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1
Integrating All Direct Marketing Channels to
Build Customer Loyalty
A BMW Case Study
Prof. Rushen Chahal
Prof. Rushen Chahal
8/3/2019 Build Customer Loyalty- BMW Case Study
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How brand marketing has evolved
1950 - 2000 Brands built by mass advertising
1985 - 2000 Database Marketing arrived, but
not integrated with mass advertising. 1996 - 2000 The Internet arrived, but not
integrated with DBM or mass advertising
2001 BMW brings them all together
2Prof. Rushen Chahal
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BMW Buyers Not Necessarily Driven
by Price BMW customers want:
± A realization of the brand promise
Performance, safety, technology, innovation
± Recognition
± Service
± Information
± Convenience
± Helpfulness
3Prof. Rushen Chahal
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How BMW Buyers Make Purchase
Decisions
Personal Profit from Purchase =
a (usefulness of product)+b (perceived brand value)
- c (money cost)
- d (time or inconvenience)
4Prof. Rushen Chahal
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Two kinds of database marketing
people Constructors
People who build databases
Merge/Purge, Hardware, Software Creators
People who understand strategy
Build loyalty and repeat sales You need both kinds!
5Prof. Rushen Chahal
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Situation Analysis
In 2000, BMW built a robust customer and
prospect database designed to:
± Provide a comprehensive view of the automotiveand financial services BMW customer
± Deliver short term, incremental revenue through
opportunistic marketing programs
± Increase customer loyalty through understanding
and ability to deliver relevant, timely
communication
± Secure BMWs place in its customers lives by
identifying which households are good targets for6Prof. Rushen Chahal
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BMW Situation II
BMW now has a central system of measurement ± The BMW Report Center monitors communications
and response from prospects and customers Measurement includes cost per response and cost per
sale BMW now has the ability to view prospects as
well customers in its universe ± This allows BMW to view the full shopper-owner
cycle from first point of contact, through sale andcross sale
The new marketing database contains a broadrange of information on the BMW consumer ± Campaign, response, and financial service data
± 190 appended individual and household data points
7Prof. Rushen Chahal
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BMW Situation III
Allowing a full view of the BMW customerdelivers smarter targeting and profit-generatingup sell and cross sell opportunities
± Which vehicle owners are best targets for creditcards?
± How can BMW card owners increase the lifetimevalue of the vehicle owners?
± Where are the pockets of our most profitablecustomers?
± Which customers will deliver additional revenuethrough financial services products after they havedisposed of their BMW?
8Prof. Rushen Chahal
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BMW Database Marketing Goals
Improve the effectiveness of marketing
programs in the years 2001 2003 in
order to: ± Return to BMW the cost of the database build
± Pay for database maintenance going forward
± Increase the revenue per customer over time
± Increase the profit per customer
± Increase the lifetime value of the combined
BMW automobile and financial services
customer9Prof. Rushen Chahal
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How BMW measures return on
investment
Consistent measurement and enhancement
of BMW marketing programs
Ability to prioritize prospects and customers
based on their likelihood to buy
Identification of low hanging fruit
programs that can be quickly implementedto generate revenue in the short term
Refinement of customer communications Testing results against Control Groups
10Prof. Rushen Chahal
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Controls and Measurement
Control groups measure the effectiveness of
each program
± Non-mailed groups that are measured against the
mailed groups
Reports on the BMW Report Center provide a
consistent form of measurement
± Cost per lead, response and sale measurement
± Cross-penetration of product purchases
11Prof. Rushen Chahal
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Benefits to BMW
Increased communication effectiveness
± Integrated database used by all groups
Increased efficiency The right information to the right customer at the right time
Reduced communication expense
± Fewer pieces mailed with higher effectiveness
Increased customer participation
Increased customer satisfaction
Increased corporate and center profits
A higher level of data from and about BMW customers
12Prof. Rushen Chahal
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Relationship Marketing Strategy
13Prof. Rushen Chahal
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The Database
All programs are built on a state-of-the-art
customer relationship management database
which provides:
± More information on owners and prospects than
BMW has ever assembled before
± Powerful tools to support BMW loyalty and
prospect conversion programs ± Automated communication that supports the
Owner Experience
14Prof. Rushen Chahal
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2001 Database Marketing Goals
Increase customer loyalty
Increase prospect conversion to sales ratio
Increase vehicle sales through existing customers Maintain existing BMW household records
Keep communication costs down while increasing
effectiveness
Develop a consistent process of program
measurement
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BMW Relationship Marketing
Objectives
Use the marketing database to realize acommunications dialogue with both ourprospects and our customers
Systematic use of customized information toattract and retain customers
Facilitate mutually beneficial and relevantinformation exchanges
Increase owner loyalty and customer acquisitionrates
Strengthen BMW brand perception at theindividual customer level
16Prof. Rushen Chahal
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Core Communications Program
Consumer Communications
± Welcome Kit
± Loyalty Communications
± Prospect Prioritization/Extending the Dialogue ± BMW Magazine Enhancements
± BMW Owners Circle
± Financial Services Programs
Credit Card & Banking Customer Acquisition
Cross Sell and Up Sell Marketing
± Opportunistic Quick Win Programs
17Prof. Rushen Chahal
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The old welcome kit was:
A static kit
Information on
±
BMW, the Brand ± BMW, the Company
± BMW, the Products
It welcomed people to the brand, but offered
no real taste of the BMW Experience
18Prof. Rushen Chahal
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The new BMW welcome kit
A personal welcome kit that owners realize was created just for them
It arrives within the first 30 days
It is a dialogue opener, an invitation to the BMW experience that extends over a full year
Each of the kit pieces enhance your perception of the BMW Brand and the Experience
Multiple calls to action which lead you deeper into the Experience
It inherently fosters the collection of information needed for further relationship dialogue
19Prof. Rushen Chahal
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The Database Supports the Welcome
Kit
Weekly feed of new owners from the database
Rapid record cleanup for mailing
Weekly fulfillment of corrected names, addressesand data to the welcome kit program
Monthly maintenance of the database which
supports all owner
and prospect
communications
20Prof. Rushen Chahal
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Welcome Kit Fulfillment Process
Task: Provide individual customer data forpersonalized welcome kit fulfillment
Strategy:
± Provide new owner personalized fulfillmentinformation on a weekly basis
± Recover key information requested
± Maintain owner files based on collected information
for future programs ± Identify customers by model, financial status, and
preparatory segmentation (i.e. loyalty, activity, etc.)
