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DO YOUR FRIENDA FAVOR
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Executive Summary MISSION
Create an integrated marketing campaign targeted to DIRECTV customers in the US to increase participation in the “Refer a Friend” program.
OPPORTUNITY DIRECTV is in a great position to increase referrals because of four key factors:
1. LARGE CUSTOMER BASE2. BEST CUSTOMER SERVICE3. RICHEST REFERRAL AWARD AMONG COMPETITORS4. BROAD CHOICE OF PLANS AND PRICES
Through primary and secondary research we have uncovered various barriers to referral and to switching TV providers including social stigma for the referrer, misleading prices, and cancellation fees for the referee. Our proposal puts forth a creative strategy to overcome these barriers along with alternate referral program offers that can increase referrals.
MARKETING STRATEGY Test new rewards offers against the DIRECTV control during a Q1 test period using TV spot rotation and direct mail to selected segments of the subscriber base. Rollout the winning offer with the winning direct mail creative in Q3 to capitalize on the best season for referrals. Winners will be determined using a cost per referral metric.
MEDIA STRATEGY Reach DIRECTV subscribers who are most likely to participate in the Refer a Friend program using all propietary DIRECTV direct and interactive channels including TV, Direct Mail, Website, Billing Inserts, and Social Media properties.
CREATIVE STRATEGY Get rid of the social stigma associated with referring and start the conversation. Invite subscribers to DO YOUR FRIEND A FAVOR by helping them cut ties with their current cable provider.
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Research Findings Based on what we’ve learned, we believe that DIRECTV is in an excellent position to increase referrals because of these four factors: 1. LARGE CUSTOMER BASE 2. BEST CUSTOMER SERVICE 3. RICHEST REFERRAL AWARD AMONG COMPETITORS 4. BROAD CHOICE OF PLANS AND PRICES
1. LARGE CUSTOMER BASE In 2014, DIRECTV’s US subscriber base made up 23.5% of the Pay TV market, coming second to Comcast which has 22.6 million subscribers and 26.3% of the market. In the satellite TV market DIRECTV is the leading provider. DISH has almost 30% fewer subscribers than DIRECTV.
SATELLITE VS CABLE MARKET SHARE COMPARISON
PROVIDER SHARE # OF SUBSCRIBERS (IN MILLIONS)
Comcast 26.30% 22.66
DIRECTV 23.50% 20.35
Dish 16.30% 14.05
TWC 12.80% 11.01
AT&T U-verse 6.80% 5.83
Verizon FiOS 6.30% 5.42
Source: Respective Company’s 2014 Annual Reports
2. BEST CUSTOMER SERVICE CUSTOMER SATISFACTION FOR DIRECTV IS HIGH NATIONWIDE According to the 2014 American Customer Satisfaction Index, DIRECTV is ranked #1 in Pay TV Providers tied with AT&T. DIRECTV’s biggest competitor, Comcast, has one of the lowest customer satisfaction ratings. Overall,viewersaremoresatisfiedwithsatelliteservicethancableTV.
Occasionally I’ll run into a problem with the satellite reception, something glitches up and I
can call [DIRECTV’s] customer service people and they’re very patience, walk me through it
and usually we resolve the problem… One of the main reasons we switched was because we
were fed up with Comcast and trying to get anything out of them. -Male, subscriber for 20 years, New Jersey
ACCORDING to the 2014 J.D. Power Customer Satisfaction Index Ranking, DIRECTV ranks highest in TV customer satisfaction in the East region, and remains in high standings in the South, North Central and West Region.
DIRECTV’s customer service is top-notch and I get along with them easily.
-Male, subscriber for 13 years, Pennsylvania
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OUR RESEARCHWe did extensive secondary research
about DIRECTV, the effectiveness of
referral programs, the psychology
behind referring and being referred, and
other economic considerations of
rewards programs. We gathered this
data by reading numerous databases,
such as Mintel, Business Insights and IBIS
World along with research studies from
scholarly journals on referral programs
and psychological motivators. In
addition, we conducted 15 phone
interviews with current DIRECTV
subscribers and fielded a quantitative survey through Survey Monkey, which
collected over 100 responses.
The key findings of these research initiatives are integrated into the
following sections.
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THIS LARGE CUSTOMER BASE PROVIDES A STRONG FOUNDATION TO BUILD A REFERRAL PROGRAM.
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RELIABLE SERVICE
We lived in Louisiana during Hurricane Katrina, and I do recall when I got back into my house after it
beingflooded,twodaysafterKatrina,IwasabletohaveDIRECTVandwatchTVduringthosetimesof
repairing my house when other people didn’t have cable. -Male, subscriber for 11 years, New York
3. RICHEST REFERRAL PROGRAM After comparing our competitors’ referral programs, it’s clear that DIRECTV’s Refer a Friend Program is the strongestandmostbeneficialtoparticipatingconsumers.Theprogramoffersthehighestmonetary incentive and allows the referrer and the referee alike to receive equal opportunities for reward.
Reviewing the competition, we found that 3 out of 5 competitors have set limits on the amount a customer can earn in a calendar year. These limits range from $500 (Comcast and DISH) through $575 (AT&T U-Verse), while DIRECTV has a limit of almost double this value ($1000 limit per year). Time Warner Cable has the lowestmonetaryofferwithbothpartiesinitiallyreceivinga$75VisaCashCardupontheirfirstreferral. Verizon Fios is the sole provider to utilize a point system, with subscribers able to redeem e-gift cards once they reach an allotted number of points. In comparison, DIRECTV’s referral program is the richest in the market. SEE APPENDIX H FOR THE FULL ANALYSIS.
However, even with such a strong reward, LESS THAN 10% OF THE ACTIVE DIRECTV SUBSCRIBER BASE PARTICIPATES IN THE REFERRAL PROGRAM, with most of these customers only referring one time. This indicates that changes to the program are necessary.
4. BROAD CHOICE OF PLANS AND PRICES COMPARED TO COMPETITORS
PROVIDER# OF
PACKAGESLOWEST PRICED PACKAGE HIGHEST PRICED PACKAGE
Comcast 5LIMITED BASIC:$14.25/mo. + additional fees
DIGITAL PREMIER:$69.99/mo.forfirst12months+additionalfees.Regular price is approx. $134.99/mo.
