Ahead of the Curve:Ahead of the Curve:
Direct & Interactive Marketing Direct & Interactive Marketing in a Digital Worldin a Digital World
Mark Van Clieaf
MVC Associates InternationalToronto • Tampa • London • Johannesburg
416-489-1917 / [email protected]
© Copyright 1999, MVC Associates International
Ahead of The CurveAhead of The Curve
• Global Macro Trends & Issues Impacting Marketers
• Client Side Challenges
• Trends in Traditional Direct Marketing
• Trends in C-Commerce ( Customer Care )
• Trends in D-Commerce ( Digital Direct Marketing )
• Trends in E-Commerce ( Smart Cards, Bill Presentment, etc)
• Trends in F-Commerce ( Fulfillment & Logistics )
• Defining Customer Relationship Management & Branding
• Changing Industry Landscape
• Appendix - Information Sources
© Copyright 1999, MVC Associates International
Global Population Distribution Global Population Distribution Shifts Dramatically Shifts Dramatically
Population(billions)
0
0.5
1
1.5
2
2.5
3
3.5
2000 2050 2100 2150
Asia excluding China and India
Africa
India
China
Latin America and the Caribbean
Europe
Northern America
Oceania
Source: United Nations MVC Associates International
Internet Proliferates Faster Than Any Internet Proliferates Faster Than Any Communication Medium in HistoryCommunication Medium in History
4
13
38
0 10 20 30 40
Net
Television
Radio
Source: U.S. Department of Commerce
Years to reach 50 million people
MVC Associates International
OECD Countries Lead in OECD Countries Lead in Secure Server GrowthSecure Server Growth
Source: OECD
0
20
40
60
80
100
120
140
Uni
ted
Sta
tes
Icel
and
Aus
tral
ia
New
Zea
land
Luxe
mbo
urg
Can
ada
Sw
itzer
land
Sw
eden
Fin
land
Uni
ted
Kin
gdom
Nor
way
Aus
tria
Irel
and
Den
mar
k
Ger
man
y
Net
herla
nds
EU
Are
a
Bel
gium
Fra
nce
Spa
in
Japa
n
Cze
ch R
epub
lic
Italy
Por
tuga
l
Gre
ece
Hun
gary
Kor
ea
Pol
and
Turk
ey
Mex
ico
1997 1998 1999
Secure Servers per Million Inhabitants
MVC Associates International
Western Europe, Net adoption over the past year exceeded IDC’s expectations.
The region is now expected to spend $430 billion online in 2003 – pretty impressive when compared to the $708 billion forecast for the U.S.
Worldwide Internet PopulationWorldwide Internet PopulationMore Than Doubles in 3 yearsMore Than Doubles in 3 years
Copyright ©1999, The Industry StandardMVC Associates International
Broad Band Internet Access Only Hits Broad Band Internet Access Only Hits
13 - 18 % in US by 200213 - 18 % in US by 2002
0
1
2
3
4
5
6
7
8
9
1997 1998 1999 2000 2001 20020
2
4
6
8
10
12
14ISDN
Wireless (2GHz)
DSL
Cable Modem
Satellite
Wireless (20+GHz)
Line 7
%
High-speed data connections as a % of total online
%
Source: Forrester MVC Associates International
Interactive Handheld Devices Interactive Handheld Devices Grow Rapidly WorldwideGrow Rapidly Worldwide
Source: International Data Corp
194 Million Units 500 Million Units
Cell Phones - Worldwide
1997 2002
$2.3 Billion Sales $7.2 Billion Sales
Personal Digital Assistants - Worldwide
1999 2003
MVC Associates International
Internet Shifts Purchasing PowerInternet Shifts Purchasing Powerto the Consumerto the Consumer
• Reduces consumer search cost for information
• Reduces value of the brand that was information based
• Connects consumers with the most relevant vendors in a timely fashion
• Extracts as much value for consumers as possible
• Price will become a commodity factor and re-define its role in the purchase decision
© Copyright 1999, MVC Associates International
Governments Step up Interest in Governments Step up Interest in Direct Marketing & E-CommerceDirect Marketing & E-Commerce
• Privacy of Customer Information
• Educational Access / Censorship
• Taxation of Internet and Global E-commerce transactions cross-border
• OECD undertakes major initiatives
• European Commission - study of direct marketing and E- commerce by the European Federation of Direct Marketing
© Copyright 1999, MVC Associates International
Globalization vs AmericanizationGlobalization vs Americanization
