Marketing Communications

OBJECTIVES AND TARGET GROUPS 427

Caja Madrid, one of the oldest Spanish Saving Banks, launched a new investment management portfolio, offering its

wealthy private banking customers a personalised service based on their individual investor profile. An impressive

campaign was set up to communicate to high-net-worth clients that its first-class fund managers could offer superior

advice, using all the advanced technology at their disposal to buy and sell astutely. This financial service was called

La Dolce Vita – or the good life – which summarised in three little words the benefit of the scheme. The idea behind

the mailing was based on an analogy with fine dining: give a chef all the best ingredients and he will create an

exceptional dish like the Caja Madrid advisers can create exceptional results. All the ingredients needed to make a

gold risotto were sent by mail, including a 22-carat golden sheet. The results were astounding: 43% of the high-

value names on the database who received the mailing called their Caja Madrid personal account manager. The

expected response was 15%.^16

business insight

Caja Madrid ‘La Dolce Vita’ direct mail

Figure 13.2 Profit per client as a function of customer retention

Source: Reprinted by permission of Harvard Business School Press. Based on The Loyalty Effect. The Hidden Force Behind Growth,

Profits and Lasting Value by Reichheld, F.F. Boston, MA 2001. Copyright © 2001 by the Harvard Business School Publishing

Corporation; all rights reserved.

Customer retention and loyalty

Direct marketing is also the appropriate tool to improve relations with customers and

increase their satisfaction and loyalty. Customer loyalty is important for different reasons.

One study involving 27 brands showed that the most loyal customers (12%) are responsible

for 69% of the sales figure of a brand.^17 Others claim that lack of loyalty slows company

performance by 25% to 50%. Relationship marketing has two positive effects: firstly, customer

retention, in combination with gaining new customers, leads to a higher number of customers;

secondly, the longer they stay, the more profitable they become. The return per customer will

increase, operational costs will decrease, positive word of mouth will lead to new customers

and loyal customers are less price sensitive. Figure 13.2 shows how profits increase year on

year due to the different effects of customer loyalty.^18

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