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CHP 11: Database, Direct Response Marketing, Personal Selling

Terms in this set (80)

Database marketing
involves collecting and utilizing customer data for the purpose of enhancing interactions with customers and developing customer loyalty.
1) identifying customers and 2) building relationships with them.
Successful database marketing emphasizes
1) building a data warehouse
2) coding and analyzing the data in the database
3) mining the data for useful information
4) using the data to develop data-driven marketing communications
5) using the data to develop data-driven marketing programs.
Tasks in Database Marketing
...
Not just ITM people deal with databases, marketers need to direct ITM people and tell them what they want accomplished
data mining
the process of analyzing data to extract information not offered by the raw data alone
...
Building a Data Warehouse
operational database
marketing database
A data warehouse has two primary types of data.
operational database
contains all of the customer transactions and follows the rules of accounting. It is used for accounting and tax purposes
marketing database
contains information about current customers, former customers, and prospects
-you can do all of the tasks of an operational database but it gets more at who you are
-Customer names and addresses
-E-mail addresses
-Record of visits to the firm's website
-Customer history
-Customer survey results
-Preferences and profiles
-Marketing campaign results
-Appended data
-Coded data
Marketing Database should contain
E-Mail, Mobile, and Internet Data
-Cost effective communications
-Build relationships
-
cookies
The Internet has the capability of storing information about customers through ______ placed on the customer's computer. With this information the website can be personalized with the person's name. The content can be customized based on the person's interests and past behaviors.
-store info
-track where youve gone
-helps websites customize content towards you
Purchase and Communication Histories
-Detailed customer histories
-Every interaction with the company
-Determine future communications (what worked in the past, what didnt)

Assist marketing team in evaluating
-Customer's lifetime value
-Other customer metrics
data research firms
For companies that lack the ability to gather personal information form their customers, a number of ______ can supply this information.
Knowledge Base Marketing, Donnelly, Dialog, and Claritas.
Some of the more well-known companies are

These companies provide demographic information and psychographic information.
Acxiom and Datran Media
Other companies, such as _____ and _____ can combine online information a company may have about their customers with offline information. Purchasing this type of information is necessary for companies that cannot obtain it themselves and want a data warehouse.
Geocoding
is the process of adding geographic codes to customer records so that customers can be plotted on a map.
-also allows for adding demographic and psychographic information to the customer's record.
-ex: if someone lives in florida, dont sell them winter down jackets bc its wasted advertising
CACI Coder/Plus
With geocoding information, customer clusters can be identified using software such as ______.
geographic clusters
The concept behind the ________ is that people who share common values and interests tend to live in the same neighborhoods.
The lifetime value figure
represents the present value of future profits a customer will generate over his or her lifetime relationship with a company.

represents the value of that customer (or customer segment) and provides an idea on how much effort should be expended to keep the customer and to upgrade him or her to a more loyal customer.
...
Some companies will calculate individual lifetime values for each person. Others will look at clusters of customers and calculate an average value for the cluster, or segment.
revenue, costs, retention rate, and visits or purchases per time period.

Revenue and costs associated with customers and customer clusters can normally be obtained. More difficult data to obtain are retention rates.
Key figures needed for lifetime value calculations are
Location Data Tracking
With GPS technology in mobile phones, companies can track a person's location and even movement within a facility, such as a sports venue. The location information can be combined with profile information to target specific individuals that fit a profile and that are at specific locations.
Hashing
is the process of anonymizing data so that specific individuals cannot be identified.
-but we still collect your info, just not store it
Data mining
involves using computer data analysis software to mine data for meaningful information and relationships.
...
Data mining is used to build profiles of customer groups and of a firm's best customers. Then a search can be made for customers who fit this profile, but who are not spending at the level of the best customers. These individuals can then be targeted with special marketing programs or even personal selling.
models
Data mining can also be used to prepare ____ that will aid in predicting future purchase behavior.
Retailers can learn what other products a person buys when a particular product is purchased. Barnes and Noble uses this process when a customer selects a book to purchase; they tell the customer what other books were bought by purchasers of that particular book.
-recommended book
-trying to get you to buy more
Data mining ex:
...
Personalizing messages is HUGE in marketing
Customer profile information
is important because it tells a company about an individual's preferences. It allows for individualizing messages and personalized responses.
Companies like Netflix can send personalized messages recommending movies.
Ex of personalization:
74%

