Lori started by telling us that her talk was aimed toward small businesses and gave us the feeling that the material she covered could be done by us without having to hire a company to do it.
Lori introduced herself as “The Database Diva” who helps customers squeeze profits from the customers they already have before they spend money going out and getting new prospects to come in.
Lori next presented two case studies. The first was a 2 day workshop on follow up marketing that she offered to her list of 3000 customers in the same geographic region. She started 10 weeks from the date of her event. Lori had 8 weeks of email to these 3000 people. The emails were mostly informational and mentioned her workshop as well.
For those 8 weeks, Lori monitored the open rates from her emails. She also monitored her clickthroughs. And by using her email marketing software, she could tell who was just interested and who was a “hot” prospect. Lori then showed us an impressive report of the open and clickthrough rates. The product she used is SwiftPage which integrates with the ACT! Database. SwiftPage created a report based on all the opens, clicks, and forwards to show Lori her “hot hot hot” prospects.
Her goal was to have 20 people attend her workshop. She got around 240 people who were the hottest. She then took those 240 names and sent them a physical mailing. Lori also used a telemarketing company to follow up via phone. The telemarketers would inform the people of her seminar, remind them that they got a letter from her, and ask if the seminar is something they would be interested in. Very low key. If they said yes, the info went back into the database.
Lori showed her final results. About 3000 names have a 28% open rate, produced 248 clickthroughs and therefore she did 248 mailings to those people and telemarketing follow-ups. This resulted in her getting her 20 attendees for about $1000 in marketing costs. And now that she’s done it once, she is going to repeat it in a few months. She now knows the formula to make it happen.
People asked some questions, and after recapping, Lori told us that these techniques work pretty much across all markets.
She then went on to present a second case study.
Walter Knoll Florist is a 118 year old company in the St. Louis area. They noticed that secretary’s week had been pretty flat over the last several years and so they were trying to just get some increase in sales.
The owner had 60,000 people in his database. So she first filtered out just the b2b customers (about 30,000). She then matched these remaining names with a universe database of 14 million other businesses to get SIC codes and other information. That then told her that this florist was very strong with healthcare companies who wanted to do buy flowers and gifts for their assistants. Lori was then able to filter down his list and she also bought new prospects that fit the right profile.
In the end, Lori reduced his mailing costs by only mailing to the right people and increased his sales by 22%.
Lori next gave her definition of database marketing as anything you can do to track and measure your results. She then pointed out that database marketing is pretty much direct marketing and using a database to do it. She summarized and said that you only want to spend your time and money on the people who are ready to buy now.
She then went on to tell us that database marketing gives us a plan with actual numbers to use when we market. It’s important to find out what is driving the customer to buy. What is his motivation?
She warned us that if we don’t understand how to market to our database, then we’re just building a commodity business that will allow our competitors to catch up to where we are. This is the secret weapon that, if you can master, you can beat all your competitors.
Lori then went on to share some “ah ha” principles:
1) All customers are not created equal. Some are more important than others.
2) Customers are more important than prospects.
3) Past buying behavior indicates future buying behavior.
4) Customers share demographics and psychographics.
5) The best prospects look like your best customers.
Lori next shared some reasons to build a marketing database.
1) Find our best customers
2) Strengthen our relationship with our customers
3) Find niche markets
4) Find ways to upsell and crosssell
5) Find out how much it costs to get a new customer
She then shared that about 1/3 of the people she talked with at the seminar had a list with only name and emails or no list at all. Lori stated that the perfect database has complete contact information. Not just first name and email. And the Holy Grail is the marriage of the online shopping cart, transaction information, and contact information.
Lori went on to say that the perfect database should also contain transaction information including purchase date, amount, and purchase history.
Lori then gave some great resources for us. She mentioned that to get demographics and psychographics, you can collect them yourself or get them appended. Lori shared a company called Acxiom that can add customer data to your list.
She also mentioned InfoUSA which has a free 500 name profile that they’ll do for you once. They return the SIC code, employee info, and more. She next pointed out that you can go to the library and use ReferenceUSA for even more info. Lori mentioned SRDS but showed us a free way to get very similar information. The URL is lists.nextmark.com, and you can put a keyword in and pull up every list that’s out there for sale and also see what your competition is.
Lori then asked for a volunteer and showed how to use the Nextmark site to do some competitive research. The audience was very impressed when Lori drilled down into an RC Car Magazine and retrieved that magazine’s subscriber information.
The next topic Lori discussed was database segmentation. She showed how to code Suspects, Inquirers, Prospects, Customers (active customers based on sales cycle), Advocates, and Referral Partners.
She then talked about how widely used the ACT! Database is and if you don’t have a solution for your database marketing, then ACT! is a great one to start with.
Next she told us that we’re ready for analysis. We start by acknowledging the 80/20 rule. You want to list and sort all of your customers by the percentage of revenue they’ve given you in the last X months.
The top 20% of those customers are labeled “A”. Then “B”, “C”, “D”, and “E”. You want to market to your “A”s. She gave some great advice that when you are writing copy; write it as though you are writing to one of your “A”s.
Lori went on to explain RFM in simple terms. When you don’t know who to spend money marketing to, you should use RFM. R is recency – who bought from me most recently? F is frequency – who bought from me the most often? Who are the loyal regulars? M is monetary. These are either the elephants who buy everything you have and you never hear from them again or they are a huge percentage of your sales last year.
What you do is take a spreadsheet and sort your customers by Recency and code the top 20% a “1″. Then the next 20% a “2″ and the remaining customers “3″, “4″, and “5″. You do the same for frequency and monetary breaking each into quintiles and assigning the best a “1″ and the worst a “5″.
Each customer will then have a value of 1-5 for all three categories. You then multiply those three numbers together and you will have an RFM number 1-125. The 1′s are the very best people. The lower the number, the more you can afford to spend marketing to them.
She then listed the action items – or the next steps:
1) Create a customer database that contains complete contact information.
2) Add missing contact information. You can send a customer survey to get the information.
3) Append lifestyle or firmographics data with a service like Acxiom.
4) Start tracking your source codes. Like keywords or whatever you can track about how customers came to you.
5) Start grouping or segmenting your contacts.
6) Perform RFM Analysis every 6 months.
7) Survey your customers to ask lifestyle questions, get referrals, and get testimonials.
Buy prospect lists. Remember to buy the people that look and act like your best customers.
9) Really investigate your advocates – create a focus group so that you can understand what motivates them and build future products for them.
10) Sell your list to non-competing Direct Marketers as a profit center.
11) Back up your database daily or weekly.
Lori then answered questions. The first question had to do with reports. Lori said that the canned reports that come with software are never good enough and you’ll have to create your own.
The next question had to do with what to do with the “C”s, “D”s, and “E”s. Lori recommended not spending any money on them, but that including them on your newsletter is fine. Also try to bump them into the “B” or “A” category without spending money on them.
The final question addressed using ACT! as the primary tool for database marketing. Lori reminded us that SwiftPage is a plug in for ACT! that makes up for the database marketing shortfalls in the ACT! Database program.