Roles of Direct Marketing and Relationship Marketing
Let's take a look at the traditional definitions of direct marketing and its latest incarnation, relationship marketing. The Internet provides exciting marketing communication opportunities using these methods to customize presentations and exchange information with end users. Looking at our favorite Web sites also demonstrates the direct communication methods that the Internet supplies.
We usually think of direct marketing as junk mail and dinner-time telemarketing efforts, but the methods are much more in depth than we may realize. Simply put, direct marketing involves direct sales to a buyer by a seller. More important, direct marketing generally involves at least five distinct elements in any program or effort:
- Promotional materials
- Databases
- Analysis
- Marketing with offers (response driven)
- Fulfillment
Promotional materials carry the marketing message to the end user. They may be mail packages, catalogs, phone scripts, fax letters, postcards, or e-mail messages. Any material, from four-color glossy to spoken words and even television infomercials, can be considered the promotional materials of a direct marketing effort. These materials are then deliverd to the prospect or customer using some method. The script being read by the telemarketer at the other end of the phone during dinner is an example of direct marketing promotional material. The method of delivery in this case is outbound telemarketing.
Databases are electronic information storage and manipulation files. They are used at a basic level to provide contact information for the promotional materials to be forwarded to. A simple list of addresses for a mailing or names and phone numbers for a telemarketing effort can be considered a direct marketing database. Real direct marketers, however, use databases over time to create contact, prospect, and customer files for ongoing business development and customer service efforts. Every communication to and from a prospective or current customer is recorded. This is why modern direct marketing is sometimes called database marketing. The telemarketer called you during dinner because you are included in a database of information. Your contact information was probably purchased from a database company that specializes in consumer home contact information.
Direct marketers analyze database information before, during, and after each program they run to better use resources and further target offerings to prospects and customers. This is how direct marketing is developed and how it is measured. Using the telemarketing example, you are being called because you have demonstrated your willingness to do whatever the telemarketer is asking you to do. You may be a well-qualified prospect. Being a responsible credit card customer is one reason you get called during dinner with offers for more credit cards.
Whatever the reason you are contacted, that reason was determined by a direct marketer. And you were chosen to receive that call through analysis of a database. If you do speak with the telemarketer and sign up for the credit card, then you have advanced from qualified prospect to customer. Later, when the program is analyzed for success, the costs to run the program and the number of new customers can be compared and evaluated. Though those telemarketing calls may seem random, and sometimes they are, a company is paying for the call and the caller. A company can't afford to call every person who has a phone. You are being called because a database was analyzed at some level and your name and contact was provided as a prospective customer.
That call almost always involves an offer. And an offer is included in direct marketing communication to solicit and motivate response. Response is a communication action taken by the recipient of the offer. Offers work on the age-old psychological principle of "What's in it for me?" Offers can be anything included in a marketing message that sweetens the deal enough to solicit response. They might be free gifts, special pricing, time-sensitive discounts, and standing offers like money-back guarantees and risk-free trials. Direct marketing always contains some form of call-to-action that can be responded to. In the telemarketing call, the offer is usually a discounted finance charge and an introductory interest rate. You may have been offered a special credit card carrying a particular set of benefits important to you based on some type of affinity, like an alumni association or frequent flyer program. This offer was developed based on deeper analysis of your contact or customer database file. The response is verbal during the call.
Once a response is captured by a direct marketer, some type of fulfillment is executed. If a product is purchased directly from a catalog, then fulfillment involves charging the cutomer's credit card account and shipping the appropriate product to the correct address. A request for information is fulfilled in the appropriate manner. A credit card account is created and opened and the cards are shipped to the new customer. A record of this transaction is recorded in the direct marketing database for analysis and later use.
Use of these methods over time is now defined as relationship marketing. In a relationship marketing model, every communication between the customer and marketer is recorded in the database. And every department in a company has access to that same information, from sales to customer service to shipping and accounts receivable. In this type of marketing every person or department that has contact with the customer shares the same information. This creates a higher level of customer service, satisfaction, and efficiency in every interaction with the customer. Greater use and sharing of information helps companies build and keep relationships with their individual customers.
