The Four Ps to Keeping Customers

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As the Internet matures, it becomes clearer every day that the lasting value of the medium is its vast potential for data collection. Collecting and using data are traditionally the domains of direct marketing. However, the winners and losers in the future will be determined by those who understand how to react to a set of tried-and-true direct marketing principles that have been changed in a fundamentally important way: the consumer is in control.


With millions of sites a click away, the Internet gives consumers control over when, what, where and how they will be marketed to. Marketing is thus transformed from an unwelcome interruption to an integrated service that the consumer has asked for and trusts. The consumer is transformed from an unsuspecting victim of your marketing campaign to a willing and active participant.


The quality and value of a customer database is therefore determined more by the depth and breadth of data, and the level of brand identity and loyalty those customers feel toward your brand. What this means, ironically, is that direct marketers will become brand marketers and brand marketers will become direct marketers because the consumer will demand it.


Ultimately, all marketers will need to develop initiatives that integrate consumer permission and privacy at their core. Services will need to leverage consumer profiles to personalize the customer experience and create a lasting relationship with their customers. In essence, brand marketing and direct marketing converge through the leveraging of personalization technology and trusted consumer relationships.


To realize the potential of this seismic shift in the science and art of marketing, we have refined four principles to help ensure that we build the highest quality customer database. These principles are called the Four Ps of e-marketing, and they help guide how consumer data should be collected and used.


Permission and privacy. One of the most difficult challenges to building a customer database is earning a consumer's trust and receiving his permission to market to him. This is a challenge and mind-set that most direct marketers will continue to face. The buying and selling of customer lists and consumer data may have been an accepted practice in the past, but to earn the public's trust, e-marketing must take a strong stand on privacy matters. Consumers won't tolerate a careless disregard for their personal information. Practices such as sending unsolicited e-mail, using cookies to track surfing behavior or creating anonymous profiles without permission also violate this core principle.


To earn the trust and permission of consumers, direct marketers must think like brand marketers. They will need to communicate their unique value proposition clearly and concisely. Having a clear brand identity will increase the chance of generating a high degree of customer loyalty because your actions and messages will be true to your original intent. The quality of the database is not based on sheer volume, but on what type of meaningful relationship the consumer has with your service and brand.


A database built largely from "promotional gimmicks" does not constitute a permission-based marketing strategy. An example is one that has been built solely from sweepstakes entrants. Consumers enter for one purpose (to win a prize) and then find themselves marketed to with an unrelated message.


Permission also means putting the customer in control by giving him the ability to specify the type, frequency and format of communication he wishes to receive. An important note: Do not work to earn the permission of a consumer only to make it nearly impossible for him to unsubscribe or change his preferences.


Ultimately, marketers will learn that the harder won the permission, the more meaningful it is.


Always feel strongly about your role as a trusted infomediary between consumers and your advertising customers. For traditional direct marketers that want to "buy" a list and "own" the consumer data, the first two Ps - permission and privacy -- fundamentally change the way consumer data can be collected and used.


Profiling and personalization. Permission and privacy are the bedrock of any e-marketing strategy, while profiling and personalization are the next critical areas for developing one-to-one relationships with your best customers.


The data you collect and in what format and frequency are two of the most important challenges in building a customer database. What broad categories of data will contribute to your data model?


• Demographic profile information.


• Stated interests and ownership.


• Behavior.


• Attitude and usage.


• Purchase and redemption data.


In each of these areas, the questions you ask or behaviors you track should be determined by the overall needs of your business and your customers. At CoolSavings, we collect date-of-birth information for the children in a household as part of a program called coolparenting. The program is designed to provide customized offers to new parents based on the life stages of their children. We also ask more detailed questions about ownership in important areas such as pets (type of pet, breed, age, etc.) and automobiles (make, year, model). The advertiser and the consumer benefit equally from sharing the specific offer information with each other.


A challenge of this new marketing environment is the integration of a customer-centric marketing discipline with a technology-driven personalization infrastructure. As the two become intertwined, leading marketers have to master both to fully realize the potential.


Making the investment in a team of data mining experts and building a highly scalable data warehouse will help provide insight into the data collected during the start-up phase. This insight should lead to the personalization of all communication with your customer base in such a way that they see relevant and appropriate information that will lead them to return to your business as loyal customers.
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