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Page-1Integrating All Direct Marketing Channels to Build Customer LoyaltyA BMW Case StudyKay Madati,Relationship Marketing Manager BMWArthur Middleton Hughes,VP for Strategic Planning MS Database MarketingThe DMA 84th AnnualMcCormick Place,ChicagoTuesday,October 30th 2001 10:00 AM 11:15 AMPage-2u1950-2000 Brands built by mass advertisingu1985-2000 Database Marketing arrived,but not integrated with mass advertising.u1996-2000 The Internet arrived,but not integrated with DBM or mass advertisingu2001 BMW brings them all togetherHow brand marketing has evolvedPage-3uBMW customers want:uA realization of the brand promiseuPerformance,safety,technology,innovationuRecognitionuServiceuInformationuConvenienceuHelpfulnessBMW Buyers Not Necessarily Driven by PricePage-4Personal Profit from Purchase=a (usefulness of product)+b (perceived brand value)-c (money cost)-d (time or inconvenience)How BMW Buyers Make Purchase DecisionsPage-5uConstructors People who build databases Merge/Purge,Hardware,SoftwareuCreators People who understand strategy Build loyalty and repeat salesuYou need both kinds!Two kinds of database marketing peoplePage-6uIn 2000,BMW built a robust customer and prospect database designed to:uProvide a comprehensive view of the automotive and financial services BMW customeruDeliver short term,incremental revenue through opportunistic marketing programsuIncrease customer loyalty through understanding and ability to deliver relevant,timely communicationuSecure BMWs place in its customers lives by identifying which households are good targets for additional BMW purchases Situation AnalysisPage-7uBMW now has a central system of measurementuThe BMW Report Center monitors communications and response from prospects and customersuMeasurement includes cost per response and cost per saleuBMW now has the ability to view prospects as well customers in its universeuThis allows BMW to view the full shopper-owner cycle from first point of contact,through sale and cross saleuThe new marketing database contains a broad range of information on the BMW consumeruCampaign,response,and financial service data u190 appended individual and household data pointsBMW Situation IIPage-8uAllowing a full view of the BMW customer delivers smarter targeting and profit-generating up sell and cross sell opportunitiesuWhich vehicle owners are best targets for credit cards?uHow can BMW card owners increase the lifetime value of the vehicle owners?uWhere are the pockets of our most profitable customers?uWhich customers will deliver additional revenue through financial services products after they have disposed of their BMW?BMW Situation IIIPage-9uImprove the effectiveness of marketing programs in the years 2001 2003 in order to:uReturn to BMW the cost of the database builduPay for database maintenance going forwarduIncrease the revenue per customer over timeuIncrease the profit per customeruIncrease the lifetime value of the combined BMW automobile and financial services customerBMW Database Marketing GoalsPage-10uConsistent measurement and enhancement of BMW marketing programsuAbility to prioritize prospects and customers based on their likelihood to buyuIdentification of“low hanging fruit”programs that can be quickly implemented to generate revenue in the short termuRefinement of customer communicationsuTesting results against Control GroupsHow BMW measures return on investmentPage-11uControl groups measure the effectiveness of each programuNon-mailed groups that are measured against the mailed groupsuReports on the BMW Report Center provide a consistent form of measurementuCost per lead,response and sale measurementuCross-penetration of product purchasesControls and MeasurementPage-12uIncreased communication effectivenessuIntegrated database used by all groupsuIncreased efficiency The right information to the right customer at the right timeuReduced communication expenseuFewer pieces mailed with higher effectivenessuIncreased customer participationuIncreased customer satisfactionuIncreased corporate and center profitsuA higher level of data from and about BMW customersBenefits to BMWRelationship Marketing StrategyPage-14uAll programs are built on a state-of-the-art customer relationship management database which provides:uMore information on owners and prospects than BMW has ever assembled beforeuPowerful tools to support BMW loyalty and prospect conversion programsuAutomated communication that supports the Owner ExperienceThe DatabasePage-15uIncrease customer loyaltyuIncrease prospect conversion to sales ratiouIncrease vehicle sales through existing customersuMaintain existing BMW household recordsuKeep communication costs down while increasing effectivenessuDevelop a consistent process of program measurement2001 Database Marketing GoalsPage-16uUse the marketing database to realize a communications dialogue with both our prospects and our customersuSystematic use of customized information to attract and retain customersuFacilitate mutually beneficial and relevant information exchangesuIncrease owner loyalty and customer acquisition ratesuStrengthen BMW brand perception at the individual customer levelBMW Relationship Marketing ObjectivesPage-17uConsumer CommunicationsuWelcome KituLoyalty CommunicationsuProspect Prioritization/Extending