Dynamics of Customer Response to Promotional and Relational Direct Mailings from an Apparel Retailer: The Moderating Role of Relationship Strength

Although direct mails have traditionally been used to sell a product or service, they can also be effective in enhancing retailer–customer relationships. This study examines how customers respond to ‘promotional’ (‘call to action’) and ‘relational’ (‘retailer-image enhancement’) direct mailings. The study develops a model that includes: (i) the dynamic effects of both types of direct mailings over time; and (ii) the moderating role of strength of the relationship that a customer enjoys with the retailer. Past purchase behavior is also considered. The model is then used in a study of customers of a Belgian apparel retailer. The results show that relational mailings positively affect customer response, irrespective of when they are sent. In contrast, the effects of promotional mailings are less clear-cut: although they work well in the short term, their effects can vary in the longer term. In addition, the study finds that a direct-mailing strategy should be planned in accordance with the strength of the relationship between the retailer and the target customers. The results of the study provide valuable insights for retailers in optimizing the effectiveness of their direct-mail initiatives.

[1]  P. Franses,et al.  The effect of relational constructs on customer referrals and number of services purchased from a multiservice provider: Does age of relationship matter? , 2002 .

[2]  P. Verhoef The Joint Effect of Relationship Perceptions, Loyalty Program and Direct Mailing on Customer Share Development , 2002 .

[3]  R. Rust,et al.  Customer satisfaction, customer retention, and market share , 1993 .

[4]  X. Drèze,et al.  An empirical investigation of the impact of communication timing on customer equity , 2008 .

[5]  Robert W. Shoemaker,et al.  Analyzing Incremental Sales from a Direct Mail Coupon Promotion , 1989 .

[6]  C. Page,et al.  Bank managers’ direct marketing dilemmas – customers’ attitudes and purchase intention , 2003 .

[7]  Paul R. Smith Marketing Communications: An Integrated Approach , 1998 .

[8]  Dominique M. Hanssens,et al.  The Category-Demand Effects of Price Promotions , 2000 .

[9]  Robert C. Blattberg,et al.  How Promotions Work , 1995 .

[10]  Paul D. Berger,et al.  Direct Marketing Management , 1989 .

[11]  Hubert A. Zielske The remembering and forgetting of advertising. , 1959 .

[12]  P. Naik,et al.  Understanding the role of marketing communications in direct marketing , 2002 .

[13]  Marco Vriens,et al.  Conjoint experiments for direct mail response optimization , 1998 .

[14]  Peter E. Rossi,et al.  The Value of Purchase History Data in Target Marketing , 1996 .

[15]  Carrie M. Heilman,et al.  The Evolution of Brand Preferences and Choice Behaviors of Consumers New to a Market , 2000 .

[16]  David L. Mothersbaugh,et al.  Switching barriers and repurchase intentions in services , 2000 .

[17]  Mohanbir Sawhney,et al.  Learning and using electronic information products and services: A field study , 2001 .

[18]  John D. C. Little,et al.  A Logit Model of Brand Choice Calibrated on Scanner Data , 2011, Mark. Sci..

[19]  Tammo H. A. Bijmolt,et al.  Which retailers adopt a loyalty program? An empirical study , 2008 .

[20]  Raymond De Young Some Psychological Aspects of Reduced Consumption Behavior , 1996 .

[21]  L. Berry,et al.  Customers' motivations for maintaining relationships with service providers , 1997 .

[22]  S. Hunt,et al.  The Commitment-Trust Theory of Relationship Marketing , 1994 .

[23]  S. Noble,et al.  Relationship hindrance: why would consumers not want a relationship with a retailer? , 2004 .

[24]  Kristina Heinonen,et al.  Communication as an element of service value , 2005 .

[25]  Donald R. Lehmann,et al.  The Effects of Advertised and Observed Quality on Expectations about New Product Quality , 1995 .

[26]  J. Jaccard,et al.  Interaction effects in multiple regression , 1992 .

[27]  John A. Schibrowsky,et al.  Decision frames and direct marketing offers: A field study in a fundraising context , 1995 .

[28]  John A. McCarty,et al.  SEGMENTATION APPROACHES IN DATA MINING: A COMPARISON OF RFM, CHAID, AND LOGISTIC REGRESSION , 2007 .