DIRECTV 6
SELECT PACKAGE:$19.99forfirst12monthswitha24-mo.agree-ment + additional fees. Regular price is $49.99/mo. Requires Auto Bill Pay enrollment
PREMIER PACKAGE:$89.99forfirst12monthswitha24-mo.agreement+ additional fees. Regular price is $136.99/mo. Requires Auto Bill Pay enrollment.
Dish 4
SMART PACK: $19.99forfirst12monthswitha24-mo.agree-ment + additional fees. Regular price is $34.99/mo.
AMERICA’S TOP 250:$39.99forfirst12monthswitha24-mo.agreement+ additional fees. Regular price is $84.99/mo. + additional fees.
TWC 7STARTER TV W/HBO:$29.99forfirst12months+additionalfees.Regular price undisclosed.
PREFERRED TV W/DVR:$64.99forfirst12months+additionalfees.Regular price undisclosed.
AT&T U-verse Due to the impending merger between AT&T and DIRECTV, U-Verse currently offers the same options for cable
plans and prices as DIRECTV.
Verizon FiOS 5FIOS TV LOCAL:$10forfirst12months+additionalfees.Regular price undisclosed.
Ultimate HD:$89.99forfirst12months+additionalfees.Regular price undisclosed.
DIRECTV HAS COMPETITIVELY PRICED PACKAGES THAT STAND OUT AGAINST THE COMPETITION. DIRECTV’s options are reasonable, affordable and versatile. Bundling options aside, the company’s packagesarestillmorebeneficialandprovideagreatervaluetothecustomerasopposedtoothercable providers. Given these advantages, referrals should be higher. We explored the reasons behind overall participationinreferralprogramsandidentifiedthebarrierstoreferralforDIRECTVspecifically.
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Barriers to Referral INCONVENIENT BUNDLING OPTIONS DIRECTV is a single service provider that solely offers cable TV services. In August of 2013, Mintel reported that 43% of subscribers who had just one paid TV service (such as DIRECTV) were the most open to changing service providers. DIRECTV only offers outsourced bundling options with other providers, which puts DIRECTV at a disadvantage when sustaining their existing subscriber base.
MISLEADING PRICES DIRECTV’sbasicpackageisadvertisedat$19.99permonthforthefirst12months upon signing a 24-month contract and enrolling in Auto Bill Pay. However, after the promotional period is over, the customer is locked in to a new cost of $49.99 for the next 12 months.
My service frustrates me a lot because the rates always go up and down...I would like to change
how they bill [automatically] and have so many hidden fees.
I have looked into switching carriers, but the other ones are just too expensive. They claim to be
cheaper, but then there is this fee and that fee that just make it too expensive. I just wish the
service was more reliable.
-Quotes taken from interviews conducted by Mintel analysts
Misleading prices can also deter customers from recommending and referring friends and family
(Ganseog 85). Our quantitative survey supported this secondary research claim. Subscribers werefirstaskediftheywereawareofthepriceincreaseafterthefirstyearofsubscriptiontoDIRECTV, 52% ANSWERED, “NO”. We then asked, “Does DIRECTV’s price increase discourage you from referring?” and 52% OF RESPONDENTS SAID “YES.”
SOCIAL STIGMA If a referral is rewarded, consumers may perceive the referral as being driven by the reward rather than by intrinsic motivations. As a result, recommenders may feel as if they “sold” their recommendation, a perception unlikely to be consistent with their self- image (Ganseog 85).
You have to go out, basically solicit your peers, the people that you work with, or friends […] and
I don’t feel comfortable being a spokesman for DIRECTV.
– Male, subscriber for 11 years, New York
I’m not going to go into a sales pitch for DIRECTV.
-Male, subscriber for 15 years, Pennsylvania
SWITCHING SERVICES According to Mintel, ONLY 20.5% OF PEOPLE ARE LOOKING TO SWITCH PROVIDERS AT ANY GIVEN TIME. Our primary research gave us insight into why this number is so low. In our survey, we asked respondentswhattheythoughtwerethemostdifficultbarrierstoovercomewhenswitchingcableproviders. Themaindifficultieswere: 1. PAYING EARLY TERMINATION FEES 2. FINDING FRIENDS THAT WERE INTERESTED 3. ADMINISTRATIVE TASKS INVOLVED
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OTHER BARRIERS CONSIDERED • Losing bundling options • Installing new satellites/set-top boxes • Navigating through a new website • Finding the time to switch • Establishing a new brand relationship • Returning equipment and performing other administrative tasks of switching
Offer Strategies Our quantitative survey tested consumer interest in FOUR DIFFERENT REFERRAL PROGRAM REWARDS OFFER #1: DIRECTV’S CONTROL OFFER You and the person you refer receive $100 in bill credits over a 10 month time period. The acquisition cost of this program is $200. RESULTS: 85% of survey respondents ranked this offer either #1 (53%) or 2 (32%).
OFFER #2: POINT SYSTEM Subscribers earn points towards gift cards by completing tasks such as upgrading packages and paying bills on time. The highest number of points will be awarded for referring a friend.
RATIONALE: With this offer structure, a monetary amount is removed and replaced with points, which may lower the social stigma or feeling of discomfort when referring. RESULTS: Based on our survey results we do not recommend this offer. Only 19% of survey respondents ranked this offer #1 (2%) or #2 (17%). 57% ranked it last.
OFFER #3: FREE MONTH When subscriber refers a friend, both receive a one-month bill credit. In addition, both parties will receive $10 in bill credits for the following 6 months. Assuming that the average monthly bill without additional fees is about $75 dollars (see chart in appendix), the acquisition cost of this program would be $270. RATIONALE: By waiving a month and offering $60 in bill credits, the subscriber may see the reward as more noticeable, immediate, and tangible. RESULTS: 46% of survey respondents ranked this offer #1 (13%) or #2 (33%).
OFFER #4: EARLY TERMINATION FEES Referrer receives $100 in bill credits and DIRECTV will pay for referred friend’s cancellation fees, up to $150. The acquisition cost of this program is $250.
