Direct & Digital Marketing

Direct and Digital Marketing

• Most electronic transactions are conducted via the Internet (public network), but many firms develop a private network to carry out day to day activities.

• Intranet: secure internal network accessed by company employees only.

• Extranet: website accessed by company employees and authorised customers. Password protected.

• Digital marketing provides relatively low-cost access to potential customers, and delivers an opportunity to build an ongoing relationship with customers.

• Enables firm to communicate in real-time

• Customer can provide early feedback

• Will often permit immediate delivery of the product (e.g. software), with simultaneous payment

• Enables accumulation of meaningful customer info

Cont’d

Cont’d• Customer Relationship Marketing can be greatly

enhanced through Direct and Digital marketing:– one-to-one marketing – direct marketing/ direct-order marketing – E-marketing; digital marketing– interactive marketing

• A digital knowledge base, which contains frequently asked questions and solutions to customer problems, can also help customers do business with the firm.

• Use of digital systems enables a productive outcome at a significantly reduced level of cost and effort

Various Methods of Interacting With Customers

Forms of Direct and Online Marketing

Mass Marketing Versus One-to-One Marketing

Direct Marketing

• Direct marketing is an interactive system of marketing which uses one or more advertising media to produce a measurable response or transaction (e.g. a purchase) at any location, as a result of a given level of marketing expenditure (e.g. a TV ad).

Digital Marketing

• Digital marketing is interaction with known customers and others in the marketing channel, on an apparent one-to-one basis, (often in real time), to maintain beneficial commercial relationships and to generate a measurable response or transaction using electronic network tools and technologies.

Cont’d

• The use of electronic communication now plays a major part in the economy and in business activities.

• Consumers are much more knowledgeable of what is available, and are increasingly selective about who they will accept communication from.

• Many marketing organisations have changed in the way they operate as a result of computerisation, globalisation and deregulation.

• Due to interactivity in real-time, digital marketing fits more closely with direct response marketing than with the old mass-marketing approach.

Digital One-to-One Marketing

• The Internet permits interactive communication, and is useful for business processes such as order taking and processing.

• However, household use of the net can differ between different countries, even when the countries are ‘culturally close’.

• So far, Australasian marketing organisations have been slow to interact online on a one-to-one basis, or to use the Internet to its full capability.

• There is often an absence of the features required for doing business with international customers, or for conducting CRM in overseas markets.

Industry Examples of Customer Differentiation

Cont’d

Use of direct methods are linked to the level of

‘differentiation’ in customer needs and value

• Q1 - same needs; mass marketing approach

• Q2 - more-specialised needs; niche marketing

• Q3 - similar needs; but majority of sales, and most value, comes from key customers. e.g. airline business travellers

• Q4 - variation in needs; one-to-one marketing for large volume B2B purchases

How are the Databases Used?

• Marketing organisations use their databases in a number of ways:

1. Identifying sales prospects

2. Deciding which customers should, or should not receive a particular offer

3. Deepening customer loyalty

4. Reactivating customers - at the appropriate time

5. Data mining - accessing linked items of data

Through proper use of databases, a firm can gain a

greater return for the amount and cost of the effort spent

Cont’d

1. Identifying prospects

– Many companies generate sales leads by advertising their products or sales offers.

– The advertisements will generally have a response feature, such as a business-reply card or toll-free phone number.

– The database is built from these responses by identifying the best prospects, and trying to turn them into customers.

Cont’d

2. Deciding which customers should receive a particular offer

– Companies identify the profile of an ideal customer for an offer, then search their databases for those individuals that most closely resembling the ideal type.

– By tracking individual customer responses, the company can, over time, improve its targeting precision and chances of success.

3. Deepening customer loyalty

– Companies can build a customer’s interest and enthusiasm by ‘remembering’ the customer’s preferences, and then sending appropriate information, gifts, or other marketing material that the customer is likely to find appealing.

Cont’d

Cont’d

4. Reactivating customers’ purchases

– The database can help a company identify when it should be making attractive offers of product replacements, upgrades, or complementary products in anticipation of when a customer might be ready to act.

Cont’d

5. Data mining

– Companies maintain many databases in large ‘data warehouses’. Data mining is checking databases for patterns and trends that are assumed to exist, or in order to find new connections between data items.

– Modern software enables open-ended queries that involve systematic searches for relationships and patterns within and between databases.

An Integrated Direct Marketing Approach

Tools and Techniques

• Direct Print and Reproduction• Direct Mail• Catalogues• Direct-response TV, radio and print• Telemarketing• Telesales• Electronic Dispensing and Kiosks• Direct Selling• Electronic Shopping

Evaluating Results

• Direct and digital marketing organisations are usually interested in a number of performance measures for both individual programs and integrated campaigns, to allow later monitoring of results such as:

Sales-lead generationDatabase generation

Fulfilment response Product inquiries Sales response Profitability Return on the investment Lifetime customer value

Cont’d

• Digital Marketing Communications can use a number of measures to determine how effectively a firm has met its targets, including:

log files; page impressions; number of ‘visits’; amount of time spent; page downloads

Other relevant measures relate to:

• Channel Performance

• Relationship Management

• Customer Lifetime Value

Evaluating Database Performance

• The three main criteria are:

– how recent was the last purchase ?

– how frequent have purchases been ?

– what is $ value of the purchases ?

Privacy

There are some concerns over issues such as:

• cross-referencing of data on individuals,• access to lists by unscrupulous marketers• the issue of unwanted mail ( junk mail)• Spamming: sending unsolicited email to large

numbers of people in an attempt to make a sale.• One possible solution is to ask people which

product categories, if any, they would like to receive information about.