• “What we are experiencing is not just globalization, but rather the Americanization of the Global economy”
• “2/3 of global advertising takes its cue from the US”
• “to keep increasing earnings and return on capital employed you have no choice but to spread your business around the world”
• “China will surpass Japan this year as our # 1 Asian market”
• “the power of globalization is about leveraging knowledge that can be shared, and the US is at this time, where we are creating the most knowledge, including how to use the internet to reshape industries”
© Copyright 1999, MVC Associates International
Martin Sorrell, Chairman WPP Group PLC
• Marketing Metrics & Performance
• Understanding the Customer Experience
• Marketing & the Internet
• Members: Fortune 500 including 3M, Bank of America, Bristol Myers, Chase, Coke, Kodak, Fidelity, GM, IBM, Kraft, Motorola, P&G, SBC, Sears, Unilever, Volvo, BCG, Andersen, McKinsey, Mercer, Y&R
(Key Research Priorities)
Marketing Science InstituteMarketing Science Institute
© Copyright 1999, MVC Associates International
Center For Marketing Center For Marketing & Technology& Technology
• The boundary between marketing & technology is dissolving
• Effects of new distribution channels on branding and customer loyalty
• Tools to forecast lifecycles of new technology products
• Members:– Carlson Wagonlit, Cellular One, IBM, UPS, Visa, Y&R
© Copyright 1999, MVC Associates International
E-Commerce vs. E-Business E-Commerce vs. E-Business Strategy OptionsStrategy Options
• E-Commerce (selling online through the internet)
• E-Business (transforming the value chain and becoming a customer led enterprise through the internet)
– Spin-off E-Business subsidiary as a pure play
– Integrate E-Business with existing company operations
– Transform completely into an E-driven enterprise
© Copyright 1999, MVC Associates International
Growing Shareholder ValueGrowing Shareholder Valueand Linking to Customer Valueand Linking to Customer Value
• Analysts need to be educated about new metrics to monetize the
customer base (inaccurate valuations)
• New Customer Metrics Required– Depth of Relationship
– Breadth of Relationship
– Duration of Relationship
– Revenue & profitability of relationship
– Future profit potential of the relationship
– LTV
• Measures at the individual and customer portfolio level to drive shareholder value
© Copyright 1999, MVC Associates International
North America
Source: DMA-US, FEDM, CMA
Canada4%
US96%
Europe
UK 21.0%
Germany37.2%
France15.2%
Italy9.4%
Netherlands7.2%
Spain4.9%
Sweden2.2%
Denmark1.5%
Finland.1%
Ireland.4%
Global Direct Marketing ExpendituresBy Geography
© Copyright 1999, MVC Associates International
$185 billion US in 1998 $41 billion US in 1996
North AmericaNorth America Europe Europe
Telemarketing38%
Direct Mail24%
Other Media/ Online
8%
Newspaper10%
Magazine/ Radio
8%
DR TV12%
Direct Mail58%
Telemarketing12%
DirectAdvertising
30%
Global Direct Marketing Global Direct Marketing Spending By Channel / MediaSpending By Channel / Media
© Copyright 1999, MVC Associates InternationalSource: DMA-US, FEDM, CMA
C-CommerceC-Commerce(Marketing Principles change
from outbound communications to in/out-bound customer care)
Phone IVR E-mail Web Teleweb ITV PDA’s
• Business rules databaseBusiness rules database• Customer profile databaseCustomer profile database• Interactive history databaseInteractive history database
© Copyright 1999, MVC Associates International
D-CommerceD-CommerceThe Web has Many UsesThe Web has Many Uses
0
10
20
30
40
50
60
70
80
90
100
61.4%
73.6%
60.1%65.9%
35.4%
8.7%
52.4%
Education
ShoppingPersonal Info.
Entertainment
Work
Communication Other
% of Users% of UsersMillions
0
100
200
300
400
1995 1996 1997 1998 1999 2000 2005
55
205
98
150
26
250
350
Source: Nua Internet Surveys
How Many Online WorldwidePrimary Uses of the Web (1998)
© Copyright 1999, MVC Associates International
Asia-Pacific Net Penetration will Asia-Pacific Net Penetration will QuadrupleQuadruple
The Net population in the Asia-Pacific region and Japan alone will quadruple, reaching 80 million by 2003.
