Letting Them Come Behind the Counter Arthur Middleton Hughes VP Strategic Planning M\S Database...
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Transcript of Letting Them Come Behind the Counter Arthur Middleton Hughes VP Strategic Planning M\S Database...
Letting Them Come Behind the Counter
Arthur Middleton Hughes
VP Strategic Planning
M\S Database Marketing
www.msdbm.com
DMA 83rd Annual Conference
New Orleans, LA
Saturday Oct 14th 2000 2:30- 3:45 PM
Pre-conference Workshop
Customer Management
Internet ServicesCompetitive Advantage Through Advanced Technology
The Old Corner Grocer
Customers today want:
Recognition Service Information Convenience Helpfulness
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!
Examples of Profitable Strategies
Recognition and Personalization Building relationships Surveys and Responses Loyalty Programs Customer and Technical Services Collaborative Filtering 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
Harnish Equipment CompanyDes Moines, IA
Mr. Dudley FoulkeFood Processing DirectorTyler Sausage Company334 Chicago AvenueAlton, IL 66780
Dear Mr. Foulke:
On November 15th the warranties expire on five of your Harnish model 1800food processors. To be sure that these machines perform as well after the warrantyexpires as they are doing now, I would like to send two of our best technicians, EricLamb and Peter Davenport, to provide maintenance for these machines. All of theirwork is covered by the warranty and will be free, of course
While Eric and Peter are there, they will be delighted, also at no cost to you,to provide a service check on any other food processing equipment in operation atyour plant, whether made by Harnish, or by any other company. They will give youa recommendation for needed service on each machine.
As a Harnish Gold customer, Mr. Foulke, you are very important to us. Wethink of ourselves as partners in helping to make Tyler Sausage a leader in the foodprocessing industry. Let me know when it is convenient for Eric and Peter to maketheir service visit.
Sincerely yours,Anne SchwartzAnne Schwartz, Service ManagerHarnish Equipment Company
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
The Web is the greatest database marketing vehicle ever invented
We can bring back the intimacy of the Old Corner Grocer
Communicating
Screen: Thank you for your order Email: Your order has been received Email: Your order will be shipped Email: Your order was shipped Email: Was everything to your satisfaction?
Cost of all of the above? Nothing!!!
Staples does it well
30 seconds later: Email
Welcome back, Arthur!
Staples has 1.4 million visitors per month
The Office Depot Web Response Form
2002 Online Small Business Market over $100 Billion
Something new: Collaborative Filtering
On-line deciding what a customer is interested in, based on a few known facts
The principal behind collaborative filtering:
Each person has a unique (and changing) view of the world.
In large populations, there are often similar preferences If hundreds of people who like A, G, and X also like W Then if you like A, G and X, you may also like W.
Collaborative Filtering requires sophisticated software
It is possible, on line, to determine the next best product for any customer, based on the customer’s past preferences and those of hundreds of others with similar preference profiles.
While the customer is on the phone, or on line, you can develop a profile and come up with intelligent recommendations.
How Netperceptions used Collaborative Filtering in the UK
GUS is largest cataloger in UK. Gets 20% cross sell on catalog orders.
Installed NetPerceptions system In six weeks got 40% cross sell on catalog orders with
same staff. Very “spooky” results which really worked.
Who uses collaborative filtering:
Bass Pro Shops Mattel Toys Home Box Office Petsmart.com Kraft Foods
Proctor & Gamble Publisher’s Clearing
House Shop at Home
network Time Warner
How the Web is changing Database Marketing
Recognition Reaching out Customer service Supplier Relationships Information Ordering parts and replacements Building personal relationships
Reaching out: How Web Ads Differ
Traditional Media Web AdvertisingSurrogate MeasurementsDirect MeasurementsHigh cost of waste Low cost of wasteSingle messages Multiple MessagesDelayed feedback Immediate FeedbackHard to adjust Real time testing & tuning
Four steps in web response
Impression: your banner appears on a viewer’s screen: $6 per thousand.
Response: Viewer clicks on your banner and sees your web site
Lead: viewer gives you her name and email address Sale: she buys something.
Three categories of Web Ad Space
Run of Network (RON) from $4 to $6 CPM. Very good values here.
Affinity Group Space (Sports, business, travel) $10 to $20 CPM Can be productive
Branded Space (Yahoo, Excite, AOL) Very expensive $30 to $70 Often has very low response rate.
Three categories of web ad space
Where should we put this ad?
0 0.5 1 1.5 2 2.5 3
Entertainment
Games
Automotive
Shopping
News
Health
Business
Sports
Travel
Technology
Women
AVERAGE
In three days we discover that travel sites work best for Casio
Result of One Week's RON Test by Site Top Eleven out of 780 Sites
Site Impress. Clicks Rate Leads Lead Rate Cost Lead CostEyegive 14,091 1,384 9.82% 23 1.66% $85 $3.68LotteryUSA 43,112 132 0.31% 12 9.09% $259 $21.56The onion 126,732 263 0.21% 10 3.80% $760 $76.04The Huddle 62,722 49 0.08% 6 12.24% $376 $62.72123Greetings 361,345 673 0.19% 4 0.59% $2,168 $542.023DFiles 56,600 57 0.10% 4 7.02% $340 $84.90Rogue Market 14,932 10 0.07% 3 30.00% $90 $29.86Netsurfer Digest 23,333 29 0.12% 3 10.34% $140 $46.67Nordic Music 28,397 34 0.12% 3 8.82% $170 $56.79ShowBiz 5,063 6 0.12% 3 50.00% $30 $10.13People-Talk 37,028 103 0.28% 3 2.91% $222 $74.06
2,166,196 6,495 0.30% 105 1.62% $12,997 $123.78
Which sites work best for E*Trade?
