandawareness and drive engagement

• Opting out of feature battle

• Objectives for Xperia to engage andcreate lasting relationships withinfluential early adopters

LBI'S RESPONSE: XPERIA STUDIO

• Xperia Studio was born – “RealityRemade”

• Create content with phone at theheart

• Wide open brief to collaborators

LBI’S RESPONSE

• Wide variety of content collaborators;– Riding in the Moab with 360 cameras– BMX tricks– Invisible Universe application– Hack-a-thon at an interactive art

studio located on a barge– Surf photography

• Launched in September 2011– XperiaStudio.com– Xperia Studio Facebook tab– Twitter– YouTube– ePR

TED VIDEO

XPERIA STUDIO RESULTS

DRIVING SOCIAL CURRENCY FOR XPERIA STUDIO

STRENGTHENMY BOND

STRENGTHENMY BOND

DEFINE OURCOLLECTIVE

IDENTITY

DEFINE OURCOLLECTIVE

IDENTITY

GIVE MESTATUSGIVE MESTATUS

CREATING SOCIAL CURRENCY FOR XPERIA STUDIO CONTENT USING COMUFY

• Social CRM platform Comufy is usedto drive social currency for XperiaStudio

• Xperia Studio Facebook users cansign up to be first to know about newXperia Studio content

• Users receive personalised newsfeedposts about new exclusive content,which can be easily Shared,Commented or ‘Liked’ for viral spread

XPERIA STUDIO CONTENT GENERATES CONVERSATION

XPERIA STUDIO RESULTS – COMUFY REACH

Potential reach 2.6m

Total friends of fans

Xperia Studio Fans10K registered

Friends of fans 245k reachedfriends reached through shares

XPERIA STUDIO RESULTS – EMAIL VS. SOCIAL DIRECT MESSAGING

Social Direct average click through: 20% Email average click through: 5.9%*

*Epsilon 2011 Email Trends and Benchmark

XPERIA STUDIO IN 2012

• Xperia Studio will continue to be a keypart of Sony Ericsson’s social strategyin 2012

• New collaborator content on XperiaStudio is coming

• Social direct messaging will continueto be used to drive social currency

• Sign up herehttp://www.facebook.com/sonyericsson

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About LBi CRM

Pipa UnsworthGlobal Head of CRMPipa.Unsworth@LBi.com@Peepa

Mobile direct marketing: thechallenge and opportunitiesIlicco Elia, Head of Mobile, LBi Group

Ilicco Eliahead of mobile, LBi

@ilicco

Technology has changedeverything

How technology feels

Early Video Calling

“ The Video camera icon iswhere you would see theperson you’re speakingto…if they had a phone that iscompatible with yourvideo call.”

How technologymakes you feel

Prada NYC / Soho

The end-to-end journeyneeds to be considered morethan ever before.

Martin Cooper

Martin,a Motorola researcherand executive, madethe first analog mobilephone call using aheavy prototypemodel.

He called Dr.Joel S.Engel of Bell Labs

There’s an app for that

Monik Markus

Thank you

Using “big data” to make the bigdecisions

Allison Wightman, Head of eBusiness, Virgin Atlantic

The Future of Direct MarketingUsing ‘BIG’ data to drive loyalty

Allison WightmanHead of eBusinessVirgin Atlantic Airways

How Virgin Atlantic uses its wealth of demographic,behavioural and attitudinal data to engage customers,defend its market position and remain relevant in tougheconomic times

Understating the obvious...

― It is not the best time to be inthe airline business

― Economic decline― Political uncertainty― Physical traumas

― The only constant is change

Need for innovative ideas to capturethe travellers imagination

Flying Club overview― 2.7 million members― Global programme

― US, UK, ROW― Extensive earning opportunities― Last year, 23 triggers― new ‘Welcome programme’ based on

the insights from previous activity― Email postal and SMS― Working to totally integrate our

relationship with customers where everthey touch us

― Online, social, retail, airport, kiosk

Whatever the technology, the same rules apply...Right message to the right customers through the right channel at the right time

Driving Effectiveness through Data andInsight

Business As Usual― The trigger programme― Automated customer

communication programme― Enables us

― to exceed our annual revenuetargets

― improve performance year onyear

― Continues to evolve whilstretaining relevance to customerswithin their Virgin Atlantic lifetimejourney.

Never standing still...

― The newest trigger...― SMS alert 2.5 hours before the

flight― Encouraging foreign currency

exchange at the airport― Significant conversion of 5%― demonstrates the use of timely

communication within theprogramme.

― This augments the existing Forexemail trigger campaign

Planning and Strategy

― Flying Club Segmentation― 7 groups, 29 types― recency, frequency and value― demographic, economic, social― wider travelling behaviours

― Monitor the health of thedatabase

― Early warning of negativebehaviours

― Common currency

Recency

24 – 36 Months 6 - 24 Months 0 - 6 Months/ Future

No

. of

Flig

hts

5 +

Ex Execs

Seasonal Flyers Flying High

3 - 4

Occasional Flyers Fledgling Flyers

1 - 2 Almost Grounded

0 Currently Grounded

Tactical Activity― Flight Curve analysis can optimise sale fare relevance

and effectiveness

54

200

300

400

500

600

700

800

900

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMed

ian

No.

of S

ecto

r Boo

king

s/De

part

ures

Flight Curves - London Heathrow to Boston (All Cabins)

Sector Bookings Sector Departures

45%

38%

18%

1 Jul 8 Sep

9 Aug 8 Nov

9 Oct

Sale fare?