In fact, Singapore now ranks above the North American and Scandinavian countries as the most Net-savvy nation on Earth.
Date IssueCopyright ©1999, The Industry Standard MVC Associates International
Balance of the World ConnectsBalance of the World Connects
Date IssueCopyright ©1999, The Industry Standard MVC Associates International
China’s Net Population DoublesChina’s Net Population Doubles
Increased competition between ISPs has led to lower prices.
This has caused the number of Internet accounts in China to double during the first half of this year, with most traffic headed for the World Wide Web.
Date IssueCopyright ©1999, The Industry Standard MVC Associates International
Africa Dials InAfrica Dials InAfrica’s rural geography has traditionally left it behind the global technology-adoption curve.
New data from researcher Sangonet shows that Net users can be found across the continent.
49 of the 54 countries and territories in Africa now have Internet access in the capital cities. In fact, the Web population in Kenya, Botswana, Egypt, Ivory Coast, Malawi, Morocco and Tunisia more than doubled in the past year.
Source: Nua Internet Surveys from Sangonet, January 1999
Date IssueCopyright ©1999, The Industry Standard MVC Associates International
Worldwide Internet Ad Spending Worldwide Internet Ad Spending Grows To $33 Billion By 2004Grows To $33 Billion By 2004
Europe
Germany $92 $202 $730$397 $1241 $1,861
United Kingdom $81 $177 $597$347 $955 $1,414
France $33 $71 $243$135 $425 $679
Scandinavia $26 $49 $153$94 $222 $355
Other Europe $35 $81 $313$165 $538 $852
Total Europe $286 $621 $2,169$1,217 $3,589 $5,480
Netherlands $11 $25 $89$51 $142 $213
Finland $8 $15 $46$28 $66 $106
1999 2000 2001 2002 2003 2004North America
Total North America $2,831 $5,410 $12,740$8,773 $17,482 $22,589
United States $2,805 $5,358 $12,587$8,680 $17,244 $22,244
Canada $26 $52 $154$93 $238 $345
* Totals may not equal sum of rows due to rounding ($ millions)
MVC Associates InternationalSource: Forrester Research
Worldwide Internet Ad Spending Worldwide Internet Ad Spending Grows To $33 Billion By 2004Grows To $33 Billion By 2004
($ millions)
Total worldwide $3,336 $6,502 $16,675$10,948 $24,113 $33,075
Latin America
Total Latin America $51 $121 $517$259 $949 $1,647
Brazil $30 $69 $283$145 $509 $890
Mexico $11 $28 $127$61 $241 $422
Other Latin America $10 $24 $107$54 $199 $334
Asia/Pacific
Australia $23 $51 $171$99 $273 $404
China $8 $16 $100$40 $220 $440
Other Asia/Pacific $9 $23 $90$48 $161 $272
Japan $117 $234 $789$459 $1,262 $1,944
South Korea $5 $13 $48$25 $86 $145
Taiwan $4 $10 $38$20 $68 $116
Total Asia/Pacific $166 $1,235$346 $691 $2,070 $3,322
Rest of world $2 $4 $8 $14 $23 $37
* Totals may not equal sum of rows due to rounding
© Copyright 1999, MVC Associates InternationalSource: Forrester Research
On-Line Spending by CategoryOn-Line Spending by Category
Jupiter Communications says consumer-goods advertisers will increase their share of Internet media dollars.
More than half of marketers surveyed by Forrester say their online ad spending will come on top of current media budgets.
However, some marketers plan to fund Net ads by slashing traditional media: 33 percent will cut their TV budgets.
Date IssueCopyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
Expert Insight: Leveraging TV-Net Expert Insight: Leveraging TV-Net SynergiesSynergies
TV drives traffic to Web sites. Overall, 24 percent of Internet users have accessed a URL they saw advertised on TV, which makes TV almost as important as word-of-mouth advice.
“Media junkies” provide new marketing opportunities. Over 8.5 million media junkies in the U.S. report going online while watching TV. Such viewers are more likely to use advance technologies such as Shockwave and chat. By developing online content for these viewers, networks can extend their brands and test methods for blending interactive and broadcast content. The bottom line: Marketers who continue to view
TV and the Internet as competitors will miss the
opportunity to take advantage of the ways they
work together.