As this information is captured and analyzed, special offers are being developed that are specifically targeted to the individual based on his or her demonstrated needs and buying history. This process builds a relationship between buyer and seller. Buyers get what they want, when they want it. Sellers deliver what is wanted at the right time. Both participants are engaged in a positive commercial relationship.
This customization is very successful in the marketplace, and it has been said that all marketing will eventually become direct relationship marketing between individuals and companies. Customization of marketing messages involves traditional elements, like personalization of promotional materials. But more important, it includes offers of products and services specifically designed to meet the wants, needs, and desires of the customer involved. These offers can be delivered in a customized presentation using personalization and targeted solicitation.
The Internet and Web are excellent communications methods for all of these aspects of direct and relationship marketing. The dynamic aspect of this media also makes individual customization of presentations available and powerful. Using the Internet as a relationship marketing tool incorporates the five elements of direct marketing to build relationships over time and deliver customized presentations and marketing messages to individual users.
Promotional materials.The Web can be used as an interactive promotional medium displaying text, graphics, and any other media available that is practical for communicating to prospects and customers. E-mail can serve the same role as traditional mail and phone communication. It could be said that every Web site is promoting something to some audience.
Databases.The nature of this medium, based on computer technology, provides the marketer with immediate interactions between users and databases of information. Information can be captured and manipulated instantaneously and utilized to provide solutions to wants, needs, and desires. A perfect example is the availability of Federal Express package tracking on the Web.
Analysis.Again this can be done immediately to provide value for the end user. Information can also be captured for later review, reporting, and improved targeting of information. This process is done automatically and behind the scenes of a Web site.
Marketing with offers (response driven).Successful Internet marketing involves the use of targeted offers. In any situation on the Web special offers can be made to solicit immediate response. And the Web provides an immediate, interactive response device that can capture and exchange information instantly. Offers can be individual for particular customers or specific products or services, such as special discounts for certain airline tickets purchased on-line. They can be available only on the Web or otherwise. Many heavily discounted airline offers can't be purchased any other way. Some offers in traditional media can be further strengthened by adding a Web response option. A recent mailing offered frequent flyer miles for completing an airline survey. The number of miles awarded was increased if the survey was completed on the Web.
Fulfillment.In some situations, including software, information products, and services like on-line trading transactions, fulfillment can be completed immediately over the Internet. Many research reports and software tools can be downloaded immediately after purchase. Internet stock trading is another example. Other products and services require fulfillment through traditional channels, including shipping of Web-based catalog purchases. But parts of the process can be automated using the Web. Credit card processing can be facilitated and fulfillment information can supplied to the customer. Order status (i.e., processing or back order) can be displayed on demand and an e-mail message can be sent when a package has been shipped.
As all of these processes are completed over time, an individual profile of each customer and his or her interactions over the Internet can be compiled. This information can be made available internally, inside the company, using a Web interface for facilitation of customer interactions. It can be added to existing customer databases and used in other media as well.
Most important, these compiled information profiles can be used to create customized presentations for each customer, further enhancing the customer/marketer relationship. As the profile grows, with more information added during each interaction, the marketer can build customized interfaces and offers that are specifically targeted to the customer. We'll look at examples of this activity in the following exercises.
We'll also start looking at the simple mechanics of the information exchanges that can take place over the Web. Information is solicited by marketers and supplied by the end user. Information captured by the marketer can then be used to build marketing relationships and fulfill wants, needs, and desires.
Some of these concepts also become apparent when we look at our personal favorites on the World Wide Web. Our favorite Web sites usually supply something we want-either information, products, or services. Looking at these sites helps us to start thinking about targeting Web presentations to audiences. And that is the subject of the next chapter.
