DM News Essential Guide: Merkle's Williams: Database Marketing Is Too Narrowly Focused
Where is database marketing today?
We see database marketing as continuing to be an underutilized discipline in the marketing enterprise. Our definition of database marketing would be around the effective use of information to drive better business results in marketing. I think we see a lot of good direct marketing out there, but we don't necessarily see a lot of good database marketing - or information-based marketing or quantitative marketing, as we like to refer to it.
Part of the reason is that the definition seems too easy to understand. In other cases, I think that people aren't fully aware of the opportunities to integrate database marketing or information-based approaches more globally in the marketing enterprise as it relates to branding strategies or product strategies or customer management strategies or marketing strategies, and then as it relates to the critical processes that drive the use of information: strategic management, content management.
Content in our world is what we call valuable marketing data - analytical management, data management, campaign management, performance management, all of those entities - most importantly, where [the data] touches what we call the profit drivers of marketing: audience selection, offer arbitration, media and channel selection, messaging and creative and contact management.
We think there's a lot of focus out there around direct marketing and direct response marketing, but we don't think the view of database marketing is big enough. We think it's too narrowly focused on lists and analytics, as an example, or database.
Isn't the world moving toward more targeted marketing, which ultimately means you want to have a one-to-one relationship with your customer? And for that you do need a database. The trends are all there ...
Well, one is I'm not sure that the availability of targeted media necessarily leads to a one-to-one relationship. In many respects, you need an information management system, but the problem is that too many people think that building a database is database marketing. It's the cliché that's been out there for 10 years.
So, why don't people offer arbitration processes? Why don't they have processes that determine the value of every piece of data in the marketing enterprise? Why do companies still struggle? I couldn't name a company that has an audience-centric approach to their marketing programs versus a product-centric approach. Why can't people attribute responses across multiple media in the marketing entity? Why can't and don't people continue to use customer value as the primary segmentation screen versus segmentation to drive messaging?
A great quote from Kevin Rollins, the CEO of Dell, as he likes to say, these things aren't "unknowable," these things are all knowable and people understand them; they're just "undoable." And they're undoable, not because of databases and lists and data and analytics, they're undoable because of organizational dynamics, lack of competency, lack of understanding of the critical processes to support them over time.
What is database marketing to you?
Database marketing is, as I said, the use of information to drive more effective marketing results - period. That's what it is. It's a discipline to me, it's not an action. It's a belief. It's a quantitative, fact-based approach to marketing, which can be most highly leveraged in three dynamics to your audience. The dynamic of customer management, and that means managing customers by value, by segment and by opportunity - not by product.
It can be readily applied to targeting of all forms of media - mass media, direct media, interactive media. And it's a key enabler in the context of measurement in the effectiveness of those media and ability to optimize those media over time. Equally important is the effectiveness of your ability to implement customer management strategies as measured through customer value. When we look at the use of information in the marketing enterprise, those are the three areas we would tend to focus on: customer management, targeting and measurement.
Can you use CRM for database marketing and vice versa? Are those terms interchangeable?
No. I think it's like an apple and an orange, or an apple and a steak. They don't have anything to do with each other. What is CRM? CRM is customer management strategy. In my humble opinion, in the decade of the '90s, the CRM revolution was nothing more than the complexity of customer management strategy being injected into the corporate world. Before that, people had corporate strategies and they had branding strategies and and marketing strategies, and they had product development strategies. All of a sudden, this thing called customer management strategy developed and people called it CRM. But in reality, it's the ability to manage things through the customer, not through the product.
So if I'm a credit card marketer, it's not so much the zero percent, 90-day offer that I have, or the balance transfer offer. What's here is 15 million consumers, prospects or customers, and what offers would they most likely be inclined to buy from me? That is not the way marketers operate today. A lot of people say that it is, that they have a vision for it, but they don't have a practical strategy to deliver on it.
Do you have any examples of marketers who you feel have understood database marketing?
I think there are marketers out there who have understood database marketing. I think that the financial services industry understands database marketing. I think Capital One is an example. There are companies out there that understand database marketing, but globally, I would still give [direct marketing] pretty poor marks.
Lots of people understand database marketing, but not a lot of people are applying it, and they don't even know what the scorecard would be to understand whether they're applying it. It is understood, conceptually. But when you dig in, how many people are really doing it?
Do you think database marketing's cause is hurt by these numerous incidents of data theft and ID fraud?
I really don't. I think it's irrelevant to database marketing. I think there are always issues with the management of information. When the direct mail industry started and people started sending checks through the mail, the amount of fraud 30 years ago doing that was far bigger than the amount of fraud we see in the context of dollars today. I believe it is an issue for marketers, and as information becomes a more critical asset in the marketing enterprise we all must be phenomenally aware of it and be dealing with those issues, but I do not believe that it is constraining anybody.
Do you think the increased use of interactive marketing services and technology is helping your cause and helping database marketing?
Generally, I would say yes. That industry is starting to mature, and it's highly targetable, it's highly measurable, so it has the right characteristics. The use of information through, whether it's paid search or Web analytics, I think it's progressed faster than those kind of applications in other media.
What is the end goal of database marketing - to know everything about me?
I think the end goal is to use information as knowledge to drive business outcomes, to see a return on marketing objective. It depends on what the company is trying to do. I believe the opportunity of quantitative marketing or database marketing is for database and information-based marketers to become more relevant to the C-suite of major marketing entities, through the dynamics that I discussed. Relevant, that is, through their ability to help people understand how to manage customers over time versus products, how to target those customers through multichannel media efforts and how to measure those results back to customer value and media performance.
Today, frankly, in most entities, I don't believe that is highly valued, therefore those people don't get a seat at the table. I think the mission of the database marketing officer over the next decade is to become more relevant to the chief marketing officer and the CEO by serving that kind of information in a more practical, business-effective manner to drive better results.
Who has the biggest database in the United States?
That is a great question, and I do not know the answer. My guess is it's going to be in financial services. They are our biggest databases by far, but I don't know.
Is there anything else you wish to add?
The only thing we didn't touch on that is kind of an interesting trend is that it's clearly not just about direct marketing anymore. If we look at our activity and at the activity in the marketplace, there are a lot of non-core direct marketers who are becoming phenomenally interested in database marketing and information-based approaches as they try to develop direct relations with their consumers where those relationships haven't existed before.
Travel and leisure is a good example, consumer packaged goods is a good example, pharma is an example. Hard-good manufacturers are starting to get in the game. So it's been interesting to watch the non-core market versus the credit card guys or the catalog retailers, or the fundraisers, the people that are core to the direct response channel. I think when you start to see those people entering the game at the pace they're entering the game, it's an exciting time to be a database marketer.
Reach David Williams at firstname.lastname@example.org