Date IssueCopyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
In fact, the latest analyst forecasts predict that U.S. Internet ad spending will total between $4.7 billion and $6.5 billion in 2000.
Forrester Research predicts a $22 billion year for the industry in 2004.
Total Overall Media Spending Total Overall Media Spending is Growingis Growing
Date IssueCopyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
Loyalty Programs OnlineLoyalty Programs OnlineBut not Re-inventedBut not Re-invented
• MVC Loyalty Program Research - 1998– Launched due to competitive issues NOT good business case
– No true understanding of long term financial impact on profits and balance sheet liability
– Failed to differentiate segments based on customer economic value Acquisition not retention focus - really promotional points
– Mix of hard and soft benefits not well researched and way too complicated
– Subsidized already loyal customers
– Failed to use modeling and customer information to customize reward & recognition, communications and create one to one relationship
© Copyright 1999, MVC Associates International
Opt-In E-mail Takes OffOpt-In E-mail Takes OffHow important is e-mail to your sales and marketing strategy?
Very unimportant 6%
Unimportant 24%
Important 32%
Very important 38%
Percent of 50 companies interviewed
© Copyright 1999, MVC Associates InternationalSource: Forrester Research
Opt-In E-mail Plays Key Role Opt-In E-mail Plays Key Role In Marketing StrategyIn Marketing Strategy
Other
Market research
Alerts/reminders
Advertising/marketing
Product releases
Newsletter
Promotions and discounts
4%
8%
24%
28%
34%
48%
66%
What are you using outbound e-mail for?
Percent of 50 companies interviewed(multiple responses accepted)
Source: Forrester Research MVC Associates International
E-mail Will Deliver Transactive ContentE-mail Will Deliver Transactive Content
Customer servicetransactions• Order form• One-click buying• Service request form• Account information
Product content• Features• Upgrades• Pricing• Specials
Marketing interactivity• Events calendars• Alerts• Feedback• Polls/surveys• Rewards Programs
T I
C
TransactiveContent
Send Reply
© Copyright 1999, MVC Associates InternationalSource: Forrester Research
Personalized E-mail Requires Help Personalized E-mail Requires Help From Outside ExpertsFrom Outside Experts
DeliveryPersonalization
Content management
Profile database
Businessrules
Web server
Analysis
Outbounde-mail servers
Inbounde-mail servers
Responses
Data distribution hub
Data analysis servers
Datamarts
Outsourcers:ViantProxicomSapient
Comments:Systems integrators have the technical acumen necessary to build this complex infrastructure
Outsourcers:Digital Impact E-DialogResponsys.com
Comments:E-mail service bureaus provide server farms, broad bandwidth, and campaign testing
Outsourcers:Bronner Slosberg HumphreyFoote, Cone, & Belding
Comments:Database marketers provide data mining skills to identify patterns in customer responses; findings refine offers, profiles, and business rules
Internet
Outgoing messages
MVC Associates InternationalSource: Forrester Research
Advertising Dominates $20 Billion Advertising Dominates $20 Billion In Interactive TV RevenuesIn Interactive TV Revenues
01,0002,0003,0004,0005,0006,0007,000
1999 2000 2001 2002 2003 2004
AdsCommerceSubscriptions
Ads 1 15 216 1,188 3,429 6,177
Commerce 0 52 233 1,233 2,490 3,838
Subscriptions 0 2 10 31 47 72
Total $1 $69 $459 $2,452 $5,966 $10,087
Enhanced broadcast
Revenues(millions)
$
* Excludes video on-demand and pay-per-view
MVC Associates InternationalSource: Forrester Research
Interactive TV Revenues Divert Interactive TV Revenues Divert $ 11 billion in advertising$ 11 billion in advertising
Affiliates
Cable andsatellite
operators
Producers
Networks
EPG$3.2B ads
$1.1B commerce
Enhanced broadcast$6.2B ads
$3.4B commerce$0.1B subscriptions
Web on TV$1.6B ads
$1.9B commerce$1.8B subscriptions
Guide vendors
Consumer electronics
Media sites
Commerce sites
Web-on-TV vendors
TV promo ads
Web ads
Outdoor
TV ads
Direct marketing
Premium channels
Portal ads
Web ads
Commerce sites
ISPs
MVC Associates InternationalSource: Forrester Research
Marketers Use An Array Of Online Marketers Use An Array Of Online SystemsSystems
Which external marketing services do you use?