Exercises
Understand the Roles of Direct Marketing and Relationship Marketing
| a) | Identify an example of direct marketing in your personal or professional life. __________________________________________________________ __________________________________________________________ |
| b) | Define the elements that make up direct marketing as a marketing technique. _________________________________________________ _________________________________________________ |
| c) | Describe an ongoing business relationship that you participate in. __________________________________________________________ __________________________________________________________ |
| d) | Try to define relationship marketing as a marketing technique. __________________________________________________________ __________________________________________________________ |
Understand the Concept of Customization
This exercise involves returning to the amazon.com Web site that you visited in Exercise 1.1.2. If you didn't actually leave, please do so at this time. You're now returning as a customer.
Point your browser back to www.amazon.com.
| a) | What do you notice that is different from your last visit? __________________________________________________________ __________________________________________________________ |
A number of suggestions will be made by the Web site for additional titles you may want to check out. Do so.
| b) | Record what you notice from a marketing perspective about this experience. __________________________________________________________ __________________________________________________________ |
| c) | What other elements of the Web site presentation are customized to you as a customer? __________________________________________________________ __________________________________________________________ |
| d) | How does this affect you emotionally as a consumer? Do you think you'll return here again to complete the same type of transaction? Why? __________________________________________________________ __________________________________________________________ |
Understand the Simple Mechanics of Internet Marketing
Thinking about the whole book buying experience, please complete the following questions:
| a) | What information was supplied by the Web site? __________________________________________________________ __________________________________________________________ |
| b) | What information did the Web site capture from you? __________________________________________________________ __________________________________________________________ |
| c) | How was the information used by the Web site initially and later during your second visit? __________________________________________________________ __________________________________________________________ |
| d) | What types of Internet communications technology were involved in these transactions? __________________________________________________________ __________________________________________________________ |
Identify and Evaluate Your Favorite Web Site
Referring back to your Internet-connected computer, this next lab exercise is probably simplified by the use of your bookmark file in your Web browser.
Point your Web browser to your favorite Web site.
| a) | What is it and why is it your favorite Web site? __________________________________________________________ __________________________________________________________ |
| b) | What information do you regularly retrieve from this Web site? __________________________________________________________ __________________________________________________________ |
If this Web site is not bookmarked by your browser, do so now. We'll be referring to it again.
Exercise Answers
Answers
| a) | Identify an example of direct marketing in your personal or professional life. __________________________________________________________ __________________________________________________________ |
| Answer: | Almost every piece of mail you receive at work and home is an example of direct marketing. For discussion purposes, let's talk about my favorite direct marketing company. L.L. Bean is a consumer-oriented catalog marketer. |
| b) | Define the elements that make up direct marketing as a marketing technique. _________________________________________________ _________________________________________________ |
| Answer: | Most people recognize the basics of direct marketing-that it involves direct communication between marketers and customers-as opposed to retail marketing, which involves physical locations, and sales representation, which involves a personal conduit between parties. The Web is a direct marketing medium. Looking at traditional direct marketing can help us prepare for Web marketing. The definable elements of direct marketing include promotional materials, databases, analysis, marketing with offers, and fulfillment. L.L. Bean distributes a variety of four-color promotional catalogs. They use advanced database techniques to develop and service customers through regular mailings of these catalogs. Analysis of response and purchasing records by the people at L.L. Bean leads to further targeting of materials and offers to appropriate audiences. If I purchase outdoor equipment, I receive the outdoor equipment catalog. If I purchase housewares, I receive the seasonal housewares catalog based on analysis of my responses. The long-time offer from L.L. Bean is a 100% no questions asked guarantee. If you buy something from them you can return it at any time for a replacement or for the money you spent. I had a friend who returned a broken pair of sunglasses years after purchase and was refunded the amount the sunglasses were selling for when she returned them. This offer has worked for L.L. Bean because purchasers have much lower risk when buying. L.L. Bean also offers discounts, special shipping, and targeted products. Fulfillment of catalog requests is efficient, and the shipping of purchased goods is equally professional. L.L. Bean is a successful direct marketing company. We can learn much from looking at L.L. Bean's use of these techniques and how they can be adapted in Web marketing and communication. |
| c) | Describe an ongoing business relationship that you participate in. __________________________________________________________ __________________________________________________________ |
