Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association

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Just Imagine!
by Ray Jutkins

Imagine this: A chain of 12 restaurants with 450,000 guests who have registered to be part of a Birthday Club and frequency marketing program.
Imagine ... mailing to these guests a birthday offer ... where 33% redeem it, generating over 400,000 total guest visits and something in excess of $3.1 million in sales. At a cost of about $630,000 -- a return of nearly 5 to 1.
Imagine ... a group of 7 restaurants with results like this. Mail 40,741 birthday cards, get 13,071 redemptions, with 34,832 guest visits and $288,800. in sales.
Imagine ... this same group sending 12,500 holiday time special offers, generating 9,391 visits and $76,400 in sales.
►   Imagine ... mailing 457,871 cards to your present customer base, inviting them to return -- and having 109,096 do so! For a total of 259,661 guest visits and over $1,500,000. in sales.

Just imagine!

Imagine ... a summer time promotion to 15,485. 4,223 guest visits generate $29,200. in sales.
Imagine ... a Mothers' Month promotion, where 14,887 mailings earn $65,000. in sales from 8,657 visits.
►   Imagine ... mailing 56,502 Thanksgiving promotion cards, getting a 20.4% response, 16,021 visits, $162,387. in sales.

Just imagine!

Imagine ... a Halloween promotion. To 55,412 customers. 12,169 show up bringing with them $170,872. in sales.
Imagine ... a back-to-school promotion. You mail 55,442. 27,940 guests visit with $167,061 in sales.
Then imagine going to non-registered guests in neighborhoods where you know your current customers live. And making a special invitation offer.
Imagine ... 5,900 households receiving your offer -- 14.9% respond for a total of 1,990 visits and $15,019 in sales.
►   Imagine ... introducing a new menu to your current customers. With a certificate offer. You reach 11,244, 27.3% respond for 7,012 guest visits and $34,257. in sales. The return is an outstanding $7.25 for each dollar invested.

Just imagine!

Imagine ... sending a follow-up "thank-you" to all those who did take advantage of your special promotion. Just a "thank-you". And having an additional 10% redemption, earning $12.25 for each dollar spent.
Imagine ... sending a follow-up "we missed you" card to those who did not take advantage of your original offer. You mail 5,740, get a 9.3% response to the follow-up, for 1,143 guest visits and $6,182 in sales ... a 3 for 1 return.
►   Imagine ... sending an Anniversary offer to 1,992 of your select customers. 22.1% redeem, for 1,345 guest visits, earning $11,098 in sales, a return of $12.89 on every dollar invested.

Just imagine!

You too, can imagine. For each of these examples is a real, live story. It all happened.

The examples came from restaurants such as Ricardo's & Don Jose, from TGI Friday's, from Charlie & Barney's, and from Acapulco Restaurants, Cask 'n Cleaver and Ragazzi's.

How are these results possible?

It is really rather simple -- it is possible because database marketing works when you do it right.

For any retailer (this story is about restaurants, so we'll stay with them as an example) here are some of the things you can do with your database:

Have a Birthday celebration program, the single most eat-out occasion in America today.
Have an Anniversary celebration program -- perfect for promotion, as it is based on emotion.
Clearly define your Specific Trading Area -- not by the larger zip code, not even census tract -- but carrier walk.
Go prospecting for Neighbors, those households close to your current customers.
Reach for new customers in your marketplace -- a New Movers program based on your specific trading area (the Neighbors and New Movers programs each work on the philosophy that "birds of a feather live together" (or at least close).
Reach for specific target audiences -- families with kids, seniors, swinging singles -- any group, again, based on your specific trading area.
Survey your current customers, to learn what they like, don't like, to introduce them to a new idea or concept -- almost anything.
Establish a psychographic and demographic profile -- to compliment the geographic profile of your specific trading area.
Run every conceivable type of promotional event -- holidays such as Valentine's, Mother's Month, 4th of July, Thanksgiving, New Year's, grand openings and re-openings, and new products and services. Also special events such as back-to-school, election day, Flag day, a local sporting event, cultural, fair or any other activity. In other words, anything you can think of, you can do
Say "Thanks" to those most frequent and most loyal customers -- or anyone! -- sometimes that is all you say, sometimes you say it with a unique and different offer.
►   Create a Frequent Diner Club -- offering an opportunity for all your guests to become frequent and loyal guests, and offering you the opportunity to build customer retention into your marketing mix.