Measurementaudience
Third-partyad server
Ad network
Rich media ad delivery
Email servicebureau
Affiliateprogram
Promotional services
Campaign analysis
70% 14%
58% 6%
34% 8%
44% 12%
34% 10%
22% 8%
36% 6%
20% 30%
Use TodayWill Addby 2002 Examples Definitions
Provides site audience demographic data
Delivers and tracks banners across multiple sites
Sells ads on content sites
Creates and delivers interactive banners
Delivers and tracks email marketing messages
Administers and tracks affiliate networks
Operates incentive and loyalty programs
Determines campaign ROI
Media Metrix, Nielsen Net Ratings
AdKnowledge, DART for Advertisers
DoubleClick, 24/7 Media, Flycast
Enliven, Thinking Media
Digital Impact, NetCreations, Echo Mail
LinkShare, BeFree
Netcentives, coolsavings.com, Webstakes
Avenue A, Millward-Brown
MVC Associates InternationalSource: Forrester Research
Marketers Use An Array Of Online SystemsMarketers Use An Array Of Online SystemsDo you contract these marketing services
directly, through your agency, or create them in-house?
Through an agency
Purchased direct
Created in-house
Audience measurement
Third-party ad server
Ad network
Rich media ad delivery
Email service bureau
Affiliate program
Promotional services
Campaign analysis
77%
50%
33%
37%
23%
7%
17%
20%
41%
38%
14%
30%
32%
24%
41%
14%
3%
3%
0%
0%
78%
43%
57%
14%
Percentages based on responses from 50 marketers interviewed (multiple responses accepted)
MVC Associates InternationalSource: Forrester
Digital Marketing ComplexityDigital Marketing ComplexityRequires Marketing Systems Integrators / ASP
to Play Four Roles
Connect Collect Analyze Distribute
Marketers
Sites
Market services
What works
What doesn't t
Integrated marketing database
Log files
Campaign performance
Affiliateprograms
Promotionaloffers
Email response Purchase
historyMVC Associates InternationalSource: Forrester Research
Broadband EnviromercialsBroadband Enviromercials
3
Color
Blue
Blue
XL
One
Size
Qty.
Green
BoardWear.com
$10 OFFyour nextpurchase
Click Here
ENTER THE CONTESTAnd Get . . .
ON TOUR NOW . . . NEW RELEASE
Buy The CD!
(Entertainment, Information, Digital Marketing, Online Purchase)
MVC Associates InternationalSource: Forrester Research
This increased European activity will help drive global e-commerce growth from $50 billion last year to $1.3 trillion by 2003.
That’s 26 times 1998 spending levels.
Date IssueCopyright ©1999, The Industry Standard
Worldwide E-Commerce ClimbsWorldwide E-Commerce Climbs
MVC Associates International
E-Commerce 15 % OECD E-Commerce 15 % OECD retail sales by 2005retail sales by 2005
Toy-giant Mattel will spend $50 million to launch an e-commerce venture that the company says will bring in $60 million this year, at gross margins greater than those of its traditional business.
Sound good? An OECD policy group has compiled over 150 pages of economic reasons why governments and businesses worldwide should pay attention to the ramifications of digital commerce.
Date IssueCopyright ©1999, The Industry Standard
Traditional system 8.0 1.08 2.22 to 3.32 400-700 15.00
Telephone-based 0.54 5.00
Internet-based 1.0 0.13 0.65 to 1.10 200-350 0.20 to 0.50
Savings (%) 87 89 71 to 67 50 97 to 99
US$ per Transaction
Airlinetickets Banking
Billpayment
Softwaredistribution
Term lifeinsurance policy
Cost Drivers of E-Commerce Cost Drivers of E-Commerce & Internet& Internet
Source: OECD MVC Associates International
Year
Amount InUS Billions
43109
251
499
843
7633188
10852
1331
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1998 1999 2000 2001 2002 2003
Business - to - Business
Business - to - Consumer
Region 2001 2005
B-to-B E-Commerce Worldwide(Millions)
B to B E-Commerce Spreads Globally & 10 x B to C
Middle East $45.1 $120.3
Africa $40.9 $125.0
South America $45.9 $153.8
Europe $990.5 $3,422.1
Asia Pacific $1,185.6 $11,174.1
North America $47,027.7 $595,149.1
Worldwide $49,335.8 $610,144.4
US - E - Commerce
Source: Forrester Research MVC Associates International
Source: Computer Economics
CEO’s Make E-Commerce & CEO’s Make E-Commerce & E-Business Strategic PriorityE-Business Strategic Priority
Just two years ago, most businesses didn’t have an Internet strategy at all. Those that did let IT managers plan it.