Site Category Impr. Clicks Resp. Leads Conv. Cost LeadMarketPlayer Business & Finance 555 4 0.72% 1 25.00% $3 $3.33Igive Charity 14,091 1,384 9.82% 23 1.66% $85 $3.68StockInvestor Business & Finance 1,145 8 0.70% 1 12.50% $7 $6.87ShowBiz Business to Business 5,063 6 0.12% 3 50.00% $30 $10.13Regent Commerce Business & Finance 2,037 37 1.82% 1 2.70% $12 $12.22CyberInvest Business & Finance 2,442 13 0.53% 1 7.69% $15 $14.65Critical Path Automotive 3,520 7 0.20% 1 14.29% $21 $21.12I-Escrow Business & Finance 7,051 15 0.21% 2 13.33% $42 $21.15Lottery USA News & Information 43,112 132 0.31% 12 9.09% $259 $21.56Rogue Market Entertainment & Movies 14,932 10 0.07% 3 30.00% $90 $29.86ezines Database Automotive 6,014 18 0.30% 1 5.56% $36 $36.08Netsurfer Digest Consumer Technology 23,333 29 0.12% 3 10.34% $140 $46.67Nordic Music Consumer Technology 28,397 34 0.12% 3 8.82% $170 $56.79Your New House Learning 19,591 61 0.31% 2 3.28% $118 $58.77TheHuddle Sports & Outdoors 62,722 49 0.08% 6 12.24% $376 $62.72People-Talk Business & Finance 37,028 103 0.28% 3 2.91% $222 $74.06
Total 817,123 3,108 0.38% 95 3.06% $4,903 $51.61
Results Optimized by Cost Per Lead – after one week!
The big Web winner: Customer Service Hundreds of millions of dollars
being saved today through use of the web
Much bigger than consumer sales
How the Web is changing Customer Service
1980s: toll free numbers Thousands of agents reading
screens Heavy cost: phone call and agents 2000: let the customers get their
own information No cost for phone or for agents Customers like it better!
Letting them come behind the counter
Open your entire company to your customers Let them find what they want themselves It is cheaper for you, and customers like it
better.
How Amazon saves millions
How Fedex Saves Millions
Let’s try it. Let Marriott plan a meeting in Ft. Lauderdale
We want 3 rooms with 50 attendees, golf and pool
Here are the properties. Let’s try the North Marriott
Here are the conference rooms we need
Here is the hotel
And, here is the location. Let’s make a reservation!
The Marriott Web Site:
1,700 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
Supplier Relationships
All manufacturers will link to their suppliers through the web
Suppliers will check inventories, and replenish parts automatally
Manufacturers and retailers will buy through the web
The National Semiconductor FedEx Partnership
National Semiconductor handed over its entire logistics management to FedEx
All products from 6 factories shipped to FedEx warehouse in Singapore
National Order center in Santa Clara ships all orders to FedEx in Memphis
FedEx directs shipments to customers from Singapore
How FedEx Manages National Semiconductor Shipments
Order Center in Santa Clara
Shipments
OrdersInventory Mgt.In MemphisSingapore
Warehouse
N
atio
nal F
acto
ries
In
Asi
aOrders from customers
Benefits to
Reduction in customer delivery cycle from four weeks to one week
Reduction in distribution costs from 2.9% of sales to 1.2% of sales
Elimination of seven regional warehouses in the US, Asia and Europe
FedEx – Omaha Steaks
Orders to Omaha simultaneously sent to FedEx and to Omaha warehouse with FedEx tracking numbers.
Both Omaha and Customer given FedEx numbers for tracking.
Omaha is out of the delivery business, and can concentrate on steaks and marketing.
FedEx - Omaha Steaks
CustomerOrdersSteaks
Orders sent to Steak WarehouseAnd to FedEx atThe same time
Steaks deliveredTo FedEx
FedEx Delivers to Customer
Virtual Distributors
Distributors are location bound They cannot stock all products They cannot represent all manufacturers. The web changes all that You can provide access for your customers to
everything that they want
Boeing Spare Parts
Idle airplanes cost $7,000 per hour Quick access to Boeing parts keeps
customers loyal Spare parts are an important revenue Buying Boeing parts keeps quality There are 2,000 Boeing part suppliers Old system: Binders or CDs + phone
+fax
Boeing Spare Parts Website
New Boeing System
Runs 24 hours a day Automatic verify part number Electronic self service Customers order without help Customers know which warehouse
has the parts!
2004 Aerospace Parts & Service 35% on Web
Sales in Non Web WebBillions Share Share
1999 $166 99% 1%2004 $209 65% 35%
ShareNon Web
99%
ShareWeb1%
ShareNon Web
65%
ShareWeb35%
Today
2004
Why customers like the web: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.
Finding Hoover on the Web
Ordering a Micro-Filtration Bag for my Hoover
Summary:Give customers total access
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.
10866 Wilshire Blvd., Suite 370Los Angeles, CA 90024-4354
Phone (310) 208-2024Fax (310) 208-5681
http://www.msdbm.com