Integrating All Direct Marketing Channels to

Build Customer Loyalty

A BMW Case Study
Kay Madati, Relationship Marketing Manager BMW
Arthur Middleton Hughes, VP for Strategic Planning
M\S Database Marketing
The DMA 84th Annual
McCormick Place, Chicago
Tuesday, October 30th 2001 10:00 AM – 11:15 AM

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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

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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

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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)

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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!

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Situation Analysis
In 2000, BMW built a robust customer and
prospect database designed to:
 Provide a comprehensive view of the automotive and
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 BMW’s place in its customers’ lives by
identifying which households are good targets for
additional BMW purchases

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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 and cross sale
The new marketing database contains a broad
range of information on the BMW consumer
 Campaign, response, and financial service data
 190 appended individual and household data points

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BMW Situation III
Allowing a full view of the BMW customer
delivers smarter targeting and profit-generating
up sell and cross sell opportunities
 Which vehicle owners are best targets for credit
cards?
 How can BMW card owners increase the lifetime
value of the vehicle owners?
 Where are the pockets of our most profitable
customers?
 Which customers will deliver additional revenue
through financial services products after they have
disposed of their BMW?

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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 customer

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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 implemented to generate
revenue in the short term
 Refinement of customer communications
Testing results against Control Groups

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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

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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

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Relationship Marketing Strategy
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

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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 a
communications dialogue with both our
prospects and our customers
Systematic use of customized information to
attract and retain customers
Facilitate mutually beneficial and relevant
information exchanges
Increase owner loyalty and customer
acquisition rates
Strengthen BMW brand perception at the
individual customer level

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Core Communications Program
 Consumer Communications
Welcome Kit
Loyalty Communications
Prospect Prioritization/Extending the Dialogue
BMW Magazine Enhancements
BMW Owner’s Circle
Financial Services Programs
Credit Card & Banking Customer Acquisition
Cross Sell and Up Sell Marketing
Opportunistic “Quick Win” Programs

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The Owner Welcome Kit

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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

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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

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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,
addresses and data to the welcome kit
program
Monthly maintenance of the database which
supports all owner
and prospect
communications

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Welcome Kit Fulfillment Process
Task: Provide individual customer data for
personalized welcome kit fulfillment
Strategy:
 Provide new owner personalized fulfillment
information 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.)

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Loyalty and Owner Communications

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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
relevant personal communications
BMW Loyalty initiatives cover the entire
ownership experience
 Welcome Kit, Newsletters, BMW Magazine,
Multiple Vehicle Owner programs

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Owner Communication Goals
Increase BMW profits through:
 Increased repurchase by existing owners
 Increasing the number of BMW’s per household
 Increased sales of BMW previously owned
vehicles
 Increased use/purchase of BMW FS products
Each program effectiveness measured by
control groups:
 Control Group: Owners who are not sent the
communications
 Test Group: Owners who get the communications

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Loyalty Building Newsletters
 General Goals:
 Immersion in the BMW Experience
 Promotion of Owner’s 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

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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 Owner’s Circle

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Newsletter Content
 New products  Roadside Assistance
 BMW awards  Servicing requirements
 Sports stars that drive  BMW Insurance
BMWs
 BMW credit cards
 Ratings by leading car
magazines  BMW Accessories
 Why the BMW engines  Driving Events
are superior  BMW trade in prices
 The history of BMW  BMW Owner Clubs
 Event calendar  Owner’s Circle
 Magazine reprints  World news featuring
 Sponsorships BMW
 BMW Brand Values

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BMW Magazine

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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 further
personalized communications

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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 Owner’s Circle
 Each program effectiveness measured by control
groups:
 Control Group: Owners who are not sent the
communications
 Test Group: Owners who get the communications

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Extending the Dialogue – Prospect Messages

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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 to
BMW Centers
Make communications interactive
Continually improve the conversion rates by
better prospecting
 Measure the conversion rate by Center, Region,
Prospect Lifestyle, Income

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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 web

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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

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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
Cost of sales

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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 average
conversion ratios create measurable
benchmarks
Above average dealers manage their leads
better

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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

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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

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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

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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 the Brand
Reduce the cost per car sold
Provide Management with accurate & timely
knowledge of the prospect and sales process
Increase the overall effectiveness of future
prospecting programs by learning from this one
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Quick wins: X factor programs

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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

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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

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X Factor: something new every quarter

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 Women’s 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 marketers typically ignore
Provide tools that reduce pre-dealer visit anxiety
Tailored communications that highlight what
women are looking for
 Live chat support by females
 Develop a network of female sales reps

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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

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X3: Series 7 Launch
Identify those current owners who are most likely
to purchase a new 7 Series BMW
Invite these special people to be among a 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 the vehicle

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X4: Mini Launch

Identify those current owners who are most 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

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X5: Birthday Cards

Develop a program that uniquely appeals to the

BMW owner
 Communicate the personality of the brand
 Reinforce the relationship that the BMW owner 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

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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

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10866 Wilshire Blvd., Suite 650
Los Angeles, CA 90024-4354
Phone (310) 208-2024
Fax (310) 208-5681
www.msdbm.com