RATIONALE: This program helps to combat the high barrier of switching service providers. In addition, since the referred friend receives a higher dollar amount off, the social stigma of the referrer only referring for extrinsic motives is lessened. RESULTS: 50% of survey respondents ranked this offer #1 (32%) OR #2 (18%)
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REQUIRED RESPONSE LIFT FOR TEST OFFERS We estimated a two year customer value at $1,000. We used this $1,000 estimation as the New Customer Value in our comparative incentive calculations. As we started to develop ideas for new Refer a Friend incentives, we knew that these ideas may have a greater acquisition cost. So we calculated how many Additional Required Customers it would take to compensate for the greater acquisition cost.
SEE EXPLANATION AND CALCULATIONS IN APPENDIX B.3.
CONTROL TERMINATION FEE FREE MONTHNEW CUSTOMER VALUE $1,000 $1,000 $1,000
OFFER VALUE $200 $250 $270
NET CUSTOMER VALUE $800 $750 $730
RESPONSE INDEX 1.00 1.07 1.10
RQD RESPONSE LIFT 7% 10%
Summary of Findings DIRECTV’s service is great and outperforms the competition on every factor, but still is unable to acquire more referred customers due to these main barriers found in our research: 1. SOCIAL STIGMA OF LOOKING LIKE A SALESMAN OR HAVING EXTRINSIC MOTIVES 2. MISLEADING PRICES 3. CANCELLATION FEES
Knowing what was getting in the way of DIRECTV’s success, our alternate referral program structures were developed to overcome these barriers. Subscribers ranked our proposed offer strategies in the following order: 1. CURRENT DIRECTV REFERRAL PROGRAM WAS MOST FAVORABLE (3.36 score) 2. EARLY TERMINATION FEES OFFER RANKED SECOND MOST FAVORABLE (2.54 score) 3. FREE MONTH OFFER RANKED THIRD MOST FAVORABLE (2.46 score) 4. SUBSCRIBERS WERE LEAST INTERESTED IN A POINTS SYSTEM REFERRAL PROGRAM (1.64 score)
(We will not consider this offer)
While our proposal does not address DIRECTV’s misleading price increase, we recommend that DIRECTV makethepricingstructureclearerwhencustomersfirstsubscribe.Nextstepsinvolvetestingtheoffer strategiestofindthemostsuccessfulone.Ultimatelythewinningcampaignwillacquiresizableamounts of new referred customers.
SEE THE COMPLETE RESEARCH RESULTS IN APPENDICES F-H.
OUR CALCULATIONS(New Customer Value – Offer Value) = CURRENT 2 YEAR NET CUSTOMER VALUE (Current 2 Year Net Customer Value / Hypothetical Net Customer Value) = RESPONSE INDEX
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Our Strategy MARKETING STRATEGY Test new rewards offers against the DIRECTV control during a Q1 test period using TV spot rotation and direct mail to selected segments of the subscriber base. Rollout the winning offer with the winning direct mail creative in Q3 to capitalize on the best season for referrals. WINNERS WILL BE DETERMINED USING A COST PER REFERRAL METRIC. In Q3 direct mail will be rolled out to the segments most likely to refer.
MEDIA STRATEGY Our campaign’s goal is to reach DIRECTV subscribers who are most likely to participate in the Refer a Friend program using all proprietary DIRECTV direct and interactive channels including TV, Direct Mail, Website, Billing Inserts, and social media properties. Based on past success and our research we focused a lot of our media budget on Direct Mail and Direct Response TV. DIRECT MAIL HAS ACCOUNTED FOR ABOUT 70% OF REFERRAL CUSTOMERS IN THE PAST, AND 56% OF OUR SURVEY RESPONDERS SAID THEY LEARNED ABOUT THE REFER A FRIEND PROGRAM FROM TELEVISION. This yearlong campaign will have sustained awareness throughout 4 periods:
JANUARY – MARCH: Test new offers, creative and segmentsAPRIL – MAY: Analyze test results while promoting control offerJUNE – SEPTEMBER: Rollout winning offer and creative in special promo periodOCTOBER – DECEMBER: Return to control offer after promo period expires (The brief specifies that DIRECTV is committed to using the control offer throughout the year except during special promotion periods.)
CREATIVE STRATEGY We have learned that referring friends to DIRECTV can be hard. People are uncomfortable referring because they don’t want to seem like a salesperson. Conversations about TV service providers don’t happen everyday. We feel that it’s time to get rid of the stigma and start the conversation. To boost referrals, our creative invites DIRECTV subscribers to “Do Your Friend a Favor” and help them cut the ties with their current TV provider. Our creative tactics include: TV SPOT (1) DIRECT MAIL (2) DOUBLE-SIDED BILL INSERT (1) WEBSITE REDESIGN SOCIAL MEDIA CAMPAIGN
Media TacticsDIRECT RESPONSE TV
WE RECOMMEND ROTATING THE THREE TEST OFFERS AMONG DIRECTV CLUSTERS. We created a single TV commercial that has three different end tags, each with a different referral offer that sends responders to a unique offer landing page. In our test period (Jan-Mar) we will rotate three different offers equally. DIRECTV offers media buys in television clusters to give an advertiser the “SAME AMOUNT OF IMPRESSIONS AS A TRADITIONAL NETWORK BUY—FOR LESS.” There are a total of eight clusters; we recommend running spots in these six clusters: ADULT, MALE, SPORTS, NEWS, LIFESTYLE, AND YOUNG ADULT.Basedonourprofiles’demographicsandpsychographics,wecanensurewereachthem by targeting each group through DIRECTV’s network of cluster buys. The Rollout period will be four months, with extra emphasis on July, because more people are social in hot summer months so referral rates are usually higher, and in September because Fall shows premiere and the NFL season is just underway.
