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  • Source: United Nations
  • Source: US Dept Commerce
  • Source: OECD
  • Source: Forrester Research
  • Source:Forrester Research
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    1. 1. Ahead of the Curve:Ahead of the Curve: Direct & Interactive MarketingDirect & Interactive Marketing in a Digital Worldin a Digital World Mark Van Clieaf MVC Associates International Toronto • Tampa • London • Johannesburg 416-489-1917 / 813-891-6644 mark@mvcinternational.com www.mvcinternational.com © Copyright 1999, MVC Associates International
    2. 2. 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
    3. 3. Global Population DistributionGlobal Population Distribution Shifts DramaticallyShifts 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
    4. 4. Internet Proliferates Faster Than AnyInternet 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
    5. 5. OECD Countries Lead inOECD Countries Lead in Secure Server GrowthSecure Server Growth Source: OECD 0 20 40 60 80 100 120 140 UnitedStates Iceland Australia NewZealand Luxembourg Canada Switzerland Sweden Finland UnitedKingdom Norway Austria Ireland Denmark Germany Netherlands EUArea Belgium France Spain Japan CzechRepublic Italy Portugal Greece Hungary Korea Poland Turkey Mexico 1997 1998 1999 Secure Servers per Million Inhabitants MVC Associates International
    6. 6. 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 Population More Than Doubles in 3 yearsMore Than Doubles in 3 years Copyright ©1999, The Industry Standard MVC Associates International
    7. 7. Broad Band Internet Access Only HitsBroad 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 2002 0 2 4 6 8 10 12 14 ISDN 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
    8. 8. Interactive Handheld DevicesInteractive 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
    9. 9. Internet Shifts Purchasing PowerInternet Shifts Purchasing Power to 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
    10. 10. Governments Step up Interest inGovernments 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
    11. 11. 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
    12. 12. • 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
    13. 13. Center For MarketingCenter 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
    14. 14. E-Commerce vs. E-BusinessE-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
    15. 15. Growing Shareholder ValueGrowing Shareholder Value and 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
    16. 16. North America Source: DMA-US, FEDM, CMA Canada 4% US 96% Europe UK 21.0% Germany 37.2% France 15.2% Italy 9.4% Netherlands 7.2% Spain 4.9% Sweden 2.2% Denmark 1.5% Finland .1% Ireland .4% Global Direct Marketing Expenditures By Geography © Copyright 1999, MVC Associates International $185 billion US in 1998 $41 billion US in 1996
    17. 17. North AmericaNorth America EuropeEurope Telemarketing 38% Direct Mail 24% Other Media / Online 8% Newspaper 10% Magazine / Radio 8% DR TV 12% Direct Mail 58% Telemarketing 12% Direct Advertising 30% Global Direct MarketingGlobal Direct Marketing Spending By Channel / MediaSpending By Channel / Media © Copyright 1999, MVC Associates InternationalSource: DMA-US, FEDM, CMA
    18. 18. 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
    19. 19. D-CommerceD-Commerce The 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 Users Millions 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
    20. 20. Asia-Pacific Net Penetration willAsia-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 Issue Copyright ©1999, The Industry Standard MVC Associates International
    21. 21. Balance of the World ConnectsBalance of the World Connects Date Issue Copyright ©1999, The Industry Standard MVC Associates International
    22. 22. 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 Issue Copyright ©1999, The Industry Standard MVC Associates International
    23. 23. Africa Dials InAfrica Dials In Africa’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 Issue Copyright ©1999, The Industry Standard MVC Associates International
    24. 24. Worldwide Internet Ad SpendingWorldwide 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
    25. 25. Worldwide Internet Ad SpendingWorldwide 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
    26. 26. 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 Issue Copyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
    27. 27. Expert Insight: Leveraging TV-NetExpert 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 Issue Copyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
    28. 28. 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 SpendingTotal Overall Media Spending is Growingis Growing Date Issue Copyright ©1999, The Industry Standard © Copyright 1999, MVC Associates International
    29. 29. Loyalty Programs OnlineLoyalty Programs Online But 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
    30. 30. Opt-In E-mail Takes OffOpt-In E-mail Takes Off How 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
    31. 31. Opt-In E-mail Plays Key RoleOpt-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
    32. 32. E-mail Will Deliver Transactive ContentE-mail Will Deliver Transactive Content Customer service transactions • 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 Transactive Content Send Reply © Copyright 1999, MVC Associates InternationalSource: Forrester Research
    33. 33. Personalized E-mail Requires HelpPersonalized E-mail Requires Help From Outside ExpertsFrom Outside Experts Delivery Personalization Content management Profile database Business rules Web server Analysis Outbound e-mail servers Inbound e-mail servers Responses Data distribution hub Data analysis servers Datamarts Outsourcers: Viant Proxicom Sapient Comments: Systems integrators have the technical acumen necessary to build this complex infrastructure Outsourcers: Digital Impact E-Dialog Responsys.com Comments: E-mail service bureaus provide server farms, broad bandwidth, and campaign testing Outsourcers: Bronner Slosberg Humphrey Foote, 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
    34. 34. Advertising Dominates $20 BillionAdvertising Dominates $20 Billion In Interactive TV RevenuesIn Interactive TV Revenues 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1999 2000 2001 2002 2003 2004 Ads Commerce Subscriptions 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
    35. 35. Interactive TV Revenues DivertInteractive TV Revenues Divert $ 11 billion in advertising$ 11 billion in advertising Affiliates Cable and satellite 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
