Building Bridges
Reach your customers and keep
them coming back
Keynote Address to the UCEA
Arthur Middleton Hughes
Hyatt Fisherman’s Wharf
San Francisco
VP / Solutions Architect
KnowledgeBase Marketing
What KnowledgeBase
Marketing Does
Lack of Marketing Strategy
To develop a relationship program, you still have to put
individuals into groups, and develop products and
strategies that will keep them loyal. That, in my opinion is
where companies have the most difficulty.
Even when you say to them, “I can help you to identify your
key customer segments.”
They respond, “Well, great. But tell me, what to do with
them once they are identified. How do I manage each
segment?”
Sciences
Marketers are not yet sophisticated enough to know what to
do with the information.
-- Stephen Shaw - Spectrum Decision
Two Kinds of Database People

Constructors
People who build databases
Merge/Purge, Hardware, Software

Creators
People who understand strategy
Build loyalty and repeat sales

You need both kinds!
Customers today want:

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Recognition
Service
Information
Convenience
Helpfulness
Marketing to Customer
Segments
Your Best Customers 80% of Revenue
Your Best Hope for New
Gold Customers
1% of Total
Revenue
GOLD
Move Up
These may be losers
Spend Service
Dollars Here
Spend Marketing
Dollars Here
Reactivate or
Archive
Compared with newcomers,
Long term customers:
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Buy more per year
Buy higher priced options
Buy more often
Are less price sensitive
Are less costly to serve
Are more loyal
Have a higher lifetime value
Retention is a measure of
loyalty
90%
80%
70%
Percentage
Retained
from
Previous
Year
60%
50%
40%
30%
20%
10%
0%
1
2
3
4
Years as a customer
5
Retention pays better than
acquisition
Annual Profit
$48
$60
$40
$20
$0
($20)
($40)
($60)
($80)
($62)
New Customer
3rd Year
Customer
Examples of Profitable
Strategies

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Newsletters
Surveys and Responses
Loyalty Programs
Customer and Technical Services
Friendly, interesting interactive web site
Event Driven Communications
Event driven communication:
Ridgeway Fashions
Leesburg, VA 22069
Dear Mr. Hughes:
I would like to remind you that your wife Helena’s birthday is
coming up in two weeks on November 5th. We have the perfect gift
for her in stock.
As you know, she loves Liz Claiborne clothing. We have an
absolutely beautiful new suit in blue, her favorite color, in a
fourteen, her size, priced at $232.00.
If you like, I can gift wrap the suit at no extra charge and
deliver it to you next week, so that you will have it in plenty of
time for her birthday. Or, I can put it aside so you can come in to
pick it up. Please call me at (703) 754-4470 to let me know which
you’d prefer.
Sincerely yours,
Robin Baumgartner
Robin Baumgartner, Store Manager
How the Web is changing
Customer Relationships
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Recognition
Reaching out
Customer service
Information
Ordering services
Building personal relationships
Now, this is recognition!
Welcome Back, Arthur!
Immediate Feedback!
30 seconds later: Email
Conclusion: the web is here
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The web is now like the telephone.
It is not an option.
It is the way business is being
conducted, and will be conducted
You can’t sell profitably on the web
You can help people to order services
and provide super customer service
Where is your web shop?