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Media Tactics (continued)DIRECT MAIL
Since our budget does not allow us to reach the entire 20 million subscriber base with direct mail, segmenting the audience allows us to target people who are mostly to participate. We can reach three different segments of previous referral program participants based on the recency of their participation and one segment of new customers. WE RECOMMEND TARGETING GEO AREAS WITH A HIGH CONCENTRATION OF DIRECTV SUBSCRIBERSinwiredneighborhoodswherepeoplemaybedissatisfied with their current service. We segment our consumers according to these parameters so that we can test these different segments, conclude who has the highest conversion rate, then better target that audience in the future. Our Matrix model is an effective way to test two different direct mail creative options while also testing our direct mail consumer segments. To test the creative, we will hold the offer equal. To test the offer, we will hold the creative equal.
LIST SEGMENTCREATIVE A -
CONTROL OFFERCREATIVE B -
CONTROL OFFERCREATIVE A - FREE MONTH
CREATIVE A - EARLY TERMINATION
TOTAL
New Customers (20%) 7,500 7,500 7,500 7,500 30,000
Been Referred (40%) 15,000 15,000 15,000 15,000 60,000
Referred <1 yr (20%) 15,000 7,500 7,500 7,500 30,000
Referred >1 <2 yrs (20%) 15,000 7,500 7,500 7,500 30,000
TOTAL 37,500 37,500 37,500 37,500 150,000
With this matrix test we can test 4 DIFFERENT LIST SEGMENTS, 2 CREATIVE EXECUTIONS AND 3 DIFFERENT OFFERS in order to determine the best creative and referral offers to run in the rollout period. We will send 150,000 direct mail pieces with unique URLS to the segmented lists encouraging them to refer. Using a total of 16 URLS, we will be able to track responses on the web to the referral by offer and list segments. We will send 300,000 direct mail pieces for the rollout period in June featuring the best offer and best creative to the best segments.
BILL INSERTS We recommend sending one bill insert in July to 20 million subscribers. This tactic maximizes reach into the subscriber base.
DIGITAL We recommend using Social Media, SEM, Email and DIRECTV’s website to target people while they are online to make it easier for them to complete the process. DIRECTV can help its consumers by making the process a few clicks away which creates a positive user experience that translates into positive brand relationships.
BUDGET ALLOCATIONS
MEDIA MIX, RATIONALE, DETAILED BUDGET, FLOWCHART, AND PROJECTIONS CAN BE FOUND IN APPENDIX D.
MEDIA BUYS OTHER PRODUCTION$874,500 $125,000
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Creative Tactics TV SPOT Our 60 second TV spot centers around two friends casually having a conversation about cable. This concept arose from our research on the barriers to referrals. Since starting the conversation about DIRECTV was difficultforcustomerswemadealight,relatableandsimplecommercialthatovercomesthisstigma.
DIRECT MAIL We used direct mail as a way to streamline the referral process. Each piece comes pre-printed with the subscriber’s unique referral code to minimize administrative tasks required of the participant. The piece below targets DIRECTV’s large sports fan base by integrating their favorite pastime with the program:
BILL INSERT We used bill inserts because they’re low in cost but high in reach. An increase in referrals is likely because a customermustlookattheirbilleverymonth.Ourtacticwastomakeitstraight-forwardandspecificsoa customer knows all the information about the program. Bill inserts are pre-printed and easy to use, similar to direct mail.
WEBSITE REDESIGN Our website redesign enhances user experience and improves the ease of program participation. Our “Sunday Funday” angle targets DIRECTV’s sports fanatics and provides a fun way to engage these customers with the company. To further simplify the process of referral, we created a pre-written email available for subscribers to send out to friends. This is less work for the customer and makes it quicker to refer multiple people.
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Creative Tactics (continued) SOCIAL MEDIA CAMPAIGN Social media is a very inexpensive way to spread the word about DIRECTV’S Refer a Friend program. DIRECTV can interact with their followers and promote the program with celebrity social media “takeovers,” social media challenges, and more through Twitter, Instagram, Facebook, and Vine.
SEE APPENDIX C FOR CREATIVE EXAMPLES.
Conclusion OUR DO YOUR FRIEND A FAVOR CAMPAIGN WILL HELP DIRECTV ACQUIRE MORE CUSTOMERS THROUGH REFERRALS.
Our creative executions help start the conversation and make DIRECTV more social. Participants will see referring as a favor and not as salesmanship. In addition, we have overcome the barriers to referral withalternateoffers.Theseoffershavegreatermonetaryrewardsyetremainfinanciallyfeasiblefor DIRECTV. Finally, the website revamp and bill inserts make participating in the program easier for all.
Using our $1 million budget we will generate over 203 million estimated impressions through all of DIRECTV’s proprietary media channels. Our testing period will determine the most effective offer as well as the best Direct Mail creative execution. With that information, we can rollout the best combination during the promotional period in the summer months when referrals are historically highest. By the end of the campaign year, we project to see close to 5,000 estimated referrals.
SEE APPENDIX B.1. FOR DETAILED FORECAST RESULTS.
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Appendix A: Detailed Budget A.1. DETAILED BUDGET CHART
TRADITIONAL MEDIA MEDIA BUY PRODUCTION MEDIA GOALSESTIMATED ANNUAL
IMPRESSIONS
PROJECTED RESULTSRESPONSE
RATECOST PER REFERRAL
PRINT - DIRECT MAILING $300,000 $0.66 CPP 453,000 0.25% $265
Testing Period $100,000 Provide personalized,
tangible deliverables to
make it easier for
customers to recruit
Original Promotion Period 1
Rollout Period $200,000
Original Promotion Period 2
PRINT - BILL INSERTS $100,000 $0.005 CPP 20,000,000 0.002% $250
sTesting Period Provide personalized,
tangible deliverables to
make it easier for
customers to recruit.
Original Promotion Period 1
Rollout Period $100,000
Original Promotion Period 2
TELEVISION - DIRECT RESPONSE $438,000 $100,000 20,000,000 0.002% $250
Testing Period $100,000 Use unique URLS and
landing pages for each
test. Promote awareness
and immediate response.
Original Promotion Period 1
Rollout Period $338,000
Original Promotion Period 2
NEW MEDIASEARCH ENGINE MARKETING $36,500 1,825,000 0.01% $200
Testing Period $9,000 Build awareness and reach
interested consumers
while they are online.
