The future of direct marketing Thursday 2 February 2012, LBi London

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Introduction from chair

Chris Combemale,Chief Executive Director, DMA

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Interact!•Twitter: #dmalbi @DMA_UK @LBiLondon•LinkedIn & Facebook groups•www.dma.org.uk

The future of direct marketing The Importance of Lifetime ValueChris Combemale, Executive Director, DMA

The value of a customerWhere do you start?

Not all customers are equal

Rank these profiles for Value of the subscriber

•

Entered competition to win a holiday on-line 3 years ago –

not clicked since

•

One-time customer, last bought 2 years ago•

Active customer, buys every 4 months•

Active customer, buys once a year but top 10% for order value

Transactional Data

Frequency

Recency

Value

“Lifetime”

alters value

•

How long to customers stay active for?

•

What revenue will they generate per year?

•

Work this out for the whole database

•

Then for customer segments

•

That gives a lifetime value (LTV)

•

What about different acquisition source?

Different Metrics, Different Conclusions

•

Click-through rate

•

New or repeat visitors

•

Bounce Rate

•

Engagement

•

Micro-conversion

•

Conversion to Sale

“All of the above is focusing on short term success.

Even measuring “Visitor Conversion Rates”

is akin to declaring success after a

one night

stand.

Visit based conversion rates promote bad marketing behaviour.”

www.kaushik.net

How about adding these?

•

First month sales

•

6 months sales

•

3 years sales

A Hypothetical Example

Best

Average Customers

Customers

Purchases per year

4

2Average Order Value

£70

£50Annual Revenue

£280

£100Gross Profit Margin

10%

10%Gross Profit

£28

£10Acquisition Cost

£8

£4Net Profit

£20

£6

A Hypothetical Example Part 2

Best Average

Customers

Customers

Life Expectancy

3 years

2 yearsRevenue Year 1

£280

£100Revenue Year 2

£220

£60Revenue Year 3

£180

£0Lifetime Revenue

£680

£160Gross Profit Margin

10%

10%Lifetime Gross Profit

£68

£16Acquisition Costs

£8

£4Lifetime Net Profit

£60

£12

»

Rethinking the traditional marketing model: from campaigns to conversationsJames Young, Digital Marketing Manager, Global Marketing,Sony EricssonPipa Unsworth, Global head of CRM, LBi Group

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Rethinking the traditional marketing model: from campaigns to conversations

James Young -

Digital Marketing Manager, Global Marketing, Sony EricssonPipa Unsworth - Global Head of CRM, LBi Group

SONY ERICSSON BRIEF

•

Video content to build brand awareness and drive engagement

•

Opting out of feature battle

•

Objectives for Xperia to engage and create lasting relationships with influential early adopters

LBI'S RESPONSE: XPERIA STUDIO

•

Xperia Studio was born –

“Reality Remade”

•

Create content with phone at the heart

•

Wide open brief to collaborators

LBI’S RESPONSE

•

Wide variety of content collaborators;–

Riding in the Moab with 360 cameras–

BMX tricks–

Invisible Universe application–

Hack-a-thon at an interactive art studio located on a barge

–

Surf photography

•

Launched in September 2011 –

XperiaStudio.com–

Xperia Studio Facebook tab–

Twitter–

YouTube– ePR

TED VIDEO

XPERIA STUDIO RESULTS

DRIVING SOCIAL CURRENCY FOR XPERIA STUDIO

STRENGTHEN MY BOND

STRENGTHEN MY BOND

DEFINE OUR COLLECTIVE

IDENTITY

DEFINE OUR COLLECTIVE

IDENTITY

GIVE ME STATUS

GIVE ME STATUS

CREATING SOCIAL CURRENCY FOR XPERIA STUDIO CONTENT USING COMUFY

•

Social CRM platform Comufy is used to drive social currency for Xperia Studio

•

Xperia Studio Facebook users can sign up to be first to know about new Xperia Studio content

•

Users receive personalised newsfeed posts about new exclusive content, which can be easily Shared, Commented or ‘Liked’

for viral spread

XPERIA STUDIO CONTENT GENERATES CONVERSATION

XPERIA STUDIO RESULTS –

COMUFY REACH

Potential reach 2.6m

Total friends of fans

Xperia Studio Fans10K registered

Friends of fans 245k reachedfriends reached through shares

XPERIA STUDIO RESULTS –

EMAIL VS. SOCIAL DIRECT MESSAGING

Social Direct average click through: 20% Email average click through: 5.9%*

*Epsilon 2011 Email Trends and Benchmark

XPERIA STUDIO IN 2012

•

Xperia Studio will continue to be a key part of Sony Ericsson’s social strategy in 2012