So what’s next?

― The future of Direct Marketing at Virgin is bright― But it will look different to what it is today― More channels― More choice― More integration― More interaction― More personal

Big Data will always support the Big decisions of this small but Big brand

Refreshment Break

Social direct messagingPhilipp Mohr, Chief Executive Officer, Comufy

Enterprise Social Media Management System

® Comufy is a registered trademark of AstrapiaLtd.

Social Media Management System

Data drivencommunicatio

n

The Comufy Social SuiteKey benefits

One-to-onecommunicatio

n

Proven ROIHigh click

rate

Full insightinto users’behaviour

Some of our Enterprise clients

Some of our partners

`

Overview

Confidential

• Evolution of Social Media

• Opportunities

• Build communities and be relevant

• Outlook

`

Why social media?

Confidential

• 50% logon very day

• Average 700 minutes / month

• 140 friends

Infographic via Bamboo

`

Maturity

Confidential

Young channel that is starting to mature, just like email did

The Evolution of a FanPage

Facebook Fan Page Evolution

Facebook Fan Page Evolution

Facebook Fan Page Evolution

Broadcast Social Messaging

`

Current State

Confidential

Is this it?

Social Media Opportunities

• 1:1 communication• Engagement• Relevancy• Personalisation• Dynamic content• Targeted, directmessaging

• Clear value exchange• Build strongcommunities• Offer rewards

A lot of data and a big user base

Compelling offering + Be relevant

Clear Value Exchange

Be Relevant

Be Relevant

Confidential

User signup

Store data

Example Results

Confidential

• 35% click rates

• Very high share rates:• Campaign to 10,000 users• Directly shared by 3,228 users• 945,291 total clicks through viral spread

• Key are tempting messages and good content

`

Social Flow

Confidential

phil@comufy.com

Customer service is the newmarketingWarren Buckley, Managing Director Customer Services, BT

The empowered consumer requiresa new means of engagementEd Van Siclen, SVP Business Development and Global Alliances, Lithium

The Age of the EmpoweredConsumer

Ed Van SiclenSVP, BD & Global Alliances@edvansiclen

88

Time Magazine’s Man of the Year

welcome to thesocialrevolution:

around theglobe, peopleare seizingpower

confidential

civildisobedience:

the social webhas organizedand amplifiedour global voice

the power of theconnected world:

collectively, we aredoing great &inspiring things atunprecedentedscale

applied gametheory:

gamers modelprotein structurewhich had eludedscientists fordecades

confidential

the good, thebad and theugly:

the dawn of themobile, socialand incrediblyempoweredconsumer:

confidential

beware of thethunder lizard!

businessmodels arebeing radicallytransformed

Source: Forrester US Interactive Marketing Forecast ,2011

Social Media SpendReach $2.1Bn in US

of CEOs surveyed reported thattheir top priority for the next five

years was ‘getting closer to theircustomers’

88%

50%build awarenessand demand forour productscustomer focus is

the major driverbehind social

social media as %of marketing budget

$2.1Bspent in 2011

57% be more relevantto our customers

54% build bettercustomerrelationships

CMO Council, 2011

Social media helps us to:

Customers want an authenticconversation and engagement

with buyers ‘like them’

but customerswant to interactwith each other,not just you

14%of consumers trustadvertisements

90%of consumers trustpeer recommendations

superior design featureswho do I engage and how? how do I manage and

scale?how do I measure the

impact?

of marketerssurveyed had no

proven ROI ofsocial initiatives

41%

social brings new complexities

Win the new Kindle withbuilt-in WiFi!!Visit www.lithium-sce.com and complete the shortsurvey*

*Every participant will receive an electronic copy version of “TheScience of Social” featuring the work of Dr Michael Wu. This bookprovides readers with a new perspective of understanding theircustomers, their customers expectations, behavior, and potential.

Panel Debate: Is the future ofall marketing direct?

• James Young, Digital Marketing Manager, Global Marketing,Sony Ericsson

• Pipa Unsworth, Global Head of CRM, LBi Group

• Ilicco Elia, Head of Mobile, LBi Group

• Allison Wightman, Head of eBusiness, Virgin Atlantic

• Philipp Mohr, Chief Executive Officer, Comufy

• Warren Buckley, Managing Director Customer Services, BT

• Ed Van Siclen, SVP Business Development and GlobalAlliances, Lithium

Closing remarks from chairChris Combemale, Chief Executive Director, DMA

Drinks and networking

Upcoming DMA events

DMA data conferenceThursday 1 March 2012

Go integratedWednesday 28 March 2012

Please visit www.dma.org.uk/event-listing or visit the registrationdesk for more information