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Insights

DIRECT MARKETING

Situation

As consumers are exposed to a growing array of advertisements, they are increasingly becoming desensitised to information that is not tailored specifically to them.

Critical Issue

Following the Chinese economy’s cool down in 2011, many companies in China found themselves limiting traditional marketing budgets. In doing so these companies lost a golden opportunity to differentiate themselves, build brand awareness, and drive sales. Some, however, saw an opportunity to increase market share and sought to implement marketing programs that were both cost-efficient and offered a high return on investment (ROI).

Solution

Precision e-mail marketing, which builds customer relationships by targeting customers with the right offer at the right time, has a low cost per contact and a high ROI. Since it is measurable, marketers can win management’s support by tracing program results directly to sales. A leading multinational provider of precision e-mail marketing with offices in China, saw its clients increase spending in the first quarter of 2011 compared with the previous quarter. To ensure that the e-mail marketing campaigns it implements on behalf of its clients are as effectively targeted as possible, this direct marketer uses IBM® SPSS® Modeler.

Results

  • Increased client ROI by determining which offers or combination of offers drive purchases 
  • Raised click rates on sale items by using e-mails based on customer profiles

In 2011 more than 500 million Chinese were surfing the internet, with almost 90% of those using some form of social networking and email. In 2011, following a stagnating worldwide economic environment the Chinese economy slowed down leading to falling consumer onfidence and decreasing advertising budgets.

Not so with a leading multinational marketing firm specialising in precision e-mail marketing, whose customers spent more in the first quarter of 2011 than in the fourth quarter of 2011, with a nine percent average increase across all clients.

In contrast to its tech-oriented competitors who happen to dabble in marketing, the company’s employees pride themselves on being marketers by trade. To further hone its precision e-mail campaigns, its marketing team relies on IBM’s SPSS suite of analytic and data mining products. 

INCREASED CLIENT RIO DETERMINING WHICH OFFER OR COMBINATION OF OFFERS DRIVE PURCHASES

Precision e-mail marketing campaigns begin when a user signs up for an e-mail newsletter on the client Web site. E-mails are then sent to solicit responses that will be used to create a customer profile.

Each new e-mail generates more data and customer profiles become increasingly complex. This leading direct marketer uses IBM SPSS Statistics and other products to sort through the numerous variables and determine which are truly meaningful. SPSS tools enable this company’s marketers to back their analysis with hard numbers.

The direct marketer’s retail clients for example like to understand which combination of offers can drive purchases, with the minimum cost and effort involved. In general a platinum-level customer might will expect a higher discount coupon and free shipping, while a general consumer may be satisfied with only half of that discount coupon. By determining the minimum set of offers that leads to purchases, the company maximises ROI for its clients.

RAISED CLICK RATES ON SALE ITEMS

The direct marketer uses IBM’s powerful data mining analysis tool, SPSS Modeler, to group people by behaviours and interests. One of the main advantages of using IBM SPSS Modeler for this task lies in its ease of use and superior user interface.

Before signing a contract with this direct marketer, one retail client sent its customers e-mails that contained links to a random assortment of items on sale. The direct marketer’s marketing team used SPSS Modeler to determine that these customers could be effectively segmented based on the sale item’s purchase price. By targeting more lavish spenders with sales on expensive items and frugal consumers with cheaper items, the direct marketer enabled the retailer to achieve a significant increase in click rates on sale items. 

As technology and marketing continue to merge, smart marketers realise that the two disciplines must work together in order to achieve the best results. The direct marketer’s experience with SPSS China is an example of just how effective this combination can be.