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In should not be a separate
department.
It should be part of customer service,
registration, marketing and information
It should be linked to other sites: local
government, chamber of commerce,
local businesses.
What can you do?
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Insist on capturing emails.
Build and maintain a database of
customers, past customers, and
prospects
Make the web very, very easy to use.
Use web communications to build
loyalty and repeat sales
What Harrah’s Casino Did
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For years, Harrah’s sent regular mail to
woo customers with cheap hotel rooms
Then it linked the database to the web
allowing customers to book hotel rooms
at a discount, capturing emails.
Sept 11, 2001 occupancy fell by 25%
Massive emails with bargain offers
raised it to 100% by Sept. 20.
What Bank of America Did
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Was spending $100 million annually on
paperwork for retirement program
enrollment. Changes took months.
Moved all programs to the web.
Saving about $50 million annually.
Most processes now take only a few
minutes instead of months.
What Ryder System Did
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$5.3 Billion company, terrible web site
10 clicks to track a shipment. No search
mechanism.
Revised site. Now each shipment is only
one click away. Super fast searches.
Result: many new customers who need
to track their shipments every day.
What RCI is doing
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Time Share Marketing Company
Call center cost $48 million per year.
Revamping web site to make it better
than a live operator
Result: saving will be $17 million per
year.
Why use the web?
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You save $6 every time a person orders on
the web instead of the phone or mail
You can build relationships with
communications and provide more info on the
web than you can in a phone call
You can use the web for confirmation of
registration, and reminders that would be
prohibitively expensive any other way
Eliminate the hassle
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Aaron: Here are the books needed for
Marketing 101. To have them sent to
you right away, click here.
Aaron: Here is your schedule for your
courses this semester together with a
map. If you need a parking permit, click
here.
Thank you letters
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Send a personal letter to everyone who has
registered.
Thank you, Arthur, for registering for
Marketing 101.
Email or Hard Copy? Test half one way and
half the other. Next term see if there is a
difference in the sign up rate
Is the difference enough to pay for the cost?
Personal Profiles

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Why are they taking a course? What is
their life goal? How do you fit in to their
future plans?
Every student should complete a web
personal profile.
Then you use the profile in all future
communications.
How to get the information
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Use the web.
Customers do all the work.
It costs you nothing to receive it and
store it.
Completing the personal
profile
Welcome, Aaron.
Can you update
your personal
profile here….?
Thank You
Email
Used in all
Database
communications
What data to keep

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Name, address, email
Age, income,
occupation
What courses has she
taken? Who paid for
them?
Her life educational
plan: long range goals
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Family situation
Why is she taking
courses? What are
her objectives?
Next best course for
her
The Mathematics of email
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Even at a 1% response rate, email
marketing is very powerful.
Messages
Response
Sales
Quantity
100,000
100,000
1,000
Rate
Amount
$0.03
$3,000
1.0%
1,000
$70
$70,000
Getting them to use the web
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You know it will save you $10 to $20
person per year.
So you can afford to incentivize people
to use the web
Registration on the web--$10 cheaper
Buying books on the web, no shipping
costs.
Customer Segmentation
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Use the profile to create customer
segments:
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Students looking for a degree
Retired looking for something to do
Retraining for a new job
Your communications should reflect the
segment and their goals.
Create segment managers
Business Rules
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The database is ideal for implementing
business rules. You must create them.
Set up the database to send automatic
communications:
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Thank you
Time to register for a new course
Update your profile
Schedule changes
Resell your used books
Reaching the right audience

Profiling your existing customers
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Where do they come from?
What do they do?
Why are they attending?
How well off are they?
What do they want to do next?
Who is paying? Them or the boss?
How old are they?
Getting lists

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80% of the success of any promotion is
the audience. (Not the copy, not the
timing)
Half of all American households never
buy anything by mail.
So, a mail-responsive list will do twice
as well as a compiled list.
New Movers
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People who move are 3 – 4 times more
likely to respond than people who have
not moved recently.
Pay for and use a list of new movers
into your community.
Recent attendees
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Someone who has just enrolled for a
class is more likely to respond than
anyone else.
When to approach them? Now. Don’t
wait.
Use tests to see what works
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Test a personal letter vs. a course
catalog
10,000 get a personal letter or email
10,000 get a catalog
If the letter is done well, it will out-pull
the catalog by a significant percentage
Don’t take my word for it, you can test
it yourself.
How to conduct tests.
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Put a unique code on each catalog and
each email.
When they register, ask for the code.
Use your database to match registrants
with those sent catalogs and emails.
You can become very accurate in your
promotions
Conclusions
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We are entering a new age of customer
communications.
This will be a very profitable age for
UCEA members.
Make the web the center of your
registration process.
Make email your primary customer
communications vehicle.
Books by Arthur Hughes
From McGraw Hill. Order at
www.dbmarketing.com
Get slides: arthur.hughes@kbm1.com