Bonding Click by Click

Successful database marketing has always been based on communications. There is no point in building and maintaining a database unless you use it to create personal communications to your customers, designed to increase loyalty, retention, referrals and cross sales.

Before the Internet, such communications were rare. Personal letters were expensive, and retention building outbound phone calls were out of reach for most marketers. The Web has changed everything. Now marketers can afford to do many interesting and profitable things that were never before possible.

For example, a major brick and mortar retailer — which does not sell direct — worked with Quris to accumulate 220,000 customers who asked for e-mail newsletters about new movies. Quris decided on a six-month test program, setting aside a random control group of 16,000 who got no e-mails, even thought they asked for them. Customers have to be registered to buy, so Quris had a very good way to track the results of their efforts.

Quris began the program with an opt-out message to be sure no one would think the messages were spam. From this they created an opt-in test universe of 170,000. Half got e-mails and half got e-mails with coupons for buy one, get one free. The results were fantastic.

Overall, during the six months, those who got the e-mails bought 28% more than those who did not. Those who got coupons responded better than those who did not. Previously active customers became more active than they had been, and many inactive customers were reactivated.

Miles Kimball has been sending out catalogs since 1935. In the spring of 2003 they created an e-mail test with their catalog mailings. Vice president of marketing Vicki Updike selected 40,000 customers who had used their Web site to order items from their paper catalog. She divided them into two exactly identical groups: 20,000 got e-mails in conjunction with three different catalogs over a two-month period. The other 20,000 got only the three catalogs. Those who got the e-mails bought significantly more than those who received only the catalogs.

For years, airlines have mailed monthly statements showing how many miles flyers have accumulated. With tens of millions signed up, the statement costs have become a serious concern.

Many are now sending statements by e-mail. The savings amount to about 80 cents per member per month, which means some hundreds of millions of dollars annually

My e-mail from American Airlines this week begins: “Arthur Hughes, here is your personal edition of AAirmail.” It features information about flights from Fort Lauderdale, which is where I live. This is a great example of relationship marketing.

Marketers are also using e-mails for last minute specials, low-cost item promotion, viral messaging, follow-up messages and to promote microsites. Let's look at a few of these.

Last-minute e-mails

In the past few years, airlines have been sending weekly personalized last-minute e-mails designed to sell empty seats. These have been working. Such messages were impossible before the advent of e-mail. Why? Because direct mail is too slow. These e-mails can be sent out on Thursday to sell seats on Saturday flights. Direct mail could not possibly work. But even more important, these e-mails to air- miles members help maintain the relationship, retention and loyalty of members, even if they do not grab at the last-minute specials.

Low-cost items

Everyone in the direct mail business knows you can't successfully promote low-cost items using direct mail. If the product costs less than $30, and your response rate is 2%, you will go broke. E-mails change the equation. Universal Music (UMG) has had great success using e-mail to promote their CDs, which sell at retail for less than $20. On the jewel box of each CD sold, UMG puts a sticker that notes the artist's Web site (such as www.sherylcrow.com). Arriving there, fans get a chance to listen to some of Sheryl's music and to register as a fan. Those registered go into a database from which they will receive e-mails about Sheryl's concert tours and new CD releases. In recent promotions, UMG used e-mail to reach 1.4 million fans, achieving an 11.2% response rate. Fans went to the Web site, registered and downloaded. Fifty percent of these reported that they bought a CD at retail as a result.

Viral marketing

E-mails also make it possible to expand your database by enlisting customers as recruiters. More and more e-mails are asking customers to recommend others who want to read the same message. They provide a place for customers to e-mail information to their friends which would be very difficult to do with direct mail. A major rifle manufacturer sent an electronic white paper on a revolutionary new product to 200,000 registered owners. Owners were encouraged to e-mail the white paper to their friends by entering their friend's e-mail addresses on the site linked to the e-mail. As a result, the manufacturer acquired the names of several thousand new potential customers.

Follow-up messages

Amazon began it, and now every good Web site uses the same techniques. When you order something, you get an instant e-mail saying, “Your order has been received. Thank you.” Later you get an e-mail saying, “Your order was shipped.” These are relationship-building messages that would be impossible with direct mail. They maintain loyalty, and are a powerful way to use database marketing.

Microsites

The beauty of a microsite is that it is very inexpensive to set up, and does not involve all the committees and expense involved in making changes to a company's main Web site. Microsites permit the text of the e-mails to be very short, which gets more of them opened and read. At microsites, the customer can do whatever the e-mail directed them there for: register, update their profile, buy a product, find a dealer, or download a coupon. Any data entered into a microsite goes directly into a database. The beauty of this type of e-mail is that you can learn within a few hours how many people received your message, read it, clicked on items of interest or downloaded the information. This is real linking of e-mails with database marketing.

The Internet and e-mail are the best things that have happened to database marketing since they invented relational databases. E-mail has made true relationship marketing possible.

Arthur Middleton Hughes is director of database marketing strategy for DoubleClick Data Management Solutions.