After a year of interviews, surveys and case studies with executives from around the world, the Economist’s Intelligence Unit and Booz-Allen & Hamilton found that CEOs now strongly believe in the Internet Economy to add to the bottom line, fuel growth, improve customer satisfaction and increase efficiencies.
Date IssueCopyright ©1999, The Industry Standard MVC Associates International
Emerging Electronic Emerging Electronic Payment SystemsPayment Systems
• Credit Cards– 92 % on-line transactions paid by credit card ( source bizrate.com )
• Smart Cards– Amex - the Blue Credit Card with free home readers
– Microsoft - Smart Card for Windows
– Pilots worldwide
– will converge with wireless
• Electronic Checks
• Digital Cash
© Copyright 1999, MVC Associates International
20%
4%
4%
4%
4%
10%
16%
27%
65%31%
4%
0 10 20 30 40 50 60 70
Percent of 51 Card Issuers Interviewed
Loyalty Programs Loyalty Programs # 2 application for Smart Cards# 2 application for Smart Cards
Stored Value
Loyalty Program
Internet Security
Micropayments
Transit
Secure Electronic Transactions
Ticketing
Electronic Benefits Transfer
Telephone
Other
Undecided
Source: Forrester Research MVC Associates International
F-Commerce (Fulfillment & Logistics)F-Commerce (Fulfillment & Logistics)The Next Big E-Business PlayThe Next Big E-Business Play
• Build, buy, drop ship, outsource
• Will be a key determinant of the branded customer experience
• Walmart decided NO/GO for online Xmas because fulfillment / logistics not ready
© Copyright 1999, MVC Associates International
Customer Relationship Management Customer Relationship Management CRM / E CRMCRM / E CRM
• Has become a catch-all term for many
• Most enterprises do not really understand the organizational / change management / metric issues of true implementation
• Forrester Research suggests Web will assist in technology migration around legacy systems
• The web is fragmenting marketing applications for CRM / e-CRM because technology vs client driven ( separate suppliers/ datamarts for e-mail/affiliate programs/call centres/promotions/ banners etc )
© Copyright 1999, MVC Associates International
Focusing on the CustomerFocusing on the Customer
• Economist / Andersen Study - 200 Co’s
– Only 18 % currently organized around customer type
– 49% plan to build customer centered org’l structures
– 33 % planning to re-design product / service development, delivery, customer ID & after sales service
– use of customer life-time sales measures will grow by 83 %
– use of customer-retention measures will increase 57 %
© Copyright 1998, MVC Associates International
Organization Organization Product / Customer / Channel Product / Customer / Channel
Goal & Marketing Investment AlignmentGoal & Marketing Investment Alignment
CurrentCurrentEnterprise / Product GoalsEnterprise / Product Goals
FutureFutureCustomer GoalsCustomer Goals==
1 and 3 Year Goals1 and 3 Year Goals• ROE
• ROA
• Fee / Revenue by Product
• Contribution Margin by Product
• SG&A / Expense Ratio
• EBIT
• Free Cashflow / EVA / SVA
Translate / Translate / AlignAlign DevelopmentDevelopment
AcquisitionAcquisition
Win-BackWin-Back
Se
gm
en
t A
Se
gm
en
t BS
eg
me
nt C
Revenue / Cashflow
H M L
© Copyright, MVC Associates International, 1998
The Killer B’s• From the 4 P’s to the Killer B’sFrom the 4 P’s to the Killer B’s
• BrandingBranding– shifts from product to enterprise brandingshifts from product to enterprise branding
– shifts from snap shot awareness / image to positioning and degree of involvement over the customer rel’shp life-shifts from snap shot awareness / image to positioning and degree of involvement over the customer rel’shp life-cycle & share of walletcycle & share of wallet
• BundlingBundling– creates new value propositions that deepens rel’shp i.e. meta-level product mgmt creates new value propositions that deepens rel’shp i.e. meta-level product mgmt
– creates competitive advantage with some customer segmentscreates competitive advantage with some customer segments