88%
A survey by Fulcrum found that ____ of individuals who received a birthday greeting from a brand thought more positively about that company and for _____ it translated into higher brand loyalty.
In-Bound Telemarketing
-your name pops up on the screen when you call a firm, your past records come up, past purchases, etc.
Database information is valuable for _______ Service personnel can access the database and have instant information about the customer. This allows for personal interactions. Based on customer value and status, it can provide information on how the customer should be treated and what special offers should be extended. If recent purchases were made, the telemarketer can inquire about the customer's level of satisfaction.
Trawling
is the process of searching a database for specific information for marketing purposes.
Home Depot can use it to locate individuals who have recently moved to offer them discounts on home furnishings and building materials. Companies can send a card or email on the anniversary of a past purchase, such as a new car. Individuals who have not made a purchase recently, say within the last 90 days, can be sent a special offer to come back. Individuals who have made a recent purchase can be thanked, or encouraged to purchase another product that goes with the original purchase.
-they look for people who would want home depot services (someone who just moved) and then send them information
Trawling can be used in a wide number of ways.
cross-selling.
Trawling can locate specific items that have been purchased for the purpose of
permission marketing, frequency or loyalty programs, and customer relationship management programs.
The three primary database-driven marketing programs are
Permission marketing
sends materials only to individuals who give permission. Companies need to make sure consumers have given permission. Sometimes when placing an online order, companies will automatically check the box that grants permission to send e-mail offers. If the customer doesn't want to participate, they must uncheck the box. In addition to online, permission can be given through the telephone and in the mail.
-backlash to spam, junk mail
-optin, opt out, confirmed opt in
confirmed opt-in
An e-mail approach where e-mail marketers send a confirmation e-mail requiring a response from the subscriber before the subscriber receives the actual marketing e-mail.
response rate
The advantage of permission marketing is that it generates a higher ______ since the individual has agreed to receive marketing materials.
-much better to send emails to people who WANT to hear from you
-Ensure recipients have granted permission
-Make e-mails relevant
-Customize program by tracking member activity
-EMPOWERMENT RECIPROCITY
Keys to Successful Permission Marketing
empowerment reciporcity
people should feel they have the power during the relationship
-customers have the option to stay opted in or can opt out at any time
sweepstakes or chance to win
already a customer
email required to access content
found site randomly
friend recommended
Reasons Consumers Opt into an E-mail Permission Program
interesting content
account status updates
contests and sweepstakes
price bargains
entertaining
Reasons Customers Remain Loyal to a Permissions Relationship
discounts and savings
better deals and offers
free products
perks and privileges
cash back
recognition and appreciation
individualized attention
Benefits of Loyalty Programs Cited By Customers
-Not up-selling and cross-selling
-Program not a brand extension
-Not building deeper customer relationships
-Treating all customers the same
-No differentiation
-Not utilizing mobile platform
-Blank perks
-Difficult to use
Common Loyalty Program Pitfalls
1) design the program to enhance the value of the product and company
2) calculate the full cost of the program, including the free merchandise and the cost to administer the program
3) design the program to maximize customer motivation to join and to make additional purchases.
For successful frequency programs, companies should keep in mind three basic principles:
Sent letter to 4,000 offering $5 discount on dinner
•Average visits increased
-From 25 to 42 during promotion
-From 25 to 29 after promotion
•Card holders' visits increased

Incremental sales increase by $17,100 during the promotion and another $4,700 after it was over.
An example of a Frequent Diner Club illustrates the benefit of a loyalty program.
Direct response marketing
is the targeting of goods and services to customers without the use of other channels of distribution.
...
According to the Direct Marketing Association, about 60% of direct marketing is to prospects to encourage a first purchase and the other 40% is for customer retention and to encourage repeat purchases.
telephone, e-mail, retail store, or a PURL.
Direct response marketing is used because it works. Customers can respond to direct offers using the
Direct mail to customers and prospects was number one, used by 77% and 73% of companies, respectively. E-mail to customers and prospects were the next most used methods.
This graph shows the percentage of companies using particular forms of direct marketing.
direct mail.
The most common form of direct response marketing is ______ Over 70% of companies use some form of direct mail.
list
The key to direct mail is the____ that is used.
uResponse list
uHot list
uCompiled list
Types of commercial lists
A response list
consists of individuals who have made purchases or who have responded to direct mail offers in the past.
A hot list
includes individuals who have responded to a direct mail offer within the last 30 days.
A compiled list
is a list of individuals who meet specific demographic characteristics.
less than 1%.
The typical response rate of direct mail is
Catalogs
offer a long term impact because they lay around for a long time and are often picked up months after they come out.
-low-pressure sales tactic and often the first stage in the buying cycle.
-Catalogs are still important for business customers.
databases
Rather than large catalogs sent to masses, companies are using ____ to send catalogs to individuals most likely to use them, either through ordering through the catalog, by phone, or online.
Specialty catalogs
are the norm, based on each person's interests.
television, radio, magazines, and newspapers.
Other direct response media are ______With most of these media, a scarcity approach is used
scarcity approach
is used where individuals have a limited time to respond and/or a limited number are available. Urgency is the key to direct response in mass media
The Internet and e-mail
have become valuable forms of direct marketing. They are cost effective and can be used to build relationships with customers. Communications can be personalized and offers can be customized to meet individual needs. Search engine ads can be purchased that will make direct offers to individuals seeking specific products.
Personal Selling
offers an opportunity to sell a product face-to-face. It can be used to build relationships with new customers as well as current customers.
relationship selling
The trend in personal selling is_____ which involves building relationships rather than just making sales. The idea is to create a customer for life, not just for one transaction. This changes the approach in dealing with individuals to a softer sell.
-Generating leads
-Qualifying prospects
-Knowledge acquisition
-Sales presentation
-Handling objections
-Sales closing
-Follow-up
Steps in the Selling Process
Qualifying Prospects
Not all sales leads are good prospects. Many companies will hire other individuals to _____ so salespeople can concentrate on making sales calls.
potential income and probability of acquiring the prospect as a customer.
Two dimensions are important when evaluating sales leads -
personal sales call.


telemarketing, mailing out marketing materials, or other strategies that are less expensive.
Often leads are categorized into three or four groups based on these two dimensions. Those in the best group (high potential income and high probability of acquiring) receive a

Leads in the other groups can be handled through
sales calls
A leads receive
telemarketing/email
B leads receive
marketing materials
C Leads receive
monitored for future
D leads receive
uHead-on method
uIndirect method
uCompensation method
u"Feel, felt, found"
Handling Objections approaches

Almost all sales calls will at some point create objections on the part of the buyer. Salespeople need to be prepared in advance to handle these objections.
head-on approach
the salesperson answers the objection directly.
indirect method
the salesperson sympathizes with the prospect and indirectly talks about how the product can meet the need without saying the prospect is wrong.
compensation method
the salesperson will reply "Yes, but ..." and then explain how the product's benefits can overcome the objection being made.
"feel, felt, found" approach
the salesperson lets the customer talk about his/her fears and feelings, then responds with how the product can eliminate or reduce those fears.
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