DIRECT RESPONSE FOUNDATIONS

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DIRECT RESPONSE FOUNDATIONS

Chapter 4

Spring 2011 Internet Marketing, 3rd ed. Mary Lou Roberts and Debra Zahay-Blatz

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In What Ways

Is The Internet A

Direct-Response Medium/

Channel?

And Why Does It Matter?

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4 Is OF DIRECT/INTERACTIVE MARKETING

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P&G CHEER FREE & GENTLE

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GENERIC MARKETING GOALS

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CRITICAL STRATEGY ELEMENTS

FROM DIRECT-RESPONSE PERSPECTIVE

The (Email) List

The Media

The Creative Execution

The Service & Support

The Offer

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3 DIRECT RESPONSE AD FORMATS

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AMAZON FULFILLMENT (WEB) SERVICES

http://www.amazonservices.com/content/fba-world-class-fulfillment-centers.htm?ld=AZMakeMAS Spring 2011 Internet Marketing, 3rd ed. Mary Lou

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NORDSTROM CUSTOMER SERVICE PAGES

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WHAT IS CLV –

AND WHY IS IT SO IMPORTANT?

Customer Lifetime Value

Is The Net Present Value

Of The Gross Margin Minus Cost of Servicing

An Individual Or A Cohort Of Customers.

Reasons For Importance:

• The Best Metric For Judging The Success Of

Customer Acquisition & Retention Programs

• The Most Powerful Segmentation Criterion

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THE CONCEPTUAL FRAMEWORK

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A SIMPLE ONLINE TOOL

http://hbsp.harvard.edu/multimedia/flashtools/cltv/index.html Spring 2011

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BASELINE CLV CALCULATION

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SUMMARY OF FIRST YEAR CLV

Total Sales

$5,280,000

Less: Total Costs

$5,148,800

Equals Gross Profit

$ 131,200

Times: Discount Rate

1.0 NPV of First Year Revenue

$ 131,200

CLV of Customer in Year 1

$ 26.24

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INCREASE FROM TARGETED MARKETING

PROGRAMS

Table 4-2

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EFFECT OF TARGETED PROGRAMS ON CLV

Table 4-3

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CLV (?) OF A FACEBOOK FAN

The survey by Syncapse found that across the twenty consumer brands studied:

• Facebook fans spend an average of $71.84 more on the brand than non-fans

• They are 28% more likely to continue using the brand than non-fans

• They are 41% more likely to recommend a fanned product than are non-fans

• Fans were more likely to report favorable attitudes toward the brand than were

non-fans.

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THE FRONT vs. THE BACK END

THE FRONT END

All Pre-Sale Activities

• Marketing and Sales

THE BACK END

All After-Sale Activities

• Includes Order Processing,

Fulfillment, Service, Support

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How is Testing

Different From Marketing Research?

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TESTING vs. MARKETING RESEARCH

• Testing Tells the Marketer WHAT WORKS.

• Marketing Research Explains WHY IT

WORKS.

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THE DIRECT RESPONSE TEST

Email Newsletter

Content Version B

Email Newsletter

Content Version A

A/B Split is One Of Many Types of Tests

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SERVICES > AUTOMATED TESTING

Use statistical significance testing to determine which treatment best met marketer objectives.

http://www.omniture.com/en/product_tours/offermatica/ab

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SUMMARY – TESTING PROCESS

• Reasons for Conducting a Test

• Design the Test

• Establish Test Metrics

• Execute and Monitor the Test

• Analyze and Report Test Results

• Make Marketing Decisions

• What Changes, if any, Should We

Make to Our Marketing Efforts?

-

Should we repeat the test?

- Should we test new variables?

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COMPLEX MULTIVARIATE DESIGN

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RECOMMENDATION

Behavioral Analysis FIRST

Faster, Cheaper, Actionable

ONLY THEN Marketing Research

IF You Need to Know “Why”

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THE DATABASE IMPERATIVE

DATABASE/

DATA WAREHOUSE

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HARRAH’S TOTAL REWARDS PROGRAM

https://www.totalrewards.com/TotalRewards/RewardsAndBenefits.do?page=overview

http://www.totalrewards.com/brands/harrahs/hotel-casinos/harrahs-brand.shtml

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MARKETING, IT AT HARRAH’S

COMPREHENSIVE DATABASE

-

2 Years > Revenue + 72%

- 10% Profits from XMkt Program

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USES OF CUSTOMER DATABASE

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WHAT IS “DATA MINING?”

A Set of Statistical Routines

That Permit Pattern Detection

In Large Data Sets

Initially

Quantitative Data Only

Result of Social Media

Mining of Qualitative Data

‘Sentiment Analysis’

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DATA MINING AT HARRAH’S

• 26% of patrons generated 82% of revenue

• Not the “high rollers”. Middle class or professional,

middle aged or retired, to have discretionary time,

and to prefer playing slot machines.

• Responded better to an offer of free chips than to the

more traditional casino offers of free rooms, meals

and entertainment.

• _{Customers satisfied with Harrah’s experience}

increased their spending by 24% per year. Dissatisfied

decreased it by 10%.

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NBA – MINING DATABASE + 3

rd

PARTY DATA

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HIERARCHY OF INTERACTIVE STRATEGIES

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CUSTOMIZATION NEXT STEP?

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