SOURCE: Google AdWords
Original Promotion Period 1 $6,100
Rollout Period $12,200
Original Promotion Period 2 $9,200
SOCIAL MEDIA Internal Resource 5,400,000 0.001% $0
Year round
Support a friendly brand reputation and promote a community for the referral program.
EMAIL Internal Resource 48,000,000 0.001% $0
Monthly. Year round.
Build awareness and reach the audience on a channel they can easily use torecruit.
DIRECTV WEBSITE $25,000 40,800,000 0.001% $0
Referral Page Redesign
$20,000Improve the customer experience by making the website more user-friendly for both parties.
SOURCE: Quantcast
Leaderboard Designs $5,000
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Appendix B: Forecast Results & Offer Value Calculations B.1. FORECAST RESULTS CHART
MEDIA ESTIMATED TARGETED # IMPRESSIONS (000)
ESTIMATED RESPONSE RATE
ESTIMATED # OF REFERRALS
COSTESTIMATED
COST/REFERRAL
Direct Mail 453 0.25% 1,133 $300,000 $265
DRTV* 87,600 0.002% 1,752 $438,000 $250
Bill Inserts 20,000 0.002% 400 $100,000 $250
SEM** 1,825 0.01% 183 $36,500 $200
Social Media*** 5,400 0.001% 54 $0 $0
Email 48,000 0.002% 960 $0 $0
Website**** 40,000 0.001% 400 $0 $0
Production Costs $125,000
TOTAL 203,278 4,881 $999,500 $205
* We calculated the DRTV estimated targeted impressions assuming that the average cable rating is .02 and our subscriber base is 20 million, we concluded that each spot would reach about 400,000 people. ** Google Ad Words, based on $100 per day*** We calculated the social media estimated impressions based on a conservative estimate that 10% of DIRECTV’s 4.5 million social media followers would be exposed to a DIRECTV presence per month.**** Based on Quantcast.com
B.2. OFFER VALUE CALCULATIONS CHART 1We calculated the cost of DIRECTV’s pay TV packages for new customers with a two year contract that do not change or upgrade to a different package. We calculated these total two year costs based on the current promotion price that lasts twelve months plus the standard price for the next 12 months. The lowest package cost for two years is estimated at $839.76 and the most expensive Premier package costs $2,723.76 for two years.
MONTHS SELECT ENTERTAINMENT CHOICE XTRA ULTIMATE PREMIER12 $19.99 $239.88 $24.99 $299.88 $29.99 $359.88 $34.99 $419.88 $39.99 $479.88 $89.99 $1,079.88
12 $49.99 $599.88 $59.99 $719.88 $70.99 $851.88 $77.99 $935.88 $86.99 $1,043.88 $136.99 $1,643.88
2 years $839.76 $1,019.76 $1,211.76 $1,355.76 $1,523.76 $2,723.76
Based on these revenues, ranging from $839 to $2,723, we choose to conservatively estimate the two year customer value at $1,000. We choose to use $1,000 because we know that of the total people who sub-scribe to any pay TV service, only 36% of people subscribe to the lowest priced plan (SOURCE Mintel). So we can conclude that the majority of subscribers pay at least $1,019.76 or more.WE USED THIS $1,000 AS THE NEW CUSTOMER VALUE IN OUR CALCULATIONS TO FIGURE OUT HOW OUR NEW REFER A FRIEND INCENTIVE IDEAS WOULD COMPARE TO THE CURRENT INCENTIVE. As we started to develop ideas for new Refer a Friend incentives, we knew that these ideas may have a greater acquisition cost. So we calculated how many Additional Required Customers it would take to compensate for the greater acquisition cost. To calculate Additional Required Customers, we used the current promotions’ Net Customer Value (the New Customer Value minus the Offer Value) and divided that by our new ideas’ Net Customer Values that differ according to Offer Value.
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Appendix B: Forecast Results & Offer Value Calculations
B.3. OFFER VALUE CALCULATIONS CHART 2 FOR INSTANCE, we estimated the New Customer Value at $1,000. Then we subtracted DIRECTV’s
current Offer value of $200. The difference of the two, $800, is the current Net Customer Value. If we repeat this process with one of our new promotion ideas, like paying the early termination fee, the Offer Value will increase to $250, and the Net Customer Value would decrease to $750. We then divide the current Net Value with the hypothetical Net Value to estimate the Additional Required Customers, which in this instance would be 7 Additional Required Customers.
CONTROL TERMINATION FEE FREE MONTHNEW CUSTOMER VALUE $1,000 $1,000 $1,000
OFFER VALUE $200 $250 $270
NET CUSTOMER VALUE $800 $750 $730
RESPONSE INDEX 1.00 1.07 1.10
RQD RESPONSE LIFT 7% 10%
CALCULATIONS(New Customer Value – Offer Value) = CURRENT 2 YEAR NET CUSTOMER VALUE (Current 2 Year Net Customer Value / Hypothetical Net Customer Value) = RESPONSE INDEX
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Appendix C: Creative Samples with RecommendationsC.1. REFERRAL PAGE OPTION 1
Appendix C: Creative Samples C.2. DIRECTV HOMEPAGE C.3. REFERRAL PAGE OPTION 2
FEATURES• Complete website redesign C.1. C.2.
• Refer a Friend Leaderboard on DIRECTV’s homepage. Includes direct linkto the Refer a Friend webpage C.2.
• New Refer a Friend webpage design C.1. C.3.
• Leaderboard designs for Refer a Friend webpage. Designs can change and will be relevant to big events in entertainment C.1. C.3.
• New page for people to send pre-writtenreferral emails to their friends or family C.1. C.3.
• Set cookies for bill pay page then target visitors with ads
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Appendix C: Creative Samples with Recommendations
C.4. DIRECT MAIL CREATIVE A C.5. DIRECT MAIL CREATIVE B
C.6. BILL INSERT - FRONT C.7. BILL INSERT - BACK
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Appendix C: Creative Samples with Recommendations C.8. SOCIAL MEDIA TWITTER MOCKUP C.9. SOCIAL MEDIA INSTAGRAM MOCKUP
C.8. and C.9. social media mockups are examples of CELEBRITY TAKEOVERS. A celebrity is featured on DIRECTV’s social media to spread the word about the Refer a Friend program.