[29]  B. Kahn,et al.  Effects of Retraction of Price Promotions on Brand Choice Behavior for Variety-Seeking and Last-Purchase-Loyal Consumers , 1990 .

[30]  Frederick Kaefer,et al.  Determining the appropriate amount of data for classifying consumers for direct marketing purposes , 2003 .

[31]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[32]  J. McAlexander,et al.  Building Brand Community , 2002 .

[33]  G. Odekerken-Schröder,et al.  Assessing the Impact of a Retailer's Relationship Efforts on Consumers' Attitudes and Behavior , 2003 .

[34]  James G. MacKinnon,et al.  Testing for Consistency using Artificial Regressions , 1989, Econometric Theory.

[35]  Jie Zhang,et al.  Customizing Promotions in Online Stores , 2004 .

[36]  Philip Hans Franses,et al.  Evaluating Direct Marketing Campaigns: recent findings and future research topics , 2002 .

[37]  Allen M. Weiss,et al.  Holding Distribution Channel Relationships Together: The Role of Transaction-Specific Assets and Length of Prior Relationship , 1997 .

[38]  Couchen Wu,et al.  Counting your customers: Compounding customer's in-store decisions, interpurchase time and repurchasing behavior , 2000, Eur. J. Oper. Res..

[39]  Ruth N. Bolton,et al.  A Dynamic Model of the Duration of the Customer's Relationship with a Continuous Service Provider: The Role of Satisfaction , 1994 .

[40]  Richard A. Briesch,et al.  Effects of prior brand usage and promotion on consumer promotional response , 2006 .

[41]  W. Reinartz,et al.  On the Profitability of Long-Life Customers in a Noncontractual Setting: An Empirical Investigation and Implications for Marketing , 2000 .

[42]  Rob Cross,et al.  Perceived trustworthiness of knowledge sources: the moderating impact of relationship length. , 2004, The Journal of applied psychology.

[43]  Frederick Newell,et al.  Loyalty.com: Customer Relationship Management in the New Era of Internet Marketing , 2000 .

[44]  Nanda Piersma,et al.  Determining the optimal direct mailing frequency , 2004, Eur. J. Oper. Res..

[45]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[46]  Denish Shah,et al.  Building and sustaining profitable customer loyalty for the 21st century , 2004 .

[47]  Dwayne A. Ball,et al.  The role of communication and trust in explaining customer loyalty: An extension to the ECSI model , 2004 .

[48]  D. Henard,et al.  The effect of sales promotion on post-promotion brand preference: A meta-analysis , 2006 .

[49]  Kenneth D. Lawrence Advances in Business and Management Forecasting , 2002 .

[50]  Raymond De Young,et al.  Some Psychological Aspects of Reduced Consumption Behavior The Role of Intrinsic Satisfaction and Competence Motivation , 1996 .

[51]  Francis J. Mulhern,et al.  Retail marketing: From distribution to integration , 1997 .

[52]  T. M. Tripp,et al.  When Customer Love Turns into Lasting Hate: The Effects of Relationship Strength and Time on Customer Revenge and Avoidance , 2009, Journal of Marketing.

[53]  V. Kumar,et al.  Antecedents and consequences of relationship intention: Implications for transaction and relationship marketing , 2003 .

[54]  Carl F. Mela,et al.  Customer Channel Migration , 2008 .

[55]  Naveen Donthu,et al.  Communication and Promotion Decisions in Retailing: A Review and Directions for Future Research , 2009 .

[56]  Robert W. Shoemaker,et al.  The Effects of a Direct Mail Coupon on Brand Choice Behavior , 1987 .

[57]  Denish Shah,et al.  Managing retailer profitability - one customer at a time! , 2006 .

[58]  Hanna Schramm-Klein,et al.  Strategic Retail Management: Text and International Cases , 2007 .

[59]  Manohar U. Kalwani,et al.  Long-Term Manufacturer-Supplier Relationships: Do They Pay off for Supplier Firms? , 1995 .

[60]  William J. McDonald Direct Marketing: An Integrated Approach , 1998 .

[61]  Stephanie M. Noble,et al.  Defensive Responses to Charitable Direct Mail Solicitations , 2001 .

[62]  P. Franses,et al.  Dynamic and Competitive Effects of Direct Mailings: A Charitable Giving Application , 2009 .

