DIRECT RESPONSE FOUNDATIONS

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2 DIRECT RESPONSE FOUNDATIONS Chapter 4

3 In What Ways Is The Internet A Direct-Response Medium/ Channel? And Why Does It Matter?

4 4 Is OF DIRECT/INTERACTIVE MARKETING 4

5 P&G CHEER FREE & GENTLE

6 GENERIC MARKETING GOALS

7 CRITICAL STRATEGY ELEMENTS FROM DIRECT-RESPONSE PERSPECTIVE 7 The Offer The Service & Support The ( ) List The Creative Execution The Media

8 3 DIRECT RESPONSE AD FORMATS

9 AMAZON FULFILLMENT (WEB) SERVICES

10 NORDSTROM CUSTOMER SERVICE PAGES

11 WHAT IS CLV AND WHY IS IT SO IMPORTANT? 11 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

12 12 THE CONCEPTUAL FRAMEWORK

13 A SIMPLE ONLINE TOOL 13

14 14 BASELINE CLV CALCULATION

15 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

16 INCREASE FROM TARGETED MARKETING PROGRAMS 16 Table 4-2

17 17 EFFECT OF TARGETED PROGRAMS ON CLV Table 4-3

18 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.

19 THE FRONT vs. THE BACK END 19 THE FRONT END All Pre-Sale Activities Marketing and Sales THE BACK END All After-Sale Activities Includes Order Processing, Fulfillment, Service, Support

20 How is Testing Different From Marketing Research?

21 TESTING vs. MARKETING RESEARCH 21 Testing Tells the Marketer WHAT WORKS. Marketing Research Explains WHY IT WORKS.

22 22 THE DIRECT RESPONSE TEST Newsletter Newsletter Content Version A Content Version B A/B Split is One Of Many Types of Tests

23 23 SERVICES > AUTOMATED TESTING Use statistical significance testing to determine which treatment best met marketer objectives.

24 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?

25 COMPLEX MULTIVARIATE DESIGN

26 RECOMMENDATION Behavioral Analysis FIRST Faster, Cheaper, Actionable ONLY THEN Marketing Research IF You Need to Know Why

27 28 THE DATABASE IMPERATIVE DATABASE/ DATA WAREHOUSE

28 HARRAH S TOTAL REWARDS PROGRAM

29 MARKETING, IT AT HARRAH S COMPREHENSIVE DATABASE -2 Years > Revenue + 72% - 10% Profits from XMkt Program

30 USES OF CUSTOMER DATABASE 31

31 WHAT IS DATA MINING? 32 Initially Quantitative Data Only Result of Social Media Mining of Qualitative Data Sentiment Analysis A Set of Statistical Routines That Permit Pattern Detection In Large Data Sets

32 33 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%.

33 NBA MINING DATABASE + 3 rd PARTY DATA

34 HIERARCHY OF INTERACTIVE STRATEGIES 35

35 CUSTOMIZATION NEXT STEP?

36 SUMMARY Interactivity of Internet = Direct-Response Medium Learning To Use In Branding Also (Chapter 6) Use For Customer Acquisition,Conversion,Retention Generate Sales, Leads, Site Stickiness Judge Success By Customer Lifetime Value To Increase Customer Lifetime Value Targeted, Information-Driven Marketing Is Essential Data Capture Through Transactions and Customer Contact Modeling, Data Mining Interactive Marketing Strategies Should Increase Customer Focus and Marketing Effectiveness May Decrease In Cost As Targeting And Personalization Improve 37