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Midterm

Midterm Study Notes.pdf

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Department
Marketing
Course
MKT 700
Professor
Richard Michon
Semester
Winter

Description
2014-03-05 11:56 AM What Customers Want • Recognition • Service • Convenience • Helpfulness • Information • Identification Operational Databases : Process transactions and get monthly statements out Marketing Database: Summary of monthly transactions, and also: • Preferences and profiles provided • Promotion and response history from direct mail and e -mail marketing campaigns • Appended data from external sources • Lifetime value and RFM analysis, leading to creation of customer segments • Modeling for churn and next -best product Customer Life-Time Value: Net present value of the profit that you will realize on the average customer during a given number of years • For e-mail/mobile customers, LTV tells you the profit you will receive over three years from each of your current subscribers • For customers, LTV tells you how much you can afford to pay for maintaining and updating your customer database How to Use the Lifetime Value Number • Get e-mail budget increased and approved • Develop new tactics, cost them out using LTV (Do your calculations without spending money) • Segment subscribers by personal LTV • Find out LTV of unsubscribers • Determine what you can afford to offer to Web site visitors • Use LTV to create an acquisition plan Where Did the Numbers Come From? • Loss During the Year: Add unsubscribes and undelivers together • Total Sales Due to E-Mails: Conversion * Off e-mail sales multiplier • Total Revenue: Average order size * Total Sales due to E-Mails • Investment in Email Marketing: Total investment • Profit after investment: Total revenue – Marginal costs – Investment in e-mail marketing • Total Investment: Subscriber acquisition + replacing lost subscribers + E -Mail Sending + Database costs per subscriber Recency, Frequency, Monetary • Don’t use it all the time; figure something valuabl e that you want to communicate to your less responsive customers once or twice a year • Database marketing is meant to be profitable for buyer and seller • Recency is a powerful predictor of response  Rush of enthusiasm towards new purchase • Frequency is less powerful than recency  How important doing business with you is in the minds of your customers • Monetary is not very predictive – high spenders are important, low spenders can’t afford Loyal customers are more valuable than the average customer • Higher retention rates • Higher spending rates • Higher referral rates • Higher lifetime value • Be less expensive to serve • Buy higher-priced products or services Loyalty Programs  “What customer behaviour do you want to reward?” • Better or more customers? • High or low-spending customers • Increased sales or increased profitability? • What changes in behaviour are required to hold onto more of our good customers and lengthen their average stay with us? • Of the behaviours we have chosen as our goals, which are the most pro fitable ones we should be rewarding? Four basic means of increasing customer loyalty • Have high-quality products and services • Offer excellent customer service and support • Have a friendly and loyal staff • Provide excellent, highly personalized, relevant, and rapid communications To create loyalty-building communications • Create personalized e -mail transaction messages in HTML, and send them out quickly • Acknowledge all customer input within a few seconds, and fulfil requests within a few hours • Ask for customer preferences and modify your communications and services based on these preferences • Develop trigger messages that treat each other as an individual rather than as a member of a large herd • Thank customers for their business, personalizing the e -mails with such comments as how long they have been your customers How to Use Survey Answers • Set up a system to give you the overall results in graphic form – see if your satisfaction ratings are going up or down • Find out those things that the customer doesn’t like and fix them • Respond to all who said anything negative – convert unhappy customers into passionate ones by listening to them, correcting the problem, and tell them what you did • Store the fact of their answering the survey in the subscribers’ data • Thank all who completed survey with short e -mail saying how pleased you are that they took the time to do this and how you use their feedback Segmentation • Divide group of people into segments based on some criteria and send them all the same promotion to see how they react  Learning segmentation • Do a similar division and create a different message to each segment based on what you think or have learned will appeal to that segment  Dynamic segmentation ; valid strategy requires o Communications o Rewards o Controls o A budge o Specific goals and metrics o An organization that accepts responsibility • Action plan for dynamic segmentation o Road map showing what will happen and when o Budget for infrastructure and for segment marketing plans o Standard applicat
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