Building Bridges Reach your customers and keep them coming back

1. Building BridgesReach your customers and keep them coming back Keynote Address to the UCEA Arthur Middleton Hughes Hyatt Fisherman’s Wharf San Francisco VP / Solutions Architect KnowledgeBase Marketing

2. What KnowledgeBase Marketing Does

3. Lack of Marketing Strategy To develop a relationship program, you still have to put individuals into groups, and develop products and strategies that will keep them loyal. That, in my opinion is where companies have the most difficulty. Even when you say to them, “I can help you to identify your key customer segments.” They respond, “Well, great. But tell me, what to do with them once they are identified. How do I manage each segment?” Sciences Marketers are not yet sophisticated enough to know what to do with the information. -- Stephen Shaw - Spectrum Decision

4. Two Kinds of Database People • Constructors People who build databases Merge/Purge, Hardware, Software • Creators People who understand strategy Build loyalty and repeat sales • You need both kinds!

5. Customers today want: • Recognition • Service • Information • Convenience • Helpfulness

6. Marketing to Customer Segments Spend Service Dollars Here • GOLD Your Best Customers - 80% of Revenue Spend Marketing Dollars Here Your Best Hope for New Gold Customers Move Up 1% of Total Revenue Reactivate or Archive These may be losers

7. Compared with newcomers, Long term customers: • Buy more per year • Buy higher priced options • Buy more often • Are less price sensitive • Are less costly to serve • Are more loyal • Have a higher lifetime value

8. Retention is a measure of loyalty

9. Retention pays better than acquisition

10. Examples of Profitable Strategies • Newsletters • Surveys and Responses • Loyalty Programs • Customer and Technical Services • Friendly, interesting interactive web site • Event Driven Communications

11. Event driven communication: Ridgeway Fashions Leesburg, VA 22069 Dear Mr. Hughes: I would like to remind you that your wife Helena’s birthday is coming up in two weeks on November 5th. We have the perfect gift for her in stock. As you know, she loves Liz Claiborne clothing. We have an absolutely beautiful new suit in blue, her favorite color, in a fourteen, her size, priced at $232.00. If you like, I can gift wrap the suit at no extra charge and deliver it to you next week, so that you will have it in plenty of time for her birthday. Or, I can put it aside so you can come in to pick it up. Please call me at (703) 754-4470 to let me know which you’d prefer. Sincerely yours, Robin Baumgartner Robin Baumgartner, Store Manager

12. How the Web is changing Customer Relationships • Recognition • Reaching out • Customer service • Information • Ordering services • Building personal relationships

13. Now, this is recognition! Welcome Back, Arthur!

14. Immediate Feedback!

15. 30 seconds later: Email

16. Conclusion: the web is here • The web is now like the telephone. • It is not an option. • It is the way business is being conducted, and will be conducted • You can’t sell profitably on the web • You can help people to order services and provide super customer service

17. Where is your web shop? • In should not be a separate department. • It should be part of customer service, registration, marketing and information • It should be linked to other sites: local government, chamber of commerce, local businesses.

18. What can you do? • Insist on capturing emails. • Build and maintain a database of customers, past customers, and prospects • Make the web very, very easy to use. • Use web communications to build loyalty and repeat sales

19. What Harrah’s Casino Did • For years, Harrah’s sent regular mail to woo customers with cheap hotel rooms • Then it linked the database to the web allowing customers to book hotel rooms at a discount, capturing emails. • Sept 11, 2001 occupancy fell by 25% • Massive emails with bargain offers raised it to 100% by Sept. 20.

20. What Bank of America Did • Was spending $100 million annually on paperwork for retirement program enrollment. Changes took months. • Moved all programs to the web. • Saving about $50 million annually. • Most processes now take only a few minutes instead of months.

21. What Ryder System Did • $5.3 Billion company, terrible web site • 10 clicks to track a shipment. No search mechanism. • Revised site. Now each shipment is only one click away. Super fast searches. • Result: many new customers who need to track their shipments every day.

22. What RCI is doing • Time Share Marketing Company • Call center cost $48 million per year. • Revamping web site to make it better than a live operator • Result: saving will be $17 million per year.

23. Why use the web? • You save $6 every time a person orders on the web instead of the phone or mail • You can build relationships with communications and provide more info on the web than you can in a phone call • You can use the web for confirmation of registration, and reminders that would be prohibitively expensive any other way

24. Eliminate the hassle • Aaron: Here are the books needed for Marketing 101. To have them sent to you right away, click here. • Aaron: Here is your schedule for your courses this semester together with a map. If you need a parking permit, clickhere.

25. Thank you letters • Send a personal letter to everyone who has registered. • Thank you, Arthur, for registering for Marketing 101. • Email or Hard Copy? Test half one way and half the other. Next term see if there is a difference in the sign up rate • Is the difference enough to pay for the cost?

26. Personal Profiles • Why are they taking a course? What is their life goal? How do you fit in to their future plans? • Every student should complete a web personal profile. • Then you use the profile in all future communications.

27. How to get the information • Use the web. • Customers do all the work. • It costs you nothing to receive it and store it.

28. Completing the personal profile Welcome, Aaron. Can you update your personal profile here….? Thank You Email Used in all communications Database

29. Name, address, email Age, income, occupation What courses has she taken? Who paid for them? Her life educational plan: long range goals Family situation Why is she taking courses? What are her objectives? Next best course for her What data to keep

30. The Mathematics of email • Even at a 1% response rate, email marketing is very powerful.

31. Getting them to use the web • You know it will save you $10 to $20 person per year. • So you can afford to incentivize people to use the web • Registration on the web--$10 cheaper • Buying books on the web, no shipping costs.

32. Customer Segmentation • Use the profile to create customer segments: • Students looking for a degree • Retired looking for something to do • Retraining for a new job • Your communications should reflect the segment and their goals. • Create segment managers

33. Business Rules • The database is ideal for implementing business rules. You must create them. • Set up the database to send automatic communications: • Thank you • Time to register for a new course • Update your profile • Schedule changes • Resell your used books

34. Reaching the right audience • Profiling your existing customers • Where do they come from? • What do they do? • Why are they attending? • How well off are they? • What do they want to do next? • Who is paying? Them or the boss? • How old are they?

35. Getting lists • 80% of the success of any promotion is the audience. (Not the copy, not the timing) • Half of all American households never buy anything by mail. • So, a mail-responsive list will do twice as well as a compiled list.

36. New Movers • People who move are 3 – 4 times more likely to respond than people who have not moved recently. • Pay for and use a list of new movers into your community.

37. Recent attendees • Someone who has just enrolled for a class is more likely to respond than anyone else. • When to approach them? Now. Don’t wait.

38. Use tests to see what works • Test a personal letter vs. a course catalog • 10,000 get a personal letter or email • 10,000 get a catalog • If the letter is done well, it will out-pull the catalog by a significant percentage • Don’t take my word for it, you can test it yourself.

39. How to conduct tests. • Put a unique code on each catalog and each email. • When they register, ask for the code. • Use your database to match registrants with those sent catalogs and emails. • You can become very accurate in your promotions

40. Conclusions • We are entering a new age of customer communications. • This will be a very profitable age for UCEA members. • Make the web the center of your registration process. • Make email your primary customer communications vehicle.

41. Books by Arthur Hughes From McGraw Hill. Order at www.dbmarketing.com Get slides: arthur.hughes@kbm1.com