•

New collaborator content on Xperia Studio is coming

•

Social direct messaging will continue to be used to drive social currency

•

Sign up here http://www.facebook.com/sonyericsson

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About LBi CRM

Pipa UnsworthGlobal Head of CRMPipa.Unsworth@LBi.com@Peepa

Mobile direct marketing: the challenge and opportunities

Ilicco Elia, Head of Mobile, LBi Group

Using “big data”

to make the big decisions

Allison Wightman, Head of eBusiness, Virgin Atlantic

The Future of Direct Marketing Using ‘BIG’ data to drive loyalty

Allison WightmanHead of eBusinessVirgin Atlantic Airways

How Virgin Atlantic uses its wealth of demographic, behavioural and attitudinal data to engage customers, defend its market position and remain relevant in tough economic times

Understating the obvious...

―

It is not the best time to be in the airline business―

Economic decline―

Political uncertainty―

Physical traumas

―

The only constant is change

Need for innovative ideas to capture the travellers imagination

Flying Club overview―

2.7 million members―

Global programme―

US, UK, ROW―

Extensive earning opportunities―

Last year, 23 triggers―

new ‘Welcome programme’

based on the insights from previous activity

―

Email postal and SMS―

Working to totally integrate our relationship with customers where ever they touch us

―

Online, social, retail, airport, kiosk

Whatever the technology, the same rules apply...Right message to the right customers through the right channel at the right time

Driving Effectiveness through Data and Insight

Business As Usual―

The trigger programme―

Automated customer communication programme

―

Enables us―

to exceed our annual revenue targets

―

improve performance year on year

―

Continues to evolve whilst retaining relevance to customers within their Virgin Atlantic lifetime journey.

Never standing still...

―

The newest trigger...―

SMS alert 2.5 hours before the flight

―

Encouraging foreign currency exchange at the airport

―

Significant conversion of 5% ―

demonstrates the use of timely communication within the programme.

―

This augments the existing Forex email trigger campaign

Planning and Strategy

―

Flying Club Segmentation―

7 groups, 29 types―

recency, frequency and value―

demographic, economic, social―

wider travelling behaviours―

Monitor the health of the database

―

Early warning of negative behaviours

―

Common currency

Recency

24 – 36 Months 6 - 24 Months 0 - 6 Months/ Future

No

. of

Flig

hts

5 +

Ex Execs

Seasonal Flyers Flying High

3 - 4

Occasional Flyers Fledgling Flyers

1 - 2 Almost Grounded

0 Currently Grounded

Tactical Activity―

Flight Curve analysis can optimise sale fare relevance and effectiveness

39

200

300

400

500

600

700

800

900

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMed

ian No. of Sector B

ookings/Dep

artures

Flight Curves ‐ London Heathrow to Boston (All Cabins)

Sector Bookings Sector Departures

45%

38%

18%

1 Jul 8 Sep

9 Aug 8 Nov

9 Oct

Sale fare?

So what’s next?

―

The future of Direct Marketing at Virgin is bright―

But it will look different to what it is today―

More channels―

More choice―

More integration―

More interaction―

More personal

Big Data will always support the Big decisions of this small but Big brand

Refreshment Break

Social direct messaging Philipp Mohr, Chief Executive Officer, Comufy

Enterprise Social Media Management System

® Comufy is a registered trademark of Astrapia Ltd.

Social Media Management System

Data drivencommunicatio

n

The Comufy Social SuiteKey benefits

One-to-one communicatio

n

Proven ROI High click

rate

Full insight into users’behaviour

Some of our Enterprise clients

Some of our partners

`

Overview

Confidential

• Evolution of Social Media

• Opportunities

• Build communities and be relevant

• Outlook

`

Why social media?

Confidential

• 50% logon very day

• Average 700 minutes / month

• 140 friends

Infographic via Bamboo

`

Maturity

Confidential

Young channel that is starting to mature, just like email did

The Evolution of a Fan Page

Facebook Fan Page Evolution

Facebook Fan Page Evolution

Facebook Fan Page Evolution

Broadcast Social Messaging

`

Current State

Confidential

Is this it?