#DOYOURFRIENDAFAVOR
#DTVCELEBRITYTAKEOVER
CONTENT:Behind the ScenesExclusive content
Celebrity takeoversDIRECTV concert photos
Sporting event photos
#SHARETHEWEALTH
#IREFERREDDTV
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Appendix D: Detailed Media Plan D.1. FLOWCHART
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Appendix D: Detailed Media Plan D.2. MEDIA MIX
• Prewritten
Referral Email
• Direct Mail
• Bill Inserts
• :60 commercial • Twitter
• Vine
• Website redesign
• Search Engine
Marketing
D.3. BUDGET BREAKDOWN
EMAILPRINT
TELEVISIONSOCIAL MEDIA
WEB
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Appendix D: Detailed Media Plan D.4. RATIONALE DIRECT MAIL
Previous Success Direct Mail accounts for about 70% of referrals. 01 Measurable
Test to see which mailing, segment and creative works best.
02 Highly Targeted Direct mail can be tailored to customers to meet individual needs and buying habits. For our purposes, we can target people who are most likely to refer.
03 Personalized These deliverables can be creatively customized and pre-printed with names and messages for a personal touch.
04 Tangible Direct mail is delivered to your consumer hands. These deliverables are personalized for our Refer-A-Friend purposes, so that the customer has a pre printed piece with their account number to easily pass to a friend.
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DIRECT RESPONSE TELEVISION
WEBSITE REDESIGN
User Experience Provide our consumers with an effortless, positive online experience will build more positive experiences with our brand. .
01 Awareness This platform can be used to build awareness for the program all year long.
02 Consumer's Comfort This digital platform makes it easy for people to follow through with our call to action just by a few clicks. People on the web can easily find their account number and quickly share it.
03
Penetration Potential to reach all 20 million DIRECTV subscribers 01 Previous Success
The second highest referral rate in the past. 02 High recall
Over half of our survey respondents recalled learning about the Refer-A-Friend program from television.
03 Audio Visual The combination of audio and visual content makes television spots attractive, memorable and compelling.
04
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Appendix D: Detailed Media Plan D.4. RATIONALE CONT’D SEARCH ENGINE MARKETING
SOCIAL MEDIA
User Experience Provide our consumers with an effortless, positive online experience will build more positive experiences with our brand. .
01 Awareness This platform can be used to build awareness for the program all year long.
02 Consumer's Comfort This digital platform makes it easy for people to follow through with our call to action just by a few clicks. People on the web can easily find their account number and quickly share it.
03
Cost Effective This digital platform allows us to contact our consumers with no outside production cost. This can be used for year long exposure. .
01 Personalization This type of deliverable is easily personalized. An email can use a special heading but distribute generic content. This can also be used target segment groups.
02 Consumer's Comfort This online connection makes it easy for people to follow through with our call to action just by a few clicks. People on the web can easily find their account number and quickly share it.
03
Mobile Every day more consumers are using their mobile devices as their portal to the web. The majority of mobile users check their email on the go.
04 Measurable It is easy to measure engagement and interaction through online analytics. With services you can measure open rates, click rates and traffic.
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Community Social networks can be used to connect the brand to its consumers, but also connect your consumers to other fellow consumers.
01 Measurable Social media can be measured by the number of Likes, Shares, Retweets, Comments, Mentions, etc.
02 Start the Conversation Use these social platforms to connect with your fans, engage with them on a personal basis, and start a conversation about the referral program. Once you start a conversation you can let your fans do the talking.
03
Listen In Once you start the conversation you can listen to what people are saying, and do some management
04 Cost Effective 05 You can do a lot with your company’s social media accounts without even paying for it. However, it will cost you time.
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Appendix E: Market Segmentation E.1. METHODOLGY
We were presented with the challenge of segmenting the target audience based on the information provided about DIRECTV’s subscriber base. Even though DIRECTV has the names and addresses of subscribers, we found it ineffective to divide the target audience this way. Instead, we decided to combine DIRECTV’s six package options and group them into three different sections: THE VALUE SEEKERS, THE CHANNEL SURFERS AND THE ULTIMATE TV ENTHUSIASTS.
Using the tool “Segment Explorer” on Claritas.com, we entered our target demographics into the search fieldandproceededtonarrowtheresultsbytheirmediabehaviors. efoundmultiplerelevantsegmentgroupsthathelpeduscraftspecificcharacteristicspertainingtoeachclassification.BysegmentingDIRECTV’ssubscriberbasesospecifically,wewereabletorecommendthebest targetedclusters on which to advertise DIRECTV’s referral program.
E.2. PROFILES
THE VALUE SEEKERSThis segment includes middle-aged men and women in urban or suburban areas. They have a householdincome of $50K or more and they rent or own homes that are close to their jobs.
They actively seek out discounts, coupons incentives, etc. for products and services. They are highly concerned with staying on budget and wish to get the most bang for their buck. This segment is resourceful and focused on saving as much money as they can when making purchases (especially on large or long-term buys). They tend to acquire products in bulk and are keen to basing their purchase decisions off of promotions and/or favorable rewards.
In relation to cable services, they will opt for a less extensive package if it means it’ll save them money on their bill per month. They tend to buy the basic packages with no added channels or bonus services.
MAIN BENEFITS RECOMMENDED TARGETED CLUSTER(S):• Will often buy based off of deals or promotions• Provide word-of-mouth marketing between other value seekers• Will buy cable packages with less channels if it costs less sacrificial• Somewhat brand loyal but are happy to switch for discounted brands
LIFESTYLEA&E, Cooking Ch., Destination America, DIY Network, Food Net-work, Hallmark Ch., Hallmark Movies & Mysteries, HGTV, Ovation, TLC and Travel Ch.
NEWSBloomberg TV, CNBC, CNN, FOX Business, FOX News Ch., HLN, MSNBC and the Weather Ch.
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Appendix E: Market Segmentation E.2. PROFILES CONT’D
THE CHANNEL SURFERSThis segment includes upper middle class familes with household incomes of $80K+ who own homes in the suburbs.