• BondingBonding– executes the Brand Promise at each “Moment of Truth” - Branded Customer Experienceexecutes the Brand Promise at each “Moment of Truth” - Branded Customer Experience
– integrates all touch points - any time & any where - & links to channel preference, life-stage / lifestyleintegrates all touch points - any time & any where - & links to channel preference, life-stage / lifestyle
• BillingBilling– Creates pricing discovery mechanisms - auctions, etcCreates pricing discovery mechanisms - auctions, etc
– recognizes bundled pricing strategy / LTV / Riskrecognizes bundled pricing strategy / LTV / Risk
– recognizes preferred payment methods / emerging electronic payment optionsrecognizes preferred payment methods / emerging electronic payment options
© Copyright, MVC Associates International, 1998
Branding Takes on New Meaning
Recall
Customer Satisfaction
ROI on marketing expense
Share of Wallet
Current or life-time
profitability
Measurement
Advertising, Name
Development, Package
& Collateral Material Design, Trademark, etc
Engineering the total customer
experience including
processes, technologies &
training to ensure that each
customer touch point (call centre,
mail, retail, e-mail, website, etc) provides an
integrated experience
consistent with the brand & relationship
Tools for Branding
One way communications
developing single message, image & brand
perception
Two-way customer
dialogue tailored depending upon
stage of customer
relationship, customer segment,
and current and potential customer
profitability
MarketingCommunication
Strategy
Initiated by the marketer
Individual product /
service level
Static relationship
Initiated by the customer & or marketer
Enterprise level
relationship
Dynamic involvement depending
upon suite of products / services needed
Relationship Between
Customer & Brand
One dimensional and channel dependent
Fixed / Static
Linked to product benefit
Bundle of products /
services and channel
independent
Flexible and customized
to micro-segment / individual customer
needs
Linked to the brand
promise
Value Proposition
Linked to the Brand
Awareness, Knowledge
& Relevance
with the product
Customer Involvement & advocacy of the brand
promise
Branding Objective
Acquisition / Activation
Complete Customer
Lifecycle = Acquisition / Activation,
Usage Stimulation, Cross-Sell
new products / services,
Retention, Win-back
BrandingMass Marketing
Branding Micromarketingand CustomerRelationshipManagement
Marketing Element
Customer Development
Strategy
© Copyright 1999, MVC Associates International
Customer Centric Business Strategy
Customer Portfolio
Organization
Information Technology
Strategy
Customer, Product, Channel, P&L Goal & Resource Alignment
Integrated Customer, Product, & Channel Compensation
Customer Processes
Customer Segments
Customer Information Mgmt
Customer Marketing Marketing Skills
Organization Capability
Mass Customized Product Attributes & Benefits (bundling & co-marketing)
Mass Customized Channel Access & Customer Contact Process Design
Value / Risk Based Pricing Strategy & Payment Options
Mass Customized Promotion to Create Trial
Value Proposition Development
Inbound / Outbound Contact Strategy & Goals
Coordinating & Sequencing
Targeting Models & Test & Control Tactics
Mass Customized Communications Strategy & Creative Development
Customer Information Mgmt & Campaign Tape Production
Customer Contact & Campaign Mgmt
Back End Analysis, Customer Learning, & Recommendations
Customer, Product & Channel Goal
Process Evaluation
Customer Portfolio Review & Recalibration of Models & Customer Insight
Evaluation & Measurement
Dynamic Customer Focused Test, Learn, & Value Creation
Campaign Centric Campaign Centric vs. Customer Centricvs. Customer Centric
© Copyright 1998, MVC Associates International
Gartner Identifies LeadingGartner Identifies LeadingCRM SuppliersCRM Suppliers
(criteria open to debate)
Challengers Leaders
As of 7/99
Niche Players Visionaries
Ability to Execute
Completeness of Vision
Andersen ConsultingKPMG
Cap Gemini
CentrobeIBMNCR
TesseraAcxiom
McKinsey & Co Peppers & Rogers
AnswerthinkTSC/eLoyalty
CTPErnst & YoungDeloitte & Touche
PWC
MVC Associates International