    36. 36. Marketers Use An Array Of OnlineMarketers Use An Array Of Online SystemsSystems Which external marketing services do you use? Measurement audience Third-party ad server Ad network Rich media ad delivery Email service bureau Affiliate program Promotional services Campaign analysis 70% 14% 58% 6% 34% 8% 44% 12% 34% 10% 22% 8% 36% 6% 20% 30% Use Today Will Add by 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
    37. 37. Marketers Use An Array Of Online SystemsMarketers Use An Array Of Online Systems Do 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
    38. 38. Digital Marketing ComplexityDigital Marketing Complexity Requires 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 Affiliate programs Promotional offers Email response Purchase history MVC Associates InternationalSource: Forrester Research
    39. 39. Broadband EnviromercialsBroadband Enviromercials 3 Color Blue Blue XL One Size Qty. Green BoardWear.com $10 OFF your next purchase Click Here ENTER THE CONTEST And Get . . . ON TOUR NOW . . . NEW RELEASE Buy The CD! (Entertainment, Information, Digital Marketing, Online Purchase) MVC Associates InternationalSource: Forrester Research
    40. 40. 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 Issue Copyright ©1999, The Industry Standard Worldwide E-Commerce ClimbsWorldwide E-Commerce Climbs MVC Associates International
    41. 41. E-Commerce 15 % OECDE-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 $60 million this year, at gross margins greater than those of its traditional business. Sound good? An OECD policy group has compiled over 150 pages of economic reasons why governments and businesses worldwide should pay attention to the ramifications of digital commerce. Date Issue Copyright ©1999, The Industry Standard
    42. 42. Traditional system 8.0 1.08 2.22 to 3.32 400-700 15.00 Telephone-based 0.54 5.00 Internet-based 1.0 0.13 0.65 to 1.10 200-350 0.20 to 0.50 Savings (%) 87 89 71 to 67 50 97 to 99 US$ per Transaction Airline tickets Banking Bill payment Software distribution Term life insurance policy Cost Drivers of E-CommerceCost Drivers of E-Commerce & Internet& Internet Source: OECD MVC Associates International
    43. 43. Year Amount In US Billions 43 109 251 499 843 76 33188 108 52 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
    44. 44. 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 Issue Copyright ©1999, The Industry Standard MVC Associates International
    45. 45. Emerging ElectronicEmerging 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
    46. 46. 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 ProgramsLoyalty 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
    47. 47. 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
    48. 48. Customer Relationship ManagementCustomer 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
    49. 49. 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
    50. 50. OrganizationOrganization Product / Customer / ChannelProduct / Customer / Channel Goal & Marketing Investment AlignmentGoal & Marketing Investment Alignment CurrentCurrent Enterprise / Product GoalsEnterprise / Product Goals FutureFuture Customer 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 SegmentA SegmentB SegmentC Revenue / Cashflow H M L © Copyright, MVC Associates International, 1998
    51. 51. 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 andshifts from snap shot awareness / image to positioning and degree of involvement over the customer rel’shp life-cycle &degree of involvement over the customer rel’shp life-cycle & share of walletshare of wallet • BundlingBundling – creates new value propositions that deepens rel’shpcreates new value propositions that deepens rel’shp i.e. meta-level product mgmti.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” -executes the Brand Promise at each “Moment of Truth” - Branded Customer ExperienceBranded Customer Experience – integrates all touch points - any time & any where - & links tointegrates all touch points - any time & any where - & links to channel preference, life-stage / lifestylechannel 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 electronicrecognizes preferred payment methods / emerging electronic payment optionspayment options © Copyright, MVC Associates International, 1998
    52. 52. 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 Marketing Communication 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 Branding Mass Marketing Branding Micromarketing and Customer Relationship Management Marketing Element Customer Development Strategy © Copyright 1999, MVC Associates International
    53. 53. 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 CentricCampaign Centric vs. Customer Centricvs. Customer Centric © Copyright 1998, MVC Associates International
    54. 54. Gartner Identifies LeadingGartner Identifies Leading CRM SuppliersCRM Suppliers (criteria open to debate) Challengers Leaders As of 7/99 Niche Players Visionaries Ability to Execute Completeness of Vision Andersen Consulting KPMG Cap Gemini CentrobeIBM NCR Tessera Acxiom McKinsey & Co Peppers & Rogers Answerthink TSC/eLoyalty CTP Ernst & Young Deloitte & Touche PWC MVC Associates International
    55. 55. 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 MarketingMarketing ObjectiveObjective Not In Place Customer Processes, CIM Enterprise Wide Customer Processes, Customer Segments, CIM CustomerCustomer 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 ofSource of ValueValue Price, Delivery, Convenienc e Customer Support Ease of Upgrade over Time PurchasePurchase DriversDrivers Time of Sale Annual Business Plan Period of Contract Life of The Customer PlanningPlanning HorizonHorizon Product Centric Product Centric Product Centric Migrating to Customer Centric Customer Centric BusinessBusiness StrategyStrategy Wave 1Wave 1 Frequency /Frequency / LoyaltyLoyalty Wave 2Wave 2 CustomerCustomer ValueValue OptimizationOptimization Wave 3Wave 3 DynamicDynamic CustomerCustomer ManagementManagement
    56. 56. Corporate Development =Corporate Development = Industry Convergence acrossIndustry Convergence across C-D-E-F CommerceC-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
    57. 57. 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
    58. 58. “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
    59. 59. AppendixAppendix Information 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
    60. 60. • 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 AppendixAppendix BooksBooks © Copyright 1999, MVC Associates International

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