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Teresa and David will discuss the evolution of loyalty marketing and how advocacy and the proliferation of channels is changing the way we segment and engage consumers.
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Tying Engagement to Customer Lifetime Value
Teresa Caro, Director CRM Solutions, RazorfishDavid Rosen, SVP, Strategy & Channel Development, Loyalty Lab
May 13, 2010
Hello
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Direct marketers recognized long ago that customer segmentation improves profits. One of the earliest segmentation techniques, called
RFM analysis, has been in use for over 50 years. It is based on three simple customer
attributes: Recency of purchase, Frequency of purchase, and Monetary value of purchase,
hence the name RFM.
David Shepard Associates. The New Direct Marketing: How to Implement a Profit-Driven Database Marketing
Strategy, 3rd edition, 1998
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Relationship marketing is the retention of customers through varying means and
practices to ensure repeated purchase. It relies upon the communication and acquisition of
consumer requirements in a mutually beneficial exchange usually involving
permission for contact by the customer through an "opt-in" system.
Gale, B.T.,Chapman., R.W. (1994) Managing Customer Value: Creating Quality and Service That Customers Can
See New York: Free Press
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Source: http://istobe.com/customer-lifetime-value-calculator.html
Marketer’s Dilemma
How do I create loyal, primary-store purchasers, where they always think of me first and achieve 7-10x the LTV?
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Loyalty Programs Addressed This Need
• Carrots to gain additional information and drive changes in behavior
• Better quantification driven by better identification of people and their transactions
• Greater relevance of their marketing communications
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Marketer’s Dilemma > How to Measure Advocacy
28% of Internet users cite online reviews and recommendations as the leading factor on purchase decisions
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Marketer’s Dilemma > How to Prioritize Channels
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Loyalty Membership
Direct Channels
Free Media
Paid Media
Internal Communities
Earned Media
External Communities
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Marketer’s Dilemma > How to Revise LTV
+ Direct Influence Value
+ Indirect Influence Value
+ Long Term Effect
Where Do We Start?
Start by Defining Engagement
1. How is engagement measured today?
2. How are consumers engaging with brands?
3. What value should we be placing on those engagements?
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Defining engagement is not new.
Yet, current models focus on measurement within a channel – not the channel as a whole.
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What Does Engagement Mean to You?
What We Heard
Engagement is more than just the channel. It is the
dialogue that takes place (one-way or two-way), the
ability to choose how / when to engage (e.g., opt-in or
opt-out), the value each channel represents, and
whether or not expectations were met.
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What We Heard > Channel Use
Company websitesshopping, purchasing, price comparison,
browsing, researching products and services
One-on-one interactionphone, face-to-face still key for problem
resolution, questions, purchasing
Face-to-faceretail shopping and purchasing
Emailpromos, offers, some communication, automatic
notifications; transfer of non-critical or non-sensitive information
WOMliterally either in person or by phone; a key,
interpersonal touchpoint, it’s engagement once-removed and is a way to learn about any brand
Snail mailtransmitting information, promos – less of a
resource now than email
Social siteslearning about company culture and news,
though many see these as more personal tools
Review siteshonest user-generated feedback, e.g., Yelp,
Amazon
Static adse.g., on buses, trains, billboards; are more
passively consumed
Mobileemerging for financial management, shopping,
purchasing
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What We Heard > Key Takeaways
Differentiate through human touch
Afford control
Be relevant
Inject something human at every point – make them feel valued
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Consumers want to opt-in and give you permission before they are served
Leverage new technologies to serve up appropriate information
What We Heard > Key Takeaways
Treat consumers fairly
Use the right channel for each need
Get the basics in place
Gain trust through transparency and consistency
Different needs are served by different channels
Optimize each channel first and then integrate and expand
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How Do You Measure Engagement?
Experience a Paradigm Shift
Digital can make or break a brand.
Digital experiences create customers.
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Of those, 97% said their experience influenced whether they eventually purchased from the brand
65% of consumers say a digital experience, changed their opinion of a brand.
Source: Razorfish FEED Report 2009
Connect the Dots
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Single View of
Transactions
Behavioral Data You Control
Engagement Data Across
Social Networks
Relevance-Empowered Email Drives Higher Top- And Bottom-Line Improvement
September 2009 “The ROI Of Email Relevance, 2009”
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What’s Next?
Q&A
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