the DialogueuBMW Magazine EnhancementsuBMW Owners CircleuFinancial Services ProgramsuCredit Card&Banking Customer AcquisitionuCross Sell and Up Sell MarketinguOpportunistic“Quick Win”ProgramsCore Communications ProgramPage-18The Owner Welcome KitPage-19uA static kituInformation onuBMW,the BranduBMW,the CompanyuBMW,the ProductsuIt welcomed people to the brand,but offered no real taste of the BMW ExperienceThe old welcome kit was:Page-20uA personal welcome kit that owners realize was created just for themuIt arrives within the first 30 daysuIt is a dialogue opener,an invitation to the BMW experience that extends over a full yearuEach of the kit pieces enhance your perception of the BMW Brand and the ExperienceuMultiple calls to action which lead you deeper into the ExperienceuIt inherently fosters the collection of information needed for further relationship dialogueThe new BMW welcome kitPage-21uWeekly feed of new owners from the databaseuRapid record cleanup for mailinguWeekly fulfillment of corrected names,addresses and data to the welcome kit programuMonthly maintenance of the database which supports all owner and prospect communicationsThe Database Supports the Welcome KitPage-22uTask:Provide individual customer data for personalized welcome kit fulfillmentStrategy:uProvide new owner personalized fulfillment information on a weekly basisuRecover key information requesteduMaintain owner files based on collected information for future programsuIdentify customers by model,financial status,and preparatory segmentation(i.e.loyalty,activity,etc.)Welcome Kit Fulfillment ProcessPage-23Loyalty and Owner CommunicationsPage-24uBMW customers are fiercely loyal to their branduLoyalty can be measured:it is the repurchase rateuSuccessful loyalty is a two way streetuCustomer loyalty can be strengthened by relevant personal communicationsuBMW Loyalty initiatives cover the entire ownership experienceuWelcome Kit,Newsletters,BMW Magazine,Multiple Vehicle Owner programsThe Loyalty SituationPage-25uIncrease BMW profits through:uIncreased repurchase by existing ownersuIncreasing the number of BMWs per householduIncreased sales of BMW previously owned vehiclesuIncreased use/purchase of BMW FS productsuEach program effectiveness measured by control groups:u Control Group:Owners who are not sent the communications uTest Group:Owners who get the communicationsOwner Communication GoalsPage-26uGeneral Goals:uImmersion in the BMW ExperienceuPromotion of Owners CircleuPurchase of BMW accessoriesuTo 3 and 4 year BMW owners.Goals:uIncrease the repurchase rateuMultiple BMWs in each householduWidespread use of BMW Financial Services productsuTo new BMW owners,Goals:uPurchase BMW financial services productsuCapture information about their preferences,lifestyles,automobile interests,etc.useful for further dialogLoyalty Building NewslettersPage-27uOngoing collection of news and information of interest to BMW ownersuOwner surveys to determine preferences for:uNews,information,and topicsuCommunication Channel(email or print)uFrequencyuBegin with a printed newsletter to gather email addressesuMove to email newsletters as quickly as possibleuMultiple offers to generate owner responseuPromote the use of Owners CircleNewsletter StrategyPage-28uNew productsuBMW awardsuSports stars that drive BMWsuRatings by leading car magazinesuWhy the BMW engines are superioruThe history of BMWuEvent calendaruMagazine reprintsuSponsorshipsuBMW Brand ValuesuRoadside AssistanceuServicing requirementsuBMW InsuranceuBMW credit cardsuBMW AccessoriesuDriving EventsuBMW trade in pricesuBMW Owner ClubsuOwners CircleuWorld news featuring BMWNewsletter ContentPage-29BMW MagazinePage-30uBMW publishes a high-value magazine to its owners in the first two years after their purchaseuBecause of its universal distribution,the magazine can be more than a magazineuIt can be a data collection tool for further personalized communicationsMagazine Strategy-BeforePage-31uCapture additional information on customersuEmail Addresses uPurchase Intentions:owners identifying themselves as entering the purchase cycleuAllow BMW owners to purchase merchandiseuProvide direction to BMW Online Store for purchaseuPush registration on Owners CircleuEach program effectiveness measured by control groups:u Control Group:Owners who are not sent the communications uTest Group:Owners who get the communicationsMagazine Strategy TodayPage-32Extending the Dialogue Prospect MessagesPage-33uIncrease prospect conversion to sell more BMW automobilesuProvide a steady flow of“qualified”leads to BMW CentersuMake communications interactiveuContinually improve the conversion rates by better prospectinguMeasure the conversion rate by Center,Region,Prospect Lifestyle,IncomeGoals of the Prospect Management SystemPage-34uProspects developed from all contact sources:uTelephone,Direct Mail,Auto Shows,Events,InternetuRapidly qualified and scoreduCenters receive qualified leads electronically within 48 hours of receiptuProspects get BMW message within 48 hoursuEvery lead tracked electronically,with daily,weekly,&monthly reports for BMW management on the webAutomated Database ProcessesPage-35uScoring models for incoming prospect requests determine priorityuFocus on priority A&B prospectsuMoving to lower priorities as the systems proves itselfuFully integrated