How to Generate ROI From Your DatabaseOver the past several years, many organizations have embarked on a mission to build a marketing database, citing the need for improved management of client relationships or the need to develop a more targeted marketing campaign. The truth is, the creation of a database itself will not meet these objectives. To be truly successful in these endeavors, an organization will also need to build business processes that effect change and create a measurable return on investment.
When building a marketing database, careful consideration must be paid to the processes and people that can generate ROI. There are four main groups of database users that may realize tremendous benefits from the database - executive level management, business analysts, statisticians and campaign managers. If each of these