Database tips for catalogers

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Catalogers have been practicing the principles of database marketing longer than anyone. RFM (recency, frequency and monetary value) and lifetime value analysis have been the foundation for segmentation strategies for a very long time.

Catalog marketers know the importance and potential of the data that is at their fingertips...well, almost at their fingertips. Huge amounts of powerful data sit in order management systems, list processing vendor's facilities, etc.

Rising telemarketing and mailing costs coupled with lower response rates call for marketing with big guns. But, until now, cost has been a huge obstacle for small-to-midsize catalog marketers to reap the benefits of a marketing database.

Such companies can in fact, get access to all of the data they have collected, across all channels and in one unified universe because Internet-based data access tools make it affordable. And it is easier than ever to refresh or update data, review the results and adjust strategy.

This is important so that marketers can analyze transactional data to determine who is buying what, when, and how often, examine customer service issues like returns, why returns are made, how often inventory is out of stock and the impact these issues have on attrition.

Cross-channel behavior can be studied. Direct mail and online marketing can be synchronized. Matchback processing results can be fed into the database and list sources can be analyzed over time, along with performance and ROI. All of this simply enriches what the catalog marketer has been doing all along:

ò Identifying the gold customers and keeping them

ò Identifying the silver customer and raising them to gold

ò Identifying the "not work it" and putting marketing dollars elsewhere

Whether you have the resources to build and maintain a marketing database in-house or choose an outside partner, you will be faced with some interesting facts. Here are just a few:

ò There will be multiple sources of data, most likely in a variety of formats, and with various degrees of cleanliness. It is paramount that the data conversion and data hygiene (such as address standardization/correction and change of address processing) be done expertly. These processes alone can yield valuable information.

ò You will discover that you are data rich. The task at hand will be to determine what data is important to your business of marketing.

For instance, what do you need most? Data that can help to predict responsiveness and sales, that can predict attrition, that can help to promote customer loyalty, or that can drive effective creative?

The architects of your database will ask you to outline the data variables that are important, but if you have not previously had the luxury of being able to data mine, it will be hard for you to answer.

What's important when you establish your needs is a strategy and a database structure that is flexible enough to allow you to analyze what you have so that you can intelligently arrive at the "gold" nuggets.

Results of this early exploration will then determine what data will be housed in the database. This predictive data then needs to be organized so that you will have access for each campaign including joining tables and creating views should it be necessary.

There are many options to consider regarding data access. The tool that you choose must, at a minimum, provide count, query and data mining capabilities. Full campaign management is offered at a wide variety of price points, but it is important to remember that the tool should support your marketing strategy, not be the strategy itself. How many bells and whistles do you really need?

A successful marketing database requires a good marriage between IT and marketing. The inherent challenge is that IT is definitely from Mars and marketing from Venus. It is imperative to find a connector between these two different mindsets, and to choose a leader who understands the marketing goals and objectives and the principles of relationship marketing, but is also savvy about technical issues.

This individual, found either from within your organization or through your database vendor, can also be the key to resource planning and keeping the project within budget.

The marketing database promise for catalogers is exciting: getting that data to work for you will increase profits through the acquisition of new customers and will help you make them happy and loyal.

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