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should not be a way to give away coupons. It should be a way to avoid having to give away coupons because the customers are so happy with the communications and services they are receiving that they will ignore the deep discounts of the competition. Treating all customers alike. Some customers are more loyal and profitable than others. Your database should identify these loyal customers, and your marketing strategy should work to retain them and to encourage others to emulate them. You should also do something to reduce the number of worthless customers on your rolls. If you treat all customers alike, you will never improve your customer mix. A retention budget of $1 million divided by 1 million customers will do very little to change anyone s behavior. Divide that $1 million among your 100,000 most valuable customers, and you have $10 per customer per year to reward loyalty and encourage retention. You may make some progress. Some company managements do not yet understand this.
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Database marketing is a great success story. During the last 20 years, thousands of creative and skillful people have developed and applied new methods for using databases of customers and prospects to acquire customers, build loyalty, and increase sales. These methods are explained in detail in this book. But database marketing is more than a success story. It is a philosophy. Looked at from the customer s point of view, database marketing is a way of making customers happy of providing them with recognition, service, friendship, and information, for which, in return, they will reward you with loyalty, reduction in attrition, and increased sales. Generating pro ts by creating genuine customer satisfaction is the goal and hallmark of satisfactory database marketing. If you are doing things right, your customers will be glad that you have a database and that you have included them in it. They will appreciate the things that you do for them. If you can develop and carry out strategies that bring this situation about, you are a master marketer. You will keep your customers for life, and you will be happy in your work. You will have made the world a better place to live in.
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Getting customers to respond to you on the Web Creating premier pages for your best business customers Providing customer service information free on the Web Determining the lifetime value of your customers and using it to evaluate your marketing strategy Determining the next best product for each customer and putting it in the database for your employees to see and use Learning the retention rate for each of your customer segments and working to improve it Sending email communications to customers who have asked for them Using cookies to recognize and greet customers when they come to your Web site Using risk/revenue analysis to concentrate your marketing resources on customers whose behavior you need to modify
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Building a huge data warehouse for the purpose of building pro table relationships with your customers Treating all customers alike Failing to set up control groups Failing to test any new idea on a small group rst Failing to use the Web as part of your database communications program
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1. Which of the following has been a failure in database marketing since 1985 a. RFM b. The Web
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c. Treating all customers alike d. Email e. Direct mail In the case given in this chapter, it was suggested that the increased retention was due to a. Customer communications b. Advanced software c. CRM d. More loyal customers e. Cookies on the Web What is considered to be a good average response rate for email communications a. 30 percent b. 20 percent c. 2 percent d. 1 percent e. 0.4 percent What is the most important factor in database marketing success a. Software b. A data warehouse c. The Web d. Marketing strategy e. CRM In risk/revenue analysis, the marketer concentrates most on a. Those customers in priority A and priority B b. The lifetime value of priority B customers c. The churn model d. The lifetime value model e. The data warehouse What s wrong with treating all customers alike a. It s undemocratic. b. The resources available to devote to the best customers will be too small. c. Even worthless customers deserve a break. d. It is impossible to segment customers by behavior. e. Customers would not like it.
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