Relationship Marketing by any other name

1. Relationship Marketing by any other name • -most commonly known as CRM (Customer Relationship Management) • -also known as • One-to-One Marketing • Permission Marketing • Customer Intimacy • Communities of Commerce • focus on understanding and responding to the customer • - database software and the internet are a means to this end

2. -maintaining long-term customer relationships increases profitability -costs less to serve existing customers (don’t have to spend money to identify and persuade) -some evidence that established customers will pay higher prices than new customers (reward program with superior customer service helps take customer’s eyes off price) -strong (and trusting) buyer-seller relationship increases likelihood that customer will disclose personal information which makes it easier to target and lowers cost High Profitability Low Short Long Customer Lifetime

3. Moving Through the Relationship Stages Customers can advance through the stages in several different ways Awareness Exploration/ Expansion Commitment Dissolution -first visits Attraction - perceive value through better function, prestigious brand and emotional connection Trust - “currency of the web”-Brand-established brand or partnered brand (ex. IBM Business Partner, Microsoft Certified)-Security and Privacy (ex. Verisign credit card protection) -Technology-Order FulfillmentCustomer Service and Support -registration Emotional - ex. Harley-Davidson and Apple lifestyle and evangelism -Communication - ex. Yahoo email and chat-also related to community and sociability -Customization-customers who take the time to customize a home page display a high level of commitment -customers might switch to better or different service -purchasing decreases over time -inconsistent service -customer outgrows service (ex music or video games) -bad behaviour (cheating, meanness) -no communication yet -largely through traditional awareness-generating marketing levers (ex. advertising) -simple web site address is easier to remember (ex. monster.com) -maintain consistency between mother brand and web brand (ex. bmw.com, sears.com)

4. Four Key Stages of Customer Relationships Awareness Exploration/ Expansion Commitment Dissolution EBay encourages browsing before registration for the purpose of exploration No. 1 general auction service on the Internet Users can stop buying or selling at any time EBay offers (1) community, (2) individualization, and (3) interaction

5. Level of intensity determined by: • Frequency of connection (# of site visits) • Scope of connection (# of points of contact) • Depth of contact (thoroughness of site use) Level of Intensity Intensity Awareness Exploration Commitment Dissolution Stages of Customer Relationships

6. The customer relationship stages are: • Awareness — The customer recognizes that the firm is a possible exchange partner, but has not initiated any communication with the firm or purchased its products • Exploration — The customer considers the possibility of exchange, gathers information and perhaps initiates trial purchases • Commitment — The parties in a relationship feel a sense of obligation or responsibility toward each other • Dissolution — This stage signals the separation of buyer and seller — the loss of connection • The Internet allows firms to interact and to individualize in powerful ways. As a result, firm-customer relationships can be formed and can progress very quickly • Firms don’t always want a relationship with all customers . . . and vice versa

7. Relationship Stages Categories of Levers Branding

8. Taking full advantage of the 2Is can move users through the customer relationship stages much faster than traditional media. Individualization Interactivity • Allows consumers to specify preferences • Facilitates relationship building through two-way communication • Allows tracking of consumer response to marketing communications • Individual controls information flow • Allows more targeted communications • Individualized marketing communications are more relevant to the consumer Communication

9. The 2IsStreamline Advancement Through the Stages One Seamless Experience • Personalized Website • Permission e-mails • Individualized offerings Banner Ad(to promote awareness) Website 2Is 2Is User can set up the webpageaccording to personal preferences,register for e-mails, give feedback,or make a purchase User clicks on bannerto find out more Commitment Awareness Exploration

10. Online and Offline Levers-all points of contact with the firm OutdoorAdvertising (Billboards) Sales force/Face-to-Face Radio Public Relations Yellow Pages Telemarketing Television Offline Brochures Direct Mailings Newsletters Magazines Newspapers Point-of-Purchase Displays Customer Service -can help move customer into committment Sponsorships Websites Personal Websites Wireless Devices Banner Ads Interstitials -between pages; includes pop-up windows -strong brand recall and better click throughs than banners Online E-MailMarketing Rich Media Dynamic Ads Classifieds & Listings Search Engines Interactive Television Personal Mass

11. Profiles of Online Media Types

12. Internet Ad Terms Ad Views (Impressions) • Number of times a banner ad is downloaded to a user’s browser and presumably looked at Click-Through • Percentage of ad views that are clicked upon; also “Ad Click Rate” CPC(Cost-per-Click) • Formula used to calculate what an advertiser will pay to an Internet publisher based on number of click-throughs a banner generates CPM • Cost per thousand impressions of a banner ad; a publisher that charges $10,000 per banner and guarantees 500,000 impressions has a CPM of $20 ($10,000 divided by 500) • Measurement recorded in server log files that represent each file downloaded to a browser; since page design can include multiple files, hits are not a good guide for measuring traffic at a website Hit Unique Users • Number of individuals who visit a website in a specified period of time; requires the use of registration and cookies to verify and identify unique users • A series of requests made by an individual at one site; if no information is requested for a certain period of time, a “time-out” occurs and the next request made counts as a new visit — a 30 minute time-out is now standard Visits

13. Six Steps of the Communication Process Identify the Target Audience Step 1 Determine the Communication Objective Step 2 Develop the Media Plan Step 3 Create the Message Step 4 Execute the Campaign Step 5 Evaluate the Effectiveness of the Campaign Step 6

14. A Process for Defining Media Choice and Mix Communication Criteria Media Criteria Choose Media Mix Allocate Spending Tie Back to Overall Plan • Behavioral objectives • Available spending • Customer segments • Ability to further behavioral objectives • CPM • Ability to reach target segments • Direct mail, Internet, broadcast, print, point-of-sale, etc. • Allocation of spending across media mix elements and time periods based on relative priority • Tie media plan back to communications plan (e.g., make sure the media plan will drive the trial or awareness required)

15. Exhibit 9.13: Exploring the Levers Across the Relationship Stages Awareness Exploratory /Expansion Commitment Dissolution • Television, iTV • Magazines and newspapers • Radio • Yellow pages • Billboards / outdoor advertising • Banner ads • Television, iTV • Magazines and newspapers • Radio • Rich media ads and dynamic ad placement • Website • E-mail • Direct mail • Telemarketing • Customer service • Sales force • Terminate marketing • Website • Personalized pages • Search engines • Listings • Classifieds • Permission e-mail • E-mail • Permission direct mail • Direct mail • Telemarketing • Customer service • Sales force • Public relations • Sales force

16. Communication — Conclusion • Effective marketing communications must be integrated and work together with synergy, and they must be consumer-centric • The communication marketing levers include various communication types that can be organized into the following categories: mass offline, personal offline, mass online, personal online • The communication process involves six steps: 1) Identify the target audience, 2) determine the communication objective, 3) develop the media plan, 4) create the message, 5) execute the campaign and 6) evaluate the effectiveness of the campaign • Specific levers can be applied that are appropriate for each relationship stage