Frequency programs work

Frequency/loyalty/retention programs were given birth by the airline industry. Sure, almost anyone -- even a local car wash -- had a punch card system ... the idea being if you got your car washed ten times the 11th time is free.

That is not what I am talking about. Because that is not making full use of the capabilities of what we know as a database, or doing what we can when we think customer relationship marketing.

There is nothing wrong with an offer of a free car wash. What that type program fails to do is gather the customers' names, which is what allows you to "make love" to them.

There is a mild incentive to return ... nothing else. Certainly no push / kick / pull / special and unique something different / no thank-you / no working the marketplace. It is a transaction only process.

What the airlines taught all of us is that if we elect to fly one airline most of the time they will take better care of us as customers, as passengers, as "guests". And, they do!

For example ...

My airline of choice is United. They get me on board 120-150,000 miles a year, and have for the last decade. They chase me frequently with direct mail. They offer upgrades free. They give me more attention in the sky. And special attention by ground personnel ...

... such as getting my bags off the belt and into a cart to walk me through immigration and customs -- something I am perfectly capable of doing and have done myself scores of times. They make the experience pleasant. And they "make" me call United first, second, third for all my air travel.

Why you need a frequency program

What are the benefits to you of a frequency program? Why should you even consider the time and effort it will take to put such a marketing program to work for you?

IMAGINE BENEFIT #1 is an increase in sales.

Since it is easier to sell to someone who knows you, vs. someone who does not, you will enjoy an increase in sales. By increasing the frequency of visits, sales will go up.

If your average customer buys from you twice a month -- 24 times a year -- and you get that total up to 27 times, you have an increase of only 3 more sales in 12 months. But this increases sales by 12.5%. Not bad -- when many, many businesses are happy with half that.

Just imagine ... a spiralling upward sales increase.

IMAGINE BENEFIT #2 is retention.

Since it costs somewhere between 5 and 9 times (depending on which research study you subscribe to) to get a new customer vs. keeping a current one, retention is a large benefit.

United and I are an excellent example. I will put up with a problem from them and still come back for more. Why? Because most of the time, in fact time after time, they do take care of me very, very well. I'm committed to United -- they benefit by getting 75-80% of all my airline travel. They work at retaining me.

Just imagine ... an ever increasing retention level.

IMAGINE BENEFIT #3 is that you learn more about your current customers.

This is really a double-benefit. The database allows you to capture knowledge about your customers and use it to market to them. Secondly, it allows you to use what you now know and seek others with similar characteristics.

You benefit two ways when you really know who your customers are.

Just imagine ... knowing what you need to know to serve your audience better.

IMAGINE BENEFIT #4 is that your awareness levels increase with a database frequency program.

Awareness, like image and position, is an advertising phrase. Still, it is important. Why? Because people buy from people first ... then from companies. People make things happen. If you are making things happen for your customers and prospects -- you will have a higher awareness level among that audience. And you will become their first choice.

Awareness goes UP when you contact your audience on a frequent basis. Coca Cola is the most recognized product name in the world. They have an amazingly high awareness level 'round the earth. Yet they keep hitting their marketplace time and time again, over and over. To make 110% certain that level stays up.

Awareness breeds preference. Just imagine ... being preferred over the competition.

IMAGINE BENEFIT #5 is that database frequency marketing allows you to target your specific audience.

The more you know, the more you can target. The more you target, the more bulls-eyes you'll hit. And database marketing allows you to specifically target the right message to the right people -- and with some strategic thinking up front, at the right time.

You know that not all customers are created equal. Some are worth considerably more than others. Sometimes we call that Lifetime Value ... how much a specific customer will be worth to us over "X" time. The length of time we will have a relationship.

Because you have knowledge of your customers, you are able to establish "levels". United Airlines has four, with the top being what they call "1K" -- those customers who flew 100,000 miles or more in the last calendar year. These few get extra and additional perks over all other customers.