Thesefamiliesarehigh-techandtendtohavethelatestconsumerelectronics.Theirhousesarefilledwithhandheldgamingdevicesfortheirkidsandelectronicsfortheirhomeofficesthatmaketheirworkeasier.Theyhave3ormoreTV’sconnected to satellites and usually 5+ cell phones from big name brands.
They subscribe to packages with a variety of channels for everyone in the family. They have the basic local channels plus extensive children’s, music, and lifestyle channels. However, they don’t care for elaborate movie or sports packages but instead lean towards packages with plentiful viewing options. They don’t like being restricted and aren’t usually brand loyal since they’re likely to buy “the latest and greatest” release.
MAIN BENEFITS RECOMMENDED TARGETED CLUSTER(S):
• Will buy add-on services if it means more options• Can be reached through all media (TV, radio, Internet, print, mobile, etc.)• Large group of friends with similar lifestyle habits• Will buy cable packages with plentiful options even if it’s more expensive
ADULTAnimal Planet, BBC America, Chiller, Cloo, CMT, GSN, ID, National Geo-graphic, USA, TV One, TV Land, TruTV, TNT, TBS and Nat. Geo Wild
SPORTSBTN, CBS Sports, ESPN, ESPN2, ESPN Classic, ESPNews, ESPNU, FOX Sports, FOX Sports 2, GOLF, TVG, Tennis, SEC ESPN, Outdoor Ch., NHL, NFL, NBCSN, NBA TV, MLB and Longhorn Network
YOUNG ADULTBET, Fuse, Fusion, LogoTV, MTV, MTV2 and VH1
THE ULTIMATE TV ENTHUSIASTSThis segment includes men and women over 45 who own homes in wealthy neighborhoods and have an average house-hold income of $100K.
Thecustomersinthissegmenthaveenoughmoneytooutfittheirhomeswiththenewestgadgetsandhavea tendency to “go overboard” when it comes to technology. They are fans of traditional media and have subscriptions to upscale magazines and luxury retail catalogues They often donate to charity organizations and are known to travel multiple times a year for business. They love VIP programs where they receive exclusiveoffersorfirst-classservicewhentravelling.
These customers also have luxurious taste when it comes to cable packages. They have packages with add-onservices such as DVR, premium movie channels and extra sports channels. They frequently watch on-demand program-ming and enjoy cable providers who allow seamless transition from TV to tablet to smartphone. They prefer the best of the best and value quality over economics when it comes to relevant services.
MAIN BENEFITS RECOMMENDED TARGETED CLUSTER(S):
• Will purchase high-end services
In uentialtofriends,family,coworkers,etc.
• Likes exclusive offers
• Loves entertainment
LIFESTYLE:A&E, Cooking Ch., Destination America, DIY Network, Food Network, Hallmark Ch., Hallmark Movies & Mysteries, HGTV, Ovation, TLC and Travel Ch. NEWS: Bloomberg TV, CNBC, CNN, FOX Business, FOX News Ch., HLN, MSN-BC and the Weather Ch.ADULT Animal Planet, BBC America, Chiller, Cloo, CMT, GSN, ID, National Geo-graphic, USA, TV One, TV Land, TruTV, TNT, TBS and Nat. Geo Wild
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Appendix E: Market Segmentation E.3. TARGETED CLUSTERS
The targeted clusters we recommend are taken from directvadsales.com. DIRECTV offers targeted television advertising in order to give an advertiser the “same amount of impressions as a traditional network buy—for less.” There are a total of eight clusters titled ADULT, MALE, FEMALE, SPORTS, NEWS, LIFESTYLE, YOUNG ADULT, AND KIDS thateachspecificallytargetacertaindemographicinroadblockfashion. This is incredibly useful for us since it’s already a DIRECTV run service and it complements our marketsegmentationprofilesbygivingustheabilitytoassignclusterstoourdifferentsegments.Basedonourprofiles’demographicsandpsychographics,wecanensurewereachthembytargetingeachgroupthrough DIRECTV’s network of cluster buys.
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Appendix F: Qualitative Research F.1. INTERVIEWS
We conducted a total of 15 ONE-ON-ONE PHONE INTERVIEWS with past and present DIRECTV subscribers. Our objectives were to identify the strengths and weaknesses of DIRECTV’s service, explore consumer interest in participating in the program and to record their opinions of the pros and cons of referral marketing. This primary research gave us invaluable insight straight from the source-- DIRECTV subscribers.
F.2. KEY FINDINGSMajority of respondents felt positively about DIRECTV.
Participants were pleased with premium channels.
DIRECTV’s Customer Service is top-notch.
Budget-friendly subscribers opted for basic packages such as the Select package, as opposed to packages with add-ons like premium and sports channels.
Budget-friendly subscribers opted for basic packages such as the Select package, as oppose to packages with add-ons like premium and sports channels.
While the awareness of the referral program was high, most could not accurately describe the logistics and rewards of participating in the program.
DIRECTV is not a common topic of discussion; the Referral Program doesn’t typically arise in day-to-day conversations.
A common barrier preventing customers from participating in the program was the fear of sounding like a “salesman” for the company.
Many said they would most likely refer a family member and would prefer to do so in person.
The current offer was too low of an incentive for the customer to refer a friend.
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Appendix G: Quantitative Research Findings G.1. SURVEY efieldeda16questionsurveyviathewebsite urvey onkey.Thesurveywasdistributedtocurrent DIRECTV subscribers across the United States and garnered 109 UNIQUE RESPONSES. The objectives of the survey were to measure the awareness of the referral program, determine the perceived challenges customers face when switching service providers and gauge responses about alternative reward structures. This targeted questionnaire was incredibly instrumental to our proposal.
G.2. SURVEY RESULTSQ1: Are you aware of DIRECTV’s Refer a Friend Program?
Q2: How did you learn about the Referral Program? Check all that apply.
Q3: Which of the following statements most accurately describes your experience with DIRECTV’s Referral Program?
Q4: If you were going to refer a friend today, would you know how to do it?
Q5: Please choose how you feel about each of the following statements.
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Appendix G: Quantitative Research Findings G.2. SURVEY RESULTS CONT’D
‘
Q6: What DIRECTV Package are you subscribed to?