21Prof. Rushen Chahal
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The Loyalty Situation
BMW customers are fiercely loyal to their brand
Loyalty can be measured: it is the repurchase rate
Successful loyalty is a two way street
Customer loyalty can be strengthened by relevantpersonal communications
BMW Loyalty initiatives cover the entire ownershipexperience ± Welcome Kit, Newsletters, BMW Magazine, Multiple
Vehicle Owner programs
22Prof. Rushen Chahal
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Owner Communication Goals
Increase BMW profits through:
± Increased repurchase by existing owners
± Increasing the number of BMWs per household
± Increased sales of BMW previously owned vehicles ± Increased use/purchase of BMW FS products
Each program effectiveness measured by controlgroups:
± Control Group: Owners who are not sent thecommunications
± Test Group: Owners who get the communications
23Prof. Rushen Chahal
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Loyalty Building Newsletters
General Goals:
± Immersion in the BMW Experience
± Promotion of Owners Circle
± Purchase of BMW accessories
To 3 and 4 year BMW owners. Goals:
±
Increase the repurchase rate ± Multiple BMWs in each household
± Widespread use of BMW Financial Services products
To new BMW owners, Goals:
± Purchase BMW financial services products
± Capture information about their preferences, lifestyles, automobile interests, etc. useful for further
dialog
24Prof. Rushen Chahal
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Newsletter Strategy
Ongoing collection of news and information of interest to BMW owners
Owner surveys to determine preferences for:
± News, information, and topics
± Communication Channel (email or print)
± Frequency
Begin with a printed newsletter to gather email addresses ± Move to email newsletters as quickly as possible
Multiple offers to generate owner response
Promote the use of Owners Circle
25Prof. Rushen Chahal
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Newsletter Content
New products
BMW awards
Sports stars that drive BMWs
Ratings by leading car magazines
Why the BMW engines are superior
The history of BMW
Event calendar
Magazine reprints
Sponsorships
BMW Brand Values
Roadside Assistance
Servicing requirements
BMW Insurance
BMW credit cards
BMW Accessories
Driving Events
BMW trade in prices
BMW Owner Clubs
Owners Circle
World news featuring BMW
26Prof. Rushen Chahal
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BMW Magazine Strategy - Before
BMW publishes a high-value magazine
to its owners in the first two years after
their purchase Because of its universal distribution, the
magazine can be more than a magazine
±
It can be a data collection tool for furtherpersonalized communications
27Prof. Rushen Chahal
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Magazine Strategy Today
Capture additional information on customers
± Email Addresses
± Purchase Intentions: owners identifying themselves as entering the purchase cycle
Allow BMW owners to purchase merchandise
± Provide direction to BMW Online Store for purchase
Push registration on Owners Circle
Each program effectiveness measured by control groups:
± Control Group: Owners who are not sent the communications
± Test Group: Owners who get the communications
28Prof. Rushen Chahal
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Goals of the Prospect Management
System Increase prospect conversion to sell more
BMW automobiles
Provide a steady flow of qualified leads toBMW Centers
Make communications interactive
Continually improve the conversion rates bybetter prospecting
± Measure the conversion rate by Center, Region,
Prospect Lifestyle, Income
29Prof. Rushen Chahal
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Automated Database Processes
Prospects developed from all contact sources:
± Telephone, Direct Mail, Auto Shows, Events,
Internet
Rapidly qualified and scored
Centers receive qualified leads electronically
within 48 hours of receipt
Prospects get BMW message within 48 hours
Every lead tracked electronically, with daily,
weekly, & monthly reports for BMW
management on the web30Prof. Rushen Chahal
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Testing and Implementation
Strategy Scoring models for incoming prospect requests determine priority
± Focus on priority A & B prospects
± Moving to lower priorities as the systems proves itself
Fully integrated creative implementation in both electronic and paper media as well as
events
Test scoring models against anticipated response and adjust as needed Utilize a 5% control group for a period of one year for reporting comparisons
31Prof. Rushen Chahal
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Measurements of the Prospect
Program
Sales
Response
±
To electronic vs. paper ± Predetermined vs. Relational
± Offers and incentives
Modeling success
% prospect conversion (historical)
Media preference automated system
Cost of program
32Prof. Rushen Chahal
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Measuring success through the
dealers
Scored leads sent to each dealer
Conversions are measured monthly
Each dealer conversation ratio calculated Program success measured by comparing
dealer to dealer conversion ratio
Dealer, Market, Region and National averageconversion ratios create measurable
benchmarks