| Answer: | Your answers will vary. Following is mine: Many of my own business relationships are based on mutually positive experiences. I get something I need, and the company involved makes it worth my while to keep the business relationship going. I drive a car and need gasoline. I regularly purchase Mobil gasoline because Mobil provides a direct payment system that is very convenient. In addition, Mobil offers a loyalty program that gives me discounted ski tickets after purchasing a certain amount of gasoline. In addition to getting something I need, I also get good service and something additional that I want, which gives me incentive to keep the relationship going. My business relationships are similar. I use list brokers and a mail house for direct marketing of the Merrimack College Webmaster Training Program. After purchasing a new list from a broker, the broker sent me a fruit basket at work. In addition to providing a good product at a competitive price and delivering it in an efficient manner, the vendor also did something to enhance a personal relationship. Who do you think I'm going to call the next time I need a list? I use the same mail house because the vendor is a nice person who does a good job and provides excellent customer service, doing extra work if needed to complete projects. These situations all involve positive relationships beyond the traditional buyer and seller model. Web technology allows us to enhance traditional marketing models and build relationships. |
| d) | Try to define relationship marketing as a marketing technique. __________________________________________________________ __________________________________________________________ |
| Answer: | Relationship marketing is an advanced model of direct marketing using the previously discussed elements. The basic premises of relationship marketing involve capturing, analyzing, and sharing customer-supplied information between all parties within a company. Information is captured and stored in every single customer communication initiated by the buyer or seller. This process further involves developing and executing customized marketing and customer service programs for individual customers based on this information. Let's look again at the L.L. Bean example. When I call L.L. Bean to order some new flannel pajamas for a gift, the sales rep pulls up my entire customer history. The representative knows immediately what pajamas I bought last year, the gift recipient information I previously supplied, my method of payment, and shipping information. The phone rep is able to suggest products based on previous history to complete the transaction efficiently. This simplifies the buying process and builds an ongoing relationship between us. If I call with a question, the customer service representative knows all the same information. This applies to billing or shipping questions as well. This type of marketing communication can be duplicated over the Web. The Web also provides further enhancement by allowing buyers to initiate, control, and benefit from the communication. |
Answers
Point your browser back to the same Web site you just visited.
| a) | What do you notice that is different from your last visit? __________________________________________________________ __________________________________________________________ |
| Answer: | The following summarizes my account of what is different. Upon return, I now have a customized greeting on the home page of the merchant. The merchant is now building a relationship with the customer. And relationship marketing is the key to success in today's highly competitive business environment. |
A number of suggestions will be made by the Web site for additional titles you may want to check out. Do so.
| b) | Record what you notice from a marketing perspective about this experience. __________________________________________________________ __________________________________________________________ |
| Answer: | Your answer will vary. Here's what my experience was like. Clicking on the link to book recommendations brings up a whole section that provides further customization of the presentation I see as a consumer. This is smart Web marketing. The Web site continuously profiles me as a customer in a number of ways. By comparing my purchases with other customers who have purchased the same titles or products, the site gives me additional choices based on patterns in customer records. If customers have similar tastes, demonstrated by purchasing the exact same thing, maybe other matches will work also. The site gives us the option to provide information about books we own and about our interests. And we can tell the site what we already own or don't like. Every piece of information we give to the site is captured and used to further customize our presentation and add to our relationship with the merchant. Our goal as Web marketers is to harness these same concepts when building on-line marketing and communication efforts. |
| c) | What other elements of the Web site presentation are customized to you as a customer? __________________________________________________________ __________________________________________________________ |
| Answer: | After completing the account setup process, our shipping information is stored and brought up when necessary. This can be changed if needed. The system is extremely easy to use, and purchasing requires only a mouse click. When an end user wants to purchase something, doing so is extremely simple and immediately gratifying. |
| d) | How does this affect you emotionally as a consumer? Do you think you'll return here again to complete the same type of transaction? Why? __________________________________________________________ __________________________________________________________ |
| Answer: | While I can probably safely assume that you had a positive experience like I did, your answer here will obviously vary. I greatly enjoyed this on-line book-buying experience. I will certainly return when planning to purchase books, as this on-line merchant completely fulfilled my wants, needs and desires. The process is simple, quick, hassle-free, saves money, adds value to the products, and provides immediate results. Granted, I still enjoy retail shopping at bookstores and will continue to support my local book merchant. But if I have an immediate need and not much time, this Web marketing effort will garner my business. |
Answers
Let's take a look at the mechanics behind this type of marketing communication.