You can do the same. You can send the right message to the right person. Not everyone gets the same offer, as not everyone is the same. Nor are they all worth the same to you. Anyone who says they treat all customers the same is someone I do not want to do business with. Because all customers are not the same.

Just imagine ... specifically targeting the right audience with the right message every time you go to the marketplace. Just imagine ...

IMAGINE BENEFIT #6 is loyalty. Any customer who stays with you over a period of time builds loyalty to you. One "brick" at a time, they make a commitment to do business with you.

With loyalty comes "belonging". Comes "family". Comes "Two-Getherness". (Yes, I know this is misspelled. I spell it this way on purpose -- to indicate you and your customer, the two of you, working "Two-Gether".)

The whole idea is that certain products and services can not be force sold. I do not need a new suit every month. I do need some new clothes ... a shirt or tie, shoes or socks -- something.

Loyalty to Apparel by Johnny and my friend Johnny Rodriguez is all he wants. Johnny wants me to think of him every time I need business attire. He wants me to be loyal. To think of him. First. Every time I need some new clothes.

Frequency builds loyalty. And it works two ways ... me to you AND you to me. If I frequent your restaurant or store, I am more likely to be loyal. If you ask me to visit you more often, I am likely to do so more frequently.

An old sales axiom applies: A.F.T.O. It stands for Ask For The Order. Asking your customers back again and again builds loyalty.

Just imagine ... your marketplace talking about you like a personal friend. Just imagine ... enjoying the benefits of loyalty from your customer base.

IMAGINE BENEFIT #7 is you can measure success. The key word is measure. Because if you can't measure it, you can't improve it.

With a database marketing frequency program you will know what happens when you go to the marketplace. You really want to know what happens when you have a side walk or midnight sale, a holiday gift offer, a special birthday promotion. No other form of marketing communication gives you the opportunity to know what happens every time you go to market.

A frequency program allows you to measure every time. Not every so often -- every time! You have a constant flow of knowledge that gives you a reading on you customers, their actions and reactions, their thinking and response. Frequency marketing is like waves hitting a beach -- it never stops.

Just imagine ... knowing what your marketing really does -- and measuring your successes.

IMAGINE BENEFIT #8 is profits. A database frequency program will be more profitable.

Without profits all of this is just so much fluff. Profit is NOT a four-letter word ... we are all suppose to make a profit. Personally, I do not like working with anyone who is not profitable. They usually don't pay their bills.

It is fitting here to define database marketing. My definition reads like this:

Database Marketing is gathering, saving and using the maximum amount of useful knowledge about your customers and prospects ... to their benefit and your profit.

The last word -- profit -- is the last "Imagine Benefit". It is as important a word as any word in the business world. Without them -- profits -- nothing else happens. Ever. Period!

Let's assume you agree with my definition and reasoning. How can a database frequency program help my bottom-line, my profits? Two ways:

  1. Because you will not be mass marketing to 'everyone', as everyone is not your prospect, you will spend less. A lot less. And,
  2. Because your marketing efforts will be directed to those people most likely to buy from you, either your customers or others most like them, or both ... you will earn more. A lot more.

So, Just imagine ...

Benefit #1 your sales will increase
Benefit #2 your customer retention level will increase
Benefit #3 your knowledge level goes up, so you talk with your customers as individuals, as people
Benefit #4 your awareness levels increase
Benefit #5 you target your message to the right people at the right time
Benefit #6 you earn an increased level of loyalty
Benefit #7 you are able to measure your successes
►   Benefit #8 you spend less / you earn more -- your profits increase.

Just Imagine ... let's go do it!

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About Ray Jutkins, October 3rd, 1936 — January 6th, 2005. Ray was one of the NMOA’s most generous contributors. Over the years Ray supplied the NMOA with hundreds of tips and articles for members. This is just one of many. Ray worked with B-2-B and Consumer clients throughout the world ... including USA, Canada, Mexico, Asia, the South Pacific, Europe, the Middle-East, Central & South America, Africa. Keep an eye out for more of Ray’s marketing tips and how-to articles in the pages of Direct Marketing Digest and the article archive on the NMOA website.

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