Above average dealers manage their leads33Prof. Rushen Chahal
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Prospect Program Communications
Strategy Direct Mail and E-mail integrated communication plan
± Alternating content delivery mediums
± Each reinforcing the one that came before it
Use of database information to drive customization and relevance Each communication introducing a new piece of the BMW Experience
All communications tie in to web activities
Integration with off-line and online marketing activities
Prospects given the opportunity to opt-out at any point
Prospects removed from program if they purchase a vehicle
34Prof. Rushen Chahal
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Program Communications
Objectives Immerse and invite the prospect into the BMW Experience
Reinforce the initial contact with BMW
Educate as to the depth of the Brand
± Products and Services Point the prospect towards a test drive and the dealer Reinforce core marketing communication objectives about:
± Brand Values
± Brand Heritage
± Product attributes
± The BMW Ownership Experience
35Prof. Rushen Chahal
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Program Content Objectives
New products
BMW in the News
BMW Technology and Innovation
BMW Safety
The history of BMW and BMW Brand Values
Event invitations
Test drive incentives
BMW gifts
Magazine reprints
BMW Financial Services products
36Prof. Rushen Chahal
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Prospect System Benefits
Sell more cars by: ± Immediate Scoring of Prospects
± Immediate electronic Center notification of
leads
± Immediate communications with the prospect
± Continually engage the customer in the
Experience
±Provide more information on the depth of theBrand
Reduce the cost per car sold
Provide Management with accurate &37Prof. Rushen Chahal
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Quick Wins: X Factor Situation
The BMW Database offers a huge opportunity
to utilize information to refine BMW programs
X Factor programs are built on data mining,and deliver:
± Highly effective marketing programs
± Incremental revenue opportunities
± Low cost per sale
± Increased customer/prospect contact and
satisfaction
38Prof. Rushen Chahal
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X Factor Initiatives
The Loyalty and Prospect Programs, combined with the database, offer great potential for
creative, interactive X factor programs:
± Contests
± Programs for Women/Minorities
± Special Events
± Referral Programs
± Certified Previously Owned Cars
± Second BMWs in every home
± Lifestyle Programs
± Congratulatory Mailings to 3+ BMW Owners
39Prof. Rushen Chahal
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X Factor: something new every
quarter
40
Q1 Q2 Q3 Q4
CPO Program
Owner Referral
Car Birthday
Launch
Plus improved reporting, query
development
and a half dozen new ideas
to be developed and implemented during
the year
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X1 Womens Program
Identify ways to build relationships with
female owners:
± Bring them to the Brand, and keep them
longer
± Appeal to their unique needs
± Recognize the purchasing power and
influence that automotive marketerstypically ignore
Provide tools that reduce pre-dealer visit
anxiety
41Prof. Rushen Chahal
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X2: Certified Previously Owned
Program
Identify households that are prime
prospects to purchase a second BMW
±Analyze multiple purchase households
± Target groups most likely to purchase a CPO
vehicle
Households with teenagers or young adults
Identify seasonality graduation, etc.
Test the program on current BMW owners,
then roll out to prospects
42Prof. Rushen Chahal
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X3: Series 7 Launch
Identify those current owners who aremost likely to purchase a new 7 Series
BMW
Invite these special people to be amonga small group who are allowed to
preview the new 7 series
± Appeal to their appreciation of inclusion by
asking for their feedback and opinion
± Allow them to be among the first to test
drive
±
Notify them periodically of the status of the43Prof. Rushen Chahal
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X4: Mini Launch
Identify those current owners who aremost likely to purchase the MINI
Create a unique lifestyle message to these
owners ± Appeal to the early adapter
± Focus on active lifestyles
± Get them to preview on the web and opt in
to marketing messages
44Prof. Rushen Chahal
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X5: Birthday Cards
Develop a program that uniquely appealsto the BMW owner
± Communicate the personality of the brand
±
Reinforce the relationship that the BMWowner has with their car
At the anniversary of purchase, send an
e-card to owners
± Direct them to a micro site to get an e-
birthday gift
45Prof. Rushen Chahal
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Summary: BMW has put it all
together
Database provides the central focus for:
± Owner loyalty communication programs
± Prospect communications
± Opportunistic Quick Win Programs
± Measurement of success
± Building BMW Brand Loyalty
46Prof. Rushen Chahal
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Thank You
47Prof. Rushen Chahal
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