creative implementation in both electronic and paper media as well as eventsuTest scoring models against anticipated response and adjust as neededuUtilize a 5%control group for a period of one year for reporting comparisonsTesting and Implementation StrategyPage-36uSalesuResponseuTo electronic vs.paperuPredetermined vs.RelationaluOffers and incentives uModeling successu%prospect conversion(historical)uMedia preference automated systemuCost of programuCost of salesMeasurements of the Prospect ProgramPage-37Measuring success through the dealersuScored leads sent to each dealeruConversions are measured monthlyuEach dealer conversation ratio calculateduProgram success measured by comparing dealer to dealer conversion ratiouDealer,Market,Region and National average conversion ratios create measurable benchmarksuAbove average dealers manage their leads betterPage-38uDirect Mail and E-mail integrated communication planuAlternating content delivery mediumsuEach reinforcing the one that came before ituUse of database information to drive customization and relevanceuEach communication introducing a new piece of the BMW ExperienceuAll communications tie in to web activitiesuIntegration with off-line and online marketing activitiesuProspects given the opportunity to opt-out at any pointuProspects removed from program if they purchase a vehicleProspect Program Communications StrategyPage-39uImmerse and invite the prospect into the BMW ExperienceuReinforce the initial contact with BMWuEducate as to the depth of the BranduProducts and ServicesuPoint the prospect towards a test drive and the dealeruReinforce core marketing communication objectives about:uBrand ValuesuBrand HeritageuProduct attributesuThe BMW Ownership ExperienceProgram Communications ObjectivesPage-40uNew productsuBMW in the NewsuBMW Technology and InnovationuBMW SafetyuThe history of BMW and BMW Brand ValuesuEvent invitationsuTest drive incentivesuBMW giftsuMagazine reprintsuBMW Financial Services productsProgram Content ObjectivesPage-41uSell more cars by:uImmediate Scoring of ProspectsuImmediate electronic Center notification of leadsuImmediate communications with the prospectuContinually engage the customer in the ExperienceuProvide more information on the depth of the BranduReduce the cost per car solduProvide Management with accurate&timely knowledge of the prospect and sales processuIncrease the overall effectiveness of future prospecting programs by learning from this oneProspect System BenefitsPage-42Quick wins:X factor programs Page-43uThe BMW Database offers a huge opportunity to utilize information to refine BMW programsuX Factor programs are built on data mining,and deliver:uHighly effective marketing programsuIncremental revenue opportunitiesuLow cost per saleuIncreased customer/prospect contact and satisfactionX Factor SituationPage-44uThe Loyalty and Prospect Programs,combined with the database,offer great potential for creative,interactive X factor programs:uContestsuPrograms for Women/MinoritiesuSpecial EventsuReferral ProgramsuCertified Previously Owned CarsuSecond BMWs in every homeuLifestyle ProgramsuCongratulatory Mailings to 3+BMW OwnersX Factor InitiativesPage-45Plus improved reporting,query developmentand a half dozen new ideas to be developed and implemented during the yearX Factor:something new every quarterPage-46uIdentify ways to build relationships with female owners:uBring them to the Brand,and keep them longeruAppeal to their unique needsuRecognize the purchasing power and influence that automotive marketers typically ignoreuProvide tools that reduce pre-dealer visit anxietyuTailored communications that highlight what women are looking foruLive chat support by femalesuDevelop a network of female sales repsX1 Womens ProgramPage-47uIdentify households that are prime prospects to purchase a second BMWuAnalyze multiple purchase householdsuTarget groups most likely to purchase a CPO vehicleuHouseholds with teenagers or young adultsuIdentify seasonality graduation,etc.uTest the program on current BMW owners,then roll out to prospectsX2:Certified Previously Owned ProgramPage-48uIdentify those current owners who are most likely to purchase a new 7 Series BMWuInvite these special people to be among a small group who are allowed to preview the new 7 seriesuAppeal to their appreciation of inclusion by asking for their feedback and opinionuAllow them to be among the first to test driveuNotify them periodically of the status of the vehicleX3:Series 7 LaunchPage-49uIdentify those current owners who are most likely to purchase the MINIuCreate a unique lifestyle message to these ownersuAppeal to the early adapteruFocus on active lifestylesuGet them to preview on the web and opt in to marketing messagesX4:Mini LaunchPage-50uDevelop a program that uniquely appeals to the BMW owneruCommunicate the personality of the branduReinforce the relationship that the BMW owner has with their caruAt the anniversary of purchase,send an e-card to ownersuDirect them to a micro site to get an e-birthday giftX5:Birthday CardsPage-51uDatabase provides the central focus for:uOwner loyalty communication programsuProspect communicationsuOpportunistic“Quick Win”ProgramsuMeasurement of successuBuilding BMW Brand LoyaltySummary:BMW has put it all together
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