Social Media Opportunities

• 1:1 communication• Engagement• Relevancy• Personalisation• Dynamic content•

Targeted, direct 

messaging

• Clear value exchange•

Build strong 

communities• Offer rewards

A lot of data and a big user base

Compelling offering + Be relevant

Clear Value Exchange

Be Relevant

Be Relevant

Confidential

User signup

Store data

Example Results

Confidential

• 35% click rates

• Very high share rates:• Campaign to 10,000 users• Directly shared by 3,228 users• 945,291 total clicks through viral spread

• Key are tempting messages and good content 

`

Social Flow

Confidential

phil@comufy.com

Customer service is the new marketingWarren Buckley, Managing Director Customer Services, BT

The empowered consumer requires a new means of engagementEd Van Siclen, SVP Business Development and Global Alliances, Lithium

The Age of the Empowered Consumer

Ed Van SiclenSVP, BD & Global Alliances@edvansiclen

Time Magazine’s Man of the Year

welcome to the social revolution:

around the globe, people are seizing power

confidential

civil disobedience:

the social web has organized and amplified our global voice

the power of the connected world:

collectively, we are doing great & inspiring things at unprecedented scale

applied game theory:

gamers model protein structure which had eluded scientists for decades

confidential

the good, the bad and the ugly:

the dawn of the mobile, social and incredibly empowered consumer:

confidential

beware of the thunder lizard!

business models are being radically transformed

Source: Forrester US Interactive Marketing Forecast , 2011

Social Media Spend Reach $2.1Bn in US

of CEOs surveyed reported that their top priority for the next five years was ‘getting closer to their

customers’

50%build awareness

and demand for

our productscustomer focus is the major driver behind social

social media as % of marketing budget

$2.1 Bspent in 2011

57% be more relevant to our customers

54% build better customer relationships

CMO Council, 2011

Social media helps us to:

Customers want an authentic conversation and engagement

with buyers ‘like them’

but customers want to interact with each other, not just you

14%of consumers trust advertisements

90%of consumers trust peer recommendations

superior design features who do I engage and how? how do I manage and

scale? how do I measure the

impact?

of marketers surveyed had no

proven ROI of social initiatives

41%

social brings new complexities

we help our clients with a roadmap to get there

LISTENto understand

DIRECTthe

conversation

PROVEthe business value

REALIZEyour brand

nation

ENGAGE

on existing networks

understand the social customer

tap into existing

social networks

create an owned hub harness the power to

drive business

impact

transform the overall

customer

experience

drive revenue

reduce service costs

accelerate innovation

engagecustomers

reputation enginesocial appstouch points

communitie

s

facebook

mobile

forums blogs ideas contests q&a

ratings surveys video tkb groups

manage social programs

management toolscustomer intelligence center

integrate rest api developer nation

social media monitoring

behavioral

analytics

studioapi creatormoderation manager

lithium has a full enterprise-class suite platform manages the social customer experience and the needs of the busines

confidential

what makes lithium different?

scientific methodolog

y (consumer web dna/research)

gaming dynamics

(reputation)

true saas

(data)

confidential

superfans are the key to success

85%and

of all useful content

superfans consist of

<1%of community

populations

on average superfans generate

50%of all community content

confidential

confidential

imagine a set of experiences that are infused with the participation of your social customers

SOCIAL CUSTOMER

EXPERIENCE

imagine this across all digital touch points

community .com mobile digital @storesocial web

confidential

we are lithium

delivering social customer experiences for the world’s most iconic brands

founded in 2001

bay area hq, new york, london, zurich, paris

300 customers 30+M registered users

named market leader by forrester, gartner

100% cloud platform

top tier VC funding, including Benchmark & NEA

confidential

confidential

Win the new Kindle

with built-in WiFi!!

Visit www.lithium-sce.com

and complete the short

survey*

*Every participant will receive an electronic copy version of “The Science of Social”

featuring the work of Dr Michael Wu. This book provides readers with a new perspective of understanding their customers, their customers expectations, behavior, and potential.

Panel Debate: Is the future of all marketing direct?

•

James Young, Digital Marketing Manager, Global Marketing, Sony Ericsson

•

Pipa

Unsworth, Global Head of CRM, LBi

Group

•

Ilicco

Elia, Head of Mobile, LBi

Group

•

Allison Wightman, Head of eBusiness, Virgin Atlantic

•

Philipp Mohr, Chief Executive Officer, Comufy

•

Warren Buckley, Managing Director Customer Services, BT

•

Ed Van Siclen, SVP Business Development and Global Alliances, Lithium

Closing remarks from chairChris Combemale, Chief Executive Director, DMA

Drinks and networking