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Drawer Code 39 in Software Copyright 2003 by Arthur Middleton Hughes. Click Here for Term of Use.

Copyright 2003 by Arthur Middleton Hughes. Click Here for Term of Use.
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wastes millions of dollars on an impossible quest. What does work is database marketing, which is essentially aimed at divining the behavior of customer segments and designing marketing programs for those segments. This process is economically possible and can be highly successful. Database marketing is incremental. Database marketing is a channel for exchanging information with customers. For database marketing to work, there have to be other channels that are delivering the basic sales: mass marketing, retail stores, catalogs, interactive Web sites, salespeople, distributors, agents, outbound telemarketing, or direct mail. What database marketing does is make incremental improvements in customer retention rates, response rates, referrals, cross sales, frequency of sales, and average order sizes. Database marketing builds relationships with customers that bind them to your company and your brand. Done right, it makes customers happy and gives them a feeling of identi cation with you, your products, your company, and your employees. It helps prevent defections. The Internet has enabled database marketing to deliver on its promises. The idea was always to use the database to communicate with customers and make them happy. But direct-mail and telephone communications are so expensive, in relation to the good that they do, that they can be used only sparingly. Email to customers is almost free. It is instant. It can be highly personalized, delivering up-to-the-minute information. It is the best thing to hit database marketing in the last 20 years. The Web is not a selling medium; it is an ordering medium. An entire industry based on Web advertising and sales was created, wasted hundreds of billions of dollars, and then died within 5 years. What did we learn from this The Web is a passive medium, not an active one like TV, radio, telemarketing, direct mail, or retail stores. It is not a very powerful advertising medium. People will buy products and services over the Web, but they rst have to be stimulated by something else: catalogs, direct mail, or mass marketing. As an ordering medium, the Web can be superb. It cuts the cost of a customer contact by more than $3. It can be tied to a database so
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that each customer sees something different, customized for her, when she clicks on a site. But she is unlikely to click on that site without some outside stimulus. People like communications. The heart of database marketing is not the database but the customized and personalized communications with customers that are created using the database. Communications work. They keep customers from defecting. They make people happy (and angry as well). They help to sell goods and to increase loyalty, referrals, cross sales, order frequency, and order size. Without an active and creative communications program, the database is worthless. Everything in database marketing can and should be measured. Whenever you design a new strategy, program, or communication, you must set aside a control group that does not get the Gold card, communication, newsletter, offer, discount, premium, or special service that is being extended to your test group. This is the only way for you to know and prove to management that your expenditures for database marketing are producing a positive return on investment. If you are not constantly testing new ideas, setting aside control groups, and measuring, you are not doing database marketing. Lifetime value is the key measurement technique for database marketing. You must learn how to compute customer lifetime value and use it in evaluating and designing your marketing strategy. LTV is a forward-looking concept that includes spending rate, discount rate, retention rate, referral rate, product costs, and marketing expenditures. It is the only way to know how much you should spend on acquisition and retention. It is an essential step to use in getting your marketing budget approved each year. Database marketing is not about discounts. Discounts are used in mass marketing campaigns, and they work. They don t work in database marketing. Why not Because the basic idea in database marketing is to build a close personal relationship with each customer that is based on quality, service, friendship, loyalty, and communications. You would not give a neighbor $5 for helping you carry a chest of drawers up your stairs. It would be an insult. Instead,
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