| a) | What information was supplied by the Web site? __________________________________________________________ __________________________________________________________ |
| Answer: | The Web site supplied a whole range of presentations involving selling products and driving transactions to do so. The majority of the information was text and was supported by presentation graphics and minimal product representation. |
| b) | What information did the Web site capture from you? __________________________________________________________ __________________________________________________________ |
| Answer: | The Web site captured contact, shipping, and payment information over a secure, encrypted connection. Relationship-building information was captured using a number of forms and drill-down techniques. In addition, this Web site electronically coded my client browser software by setting a cookie on my hard drive. This software transaction individually identifies each customer and allows the marketer's server to present customized presentations each time the client logs on. A cookie is actually a short text code written into a file on the client computer by the server computer. Each code is distinct making the client computer discernable by the server computer in each ensuing interaction. This electronic identity badge also provides a system to track the activity of the client over time and helps build relationships. |
| c) | How was the information used by the Web site initially and later during your second visit? __________________________________________________________ __________________________________________________________ |
| Answer: | When I filled out the initial account information, the Web site immediately customized by presentation and provided opportunities to add information in the recommendation process. When I returned to the site the server read my cookie file, accessed my customer account information, and served Web pages with the appropriate customization. |
| d) | What types of Internet communications technology were involved in these transactions? __________________________________________________________ __________________________________________________________ |
| Answer: | The technology involved in these transactions was the same two client-server-based applications available to us as Web marketers. World Wide Web servers and client browsers played a primary role for presentation and interactively between parties. E-mail served a secondary role to confirm the purchase transactions. The power behind the scenes comes from the use of database technology for the storage, searching, and customized presentation of product information. Web pages produced and supported by database technology also capture customer information to complete the transactions and further customize the interactions. In this situation and others on the Internet, the Web interface allows individual customers and other end users to access, manipulate, retrieve, and benefit from databased information. They can do this at their convenience in situations where they have control of the interaction and receive an immediate positive response. In addition, these database-driven interactions are more cost effective and more productive than many traditional communications channels. Database-driven Web communication is an achievable goal for any Web marketing and communication effort. |
Answers
Point your Web browser to your favorite Web site.
| a) | What is it and why is it your favorite Web site? __________________________________________________________ __________________________________________________________ |
| Answer: | Your answer will vary. I consider the Cable News Network site (cnn.com) to be my favorite Web site. I originally studied journalism in college and ever since have been kind of a news junkie. I like to know what is going on nationally and in the high-tech business sector. I also like the space coverage and the random features available on that site. Most important, a weather report and forecast is also available based on my hometown zip code. Your favorite site probably involves a personal interest. |
| b) | What information do you regularly retrieve from this Web site? __________________________________________________________ __________________________________________________________ |
| Answer: | Again, your answer here will vary. Here's mine. I do a lot of outdoor stuff when I have the time, and knowing the immediate forecast is helpful in the inconsistent weather of New England, where I live. This is quite useful for me personally, and I go to my favorite site a couple of times a week. I'll bet that you access your favorite site at least weekly for some type of information you either want or need to see. I have this resource bookmarked, and with one mouse double click I can get current weather conditions and a four-day forecast. I like doing so. It makes me happy, and I don't mind taking the action to retrieve this information that I value highly. Marketers and communicators can leverage such relationships using the Web as a communications tool. |
Self-Review Questions
In order to test your progress, you should be able to answer the following questions:
| 1) | Which are technologies used in creating customer relationships at amazon.com?
|
| 2) | Which are the elements of direct and relationship marketing?
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| 3) | Which is the reason you access a particular Web site regularly?
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Quiz answers appear inAppendix A, Section 1.2.
EAN: 2147483647
Pages: 87
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