Q7: When you subscribed to DIRECTV were you aware that your package price increases after the first year?
Q8: Does the price increase after 1 year discourage you from referring?
Q9: How easy or difficult is it to overcome the following barriers to referring a friend?
Q10: How easy or difficult is it to overcome the following barriers to switching TV service providers?
Q11: Which of the following rewards is most appealing for you to refer a friend? Please rank 1 - most favorable; 4 - least favorable
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Appendix G: Quantitative Research Findings G.2. SURVEY RESULTS CONT’D
Q12: Age
Q13: What is your gender?
Q14: How much total combined money did all members of your HOUSEHOLD earn last year?
Q15: US Region
Q16: Device Types
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Appendix H: Secondary Research Findings H.1. COMPETING REFERRAL PROGRAMS ANALYSIS CHART
COMPANY OFFER LOGISTICS & CONDITIONS
Comcast finity“Share the Awesome”
Referrer receives a Visa Prepaid Card for each referred friend, up to $500 in a calendar year. Monetary value increases with each referred friend ($100, $200, $200). New referred customer receives $25-$100 Visa Prepaid Card depending on services they sign up for.
Referred friend uses the referrer’s unique code to sign up and participate in the program. In order to receive the reward, referred friend must remain in good standing for 60 days. Web only.
DIRECTV“Refer a Friend”
Both parties receive $100 bill credits, in $10 credit increments for 10 months. Referrer can refer up to 10 friends to receive $1000 within a 10 month time span.
Referred friend uses the referrer’s activation code to sign up and participate in the program. Requires 24 month agreement and enrollment in auto bill pay. Web or telephone.
DISH“Refer a Friend”
Both parties receive $50 in bill credits. Referrer can refer up to 10 friends each year, $500 limit. Referrer receives reward in $5 increments for 10 months. Referred friend receives $50 onfirstbill.
Referrer clicks the Refer Now button on DISH web-siteinordertoreceiveaRefera riendcertificatetobegiventofriend. riendusesthecertificatetoenroll in the program. Requires 24 month commit-ment. Web or telephone only.
TWC “Referral Rewards”
Both parties receive $75 Visa Cash Card. $10 for every sec-ond tier referral. $5 for every third tier referral. If friend refers others, initial referrer earns more cash.
Referrer joins Referral Rewards to invite friends to switch. Referred friend must keep account for 90 days in order for both parties to receive reward. Web only
AT&T U-verse“AT&T Refer-a-Friend”
Both parties receive $25 AT&T Promotion Card each, up to $575 a year. Each successful referral results in additional $25 promotion card.
Referrer must register for program within 7 days of the referee friend’s purchase. Referred friend must register for the program within 14 days of initial purchase. Includes other AT&T services. Web only
Verizon Fios“My Rewards+ Refer a Friend”
Both parties get 2,500 My Reward+ points. Referee must purchase Double or Triple Play. Subscribers can use points to redeem e-gift cards for participating locations
Both parties must enroll in My Rewards+ program. Referred friend uses referrer’s referral code to par-ticipate in the program. Referred friend’s account must be active for 60 days in order for both parties to receive points.
H.2. SUBSCRIPTION TELEVISION SERVICE ACSI SCORESCOMPANY 2013 2014 % Change
Subscription Television Service 68 65 -4.4%
DIRECTV 72 69 -4%
AT&T U-verse 71 69 -3%
Verizon Communications FiOS 73 68 -7%
DISH Network 70 67 -4%
All Others 69 66 -4%
Cox Communications 65 63 -3%
Charter Communications 65 63 -6%
Comcast 63 60 -5%
Time Warner Cable 60 56 -7%Source: American Consumer Satisfaction Index
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Appendix H: Secondary Research Findings
H.3. J.D. POWER STUDY CHART: 2014 U.S. RESIDENTIAL TELEVISION SERVICE PROVIDER SATISFACTION STUDY
CUSTOMER SATISFACTION INDEX RANKING EAST REGION (Based on a 1,000-point scale)
H.4. MINTEL CHART A H.5. MINTEL CHART B
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Appendix I: BibliographyDIRECTV atelliteTV-Official ite 1-800-490-4388. DIRECTV.DIRECTV, C,n.d. eb.12 ay2015.
2014 DIRECTV Annual Report. Rep. NTIS No. 1-34554. DIRECTV, LLC, n.d. Web. 12 May 2015.
ACSI Telecommunications & Information Report 2014. Rep. ACSI L.L.C., n.d. Web. 12 May 2015.
J.D. Power. Performance & Reliability Problems Decline in Both Residential TV & Internet Services; Quality & Con-
nection Speeds Continue to Improve. J.D. Power McGraw Hill Financial, 24 Sept. 2014. Web. 12 May 2015.
“DISH Satellite TV Packages & Service” DISH Satellite TV Packages & Service… DISH Network, L.L.C., n.d. Web. 12
May 2015.
“Home.” Cable TV, High Speed Internet & Phone Service. TWC Enterprises LLC, n.d. Web. 12 May 2015.
“U-verse TV” AT&T U-verse Digital TV Providers. AT&T Intellectual Property, n.d. Web. 12 May 2015.
“Verizon FiOS Triple Play.” Verizon FiOS. V Web, n.d. Web. 12 May 2015.
INIT TV. ComcastOfficial ite:CableTV,Internet, hone ervice.N.p.,n.d. eb.12 ay2015.
Billy Hulkower. “Pay TV & Home Communication Services - US - March 2015.” March 2015. Mintel. April 8, 2015.
Ryu, Gangseog, & Lawrence Feick. “A Penny for Your Thoughts: Referral Reward Programs & Referral Likelihood.”
Journal of Marketing 71.1 (2007): 84-94. JSTOR Web. 11 Mar. 2015.
Billy Hulkower. “Bundled Communication Services - US - November 2013.” November 2013. Mintel. April 6, 2015.
“DIRECTV Packages & Pricing - Call 855-849-4388.” DIRECTV, LLC, n.d. Web. 08 Apr. 2015. DIRECTV.
Billy Hulkower. “Pay TV & Home Communication Services - US - October 2014.” October 2014. Mintel. May 12, 2015.
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