The Waves of Customer CentricThe Waves of Customer Centric
© Copyright, MVC Associates International, 1998
Product P&L
Product P&L
Product P&L
&Starting
Customer Metrics
Customer Value & Duration, Product & Channel
P&L, EVA / SVA
Compen-Compen-sationsation
Product Brand Equity
Relationship Equity
Community Equity
Marketing Marketing ObjectiveObjective
NotIn
Place
Customer Processes,
CIM
Enterprise Wide
Customer Processes, Customer Segments,
CIM
Customer Customer Org DesignOrg Design
Batch, Points
&Rewards, Outbound
Batch (2 wks-24hr)
Product Purchase
Data, Customer
Value Scoring,
Outbound
Real Time, Integrated
Across LOB’s,
Inbound &
Outbound
CIMCIM
Product Feature / Benefit, Fixed
&Uniform
Mass Customized
Training, Service, Support
Customer Knowledge,
Ongoing Learning,
Anticipating Needs
Source of Source of ValueValue
Price, Delivery,
Convenience
Customer Support
Ease of Upgrade
over Time
Purchase Purchase DriversDrivers
Time of Sale
Annual Business
Plan
Period of
Contract
Life of
The Customer
Planning Planning HorizonHorizon
Product Centric
Product Centric
Product Centric
Migrating to Customer
Centric
Customer Centric
Business Business StrategyStrategy
Wave 1Wave 1
Frequency / Frequency / LoyaltyLoyalty
Wave 2Wave 2
Customer Customer Value Value
OptimizationOptimization
Wave 3Wave 3
Dynamic Dynamic Customer Customer
ManagementManagement
Corporate Development =Corporate Development =Industry Convergence acrossIndustry Convergence across
C-D-E-F Commerce C-D-E-F Commerce continuumcontinuum
• North America (Winterberry Group & other sources)
– Convergys emerges from merger of AT&T Customer Care & Matrix Marketing
– US Web acquires CKS and then Mitchell Madison (former McKinsey)
– Doubleclick acquires NetGravity, Abacus, Opt-in Email.com
– Y&R acquires Knowledge Base Marketing
– Federated Dept Stores buys Fingerhut
– Toys”R”Us.com buys Genesis Direct
– EDS acquires Neodata ( database & fulfillment ) creates Centrobe
– Venture Capital = 57 % deal activity
– Interactive Agency acquisitions slow as transactions focus on business solutions providers and internet consultancies
© Copyright 1999, MVC Associates International
Expanding Existing Presence
Entering New Segments
US Future Acquisition IntentionsUS Future Acquisition Intentions
Source: Winterberry Group LLC
3%
5%
6%
6%
1%
2%
6%
5%
6%
7%
2%
1%
1%8%
4%7%
4%7%
3%10%
15%5%
36%26%
Internet/E-Commerc e
Database
Fulfillment
Direct Response Agency
Web Agency
Consulting
Teleservices
List
Computer Services
Promotion
Market Research
Printing
Lettershop
Software Provider
0%
0%
0%
0%
Expansion Plans By Segment
Sought-After Acquisitions By Media Channel
Internet / E-Commerce
Direct Mail
Telemarketing
Alternative Media
Catalog
DRTV
Magazine / Newspaper
Indifferent
27%
22%
13%
12%
10%
8%
6%
3%
MVC Associates International
“If You’re Not Confused,
You Don’t Know What’s Going On !”
Or
“Destroyyourbusiness.com”
Jack Welch, CEO, General Electric Corporation
MVC Associates International
AppendixAppendixInformation ResourcesInformation Resources
• USA, Direct Marketing Association• Canadian Marketing Association• UK, Direct Marketing Association• Federation European Direct Marketing• Forrester Research• Gartner Research• NUA Internet Surveys• International Data Corporation• The Industry Standard• Business 2.0• The Red Herring• Marketing Science Institute• The Center For Marketing & Technology• OECD• United Nations• Economist• Winterberry Group• Results International Consulting • MVC Associates International• etc
© Copyright 1999, MVC Associates International
• Digital Darwinism - Evan Schwartz
• Blueprint to the Digital Economy - Don Tapscott & David Ticoll
• Customer.Com - Patricia Seybold
• Net Future - Chuck Martin
• Net Gain - John Hagel & Arthur Armstrong
• Futurize Your Enterprise - David Siegel
• Real Time: Preparing for the Age of the Never Satisfied Customer - Regis McKenna
• The Power of Now - Vivek Ranadive
• The End of Marketing as We Know It - Sergio Zyman
AppendixAppendixBooksBooks
© Copyright 1999, MVC Associates International
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