As special loyalty-building offers. A credit card

As an example of the second goal—customerretention, or loyalty building a company such as DuPont Automotive might sendall its present customers a regu­lar newsletter on its new research and newproducts to build up its relationship with these customers.

In many businesses,a key 20 percent or so of customers ac­count for 80 percent or so of volume, sobuilding relationships with these key cus­tomers is obviously vital. To enhancecustomer satisfaction, a company might offer a toll-free telephone number forservice questions, customer enquiries, or product complaints. (Such a telephoneservice is an example of inbound telemar­keting.) An airline might send all itsfrequent-flyer program members a newsletter with special loyalty-buildingoffers. A credit card might use an envelope stuffer mailing to induce itspresent customers to charge even more.

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Many of these loyalty programs offerfree gifts or incentives to a company’s best customers: American Ex­pressoffers the top 5 percent of its card members special restaurant and travel of­fersthat vary by the zip code in which the card member lives.’Such mailings can be used not only tostrengthen relationships and build loy­alty, but also to accomplish the thirdand fourth goals—cross-selling products or increasing the usage rate. Thus, alarge financial services company such as Ameri­can Express might attempt tosell new insurance or financial planning services to its charge card membershipbase, or a large foods company like Kraft General Foods might try to get acustomer of one low-fat product to try its other low-fat products (by mailingthem coupons or samples). As an example of direct market­ing to increase theusage rate, or amount of repeat consumption, an automobile dealership or repairfacility (such as Goodyear Auto Service) may track the mileage of the carsbrought in for service and send mailed reminders to these cus­tomers to bringtheir cars in for service at regularly scheduled intervals.Because of the high cost of personal salescalls, companies also often use di­rect marketing in after-market sales (e.g.

,selling copier supplies to people who bought copiers and whose names andaddresses and phone numbers are now in a database), and in generating salesinquiries that can then be followed up by telephone and personal sales calls.The use of databases also allows companies to use direct marketing to targetmailings of coupons and samples to only high-opportunity individuals andhouseholds. The traditional users of direct marketing have always beenmagazines and newspapers (who use it to sell subscriptions), the marketers ofinsurance-by-mail, the record and book clubs (in what are called the negativeoption continuity programs, through which customers are sent something everyfew weeks till they say no), and, of course, the catalog retailers (such asSpiegel’s, Lands’ End, etc.)


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