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 BMWs 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 Owners 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 BMWs 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 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

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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

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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 BMW Accessories
magazines Driving Events
Why the BMW engines BMW trade in prices
are superior
BMW Owner Clubs
The history of BMW
Owners Circle
Event calendar
World news featuring
Magazine reprints BMW
Sponsorships
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 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

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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 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 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