[63]  Huan-Ming Chuang,et al.  A study on the applications of data mining techniques to enhance customer lifetime value — based on the department store industry , 2008, 2008 International Conference on Machine Learning and Cybernetics.

[64]  Jan Roelf Bult,et al.  Semiparametric versus Parametric Classification Models: An Application to Direct Marketing , 1993 .

[65]  T. Keiningham,et al.  A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics , 2007 .

[66]  Philip Hans Franses,et al.  Deriving target selection rules from endogenously selected samples , 2006 .

[67]  Georges Zaccour,et al.  The Dilemma of Pull and Push Price Promotions , 2008 .

[68]  D. Wittink,et al.  A model of consumer perceptions and store loyalty intentions for a supermarket retailer , 1998 .

[69]  Eric T. Anderson,et al.  Dynamics of Retail Advertising: Evidence from a Field Experiment , 2007 .

[70]  Michael Lewis The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention , 2004 .

[71]  P. Franses,et al.  Does Irritation Induced by Charitable Direct Mailings Reduce Donations? , 2008 .

[72]  Katherine N. Lemon,et al.  The Theoretical Underpinnings of Customer Asset Management , 2002 .

[73]  Pierre Volle The short-term effect of store-level promotions on store choice, and the moderating role of individual variables , 2001 .

[74]  G. Odekerken-Schröder,et al.  Investments in Consumer Relationships: A Cross-Country and Cross-Industry Exploration , 2001 .

[75]  Charlotte H. Mason,et al.  Collinearity, power, and interpretation of multiple regression analysis. , 1991 .

[76]  T. Ambler,et al.  The Dark Side of Long-Term Relationships in Marketing Services , 1999 .

[77]  Maurice Patterson,et al.  Direct marketing in postmodernity: neo‐tribes and direct communications , 1998 .

[78]  A. Buvik,et al.  The allocation of specific assets, relationship duration, and contractual coordination in buyer-seller relationships , 2005 .

[79]  Li-Wei Wu,et al.  Customer retention and cross-buying in the banking industry: An integration of service attributes, satisfaction and trust , 2007 .

[80]  Jagdish N. Sheth,et al.  RELATIONSHIP MARKETING IN MASS MARKETS , 2005 .

[81]  Carl F. Mela,et al.  Managing Advertising and Promotion for Long-Run Profitability , 1999 .

[82]  Philip Hans Franses,et al.  The impact of satisfaction and payment equity on cross-buying: A dynamic model for a multi-service provider , 2001 .

[83]  Geert Wets,et al.  Customer-adapted coupon targeting using feature selection , 2004, Expert Syst. Appl..

[84]  P. Verhoef Understanding the Effect of Customer Relationship Management Efforts on Customer Retention and Customer Share Development , 2003 .

[85]  Kevin Lane Keller,et al.  Relating Brandand Customer Perspectives on Marketing Management , 2002 .

[86]  C. Grönroos,et al.  Managing Customer Relationships for Profit: The Dynamics of Relationship Quality , 1994 .

[87]  Ron Kahan,et al.  Using database marketing techniques to enhance your one‐to‐one marketing initiatives , 1998 .

[88]  Dirk Van den Poel,et al.  Customer base analysis: partial defection of behaviourally loyal clients in a non-contractual FMCG retail setting , 2005, Eur. J. Oper. Res..

[89]  Frenkel Ter Hofstede,et al.  How to Compute Optimal Catalog Mailing Decisions , 2006 .

[90]  Peter C. Verhoef,et al.  The commercial use of segmentation and predictive modeling techniques for database marketing in the Netherlands , 2003, Decis. Support Syst..

[91]  Susan S. Fiorito,et al.  An empirical analysis of the components of retailer customer loyalty programs , 2008 .

[92]  Tom Wansbeek,et al.  Interaction between target and mailing characteristics in direct marketing, with an application to health care fund raising , 1997 .

[93]  K. Ruyter,et al.  Multi-channel service retailing: The effects of channel performance satisfaction on behavioral intentions , 2006 .

[94]  Bert Rosenbloom,et al.  Marketing Channels: A Management View , 1978 .

[95]  Atul Parvatiyar,et al.  Handbook of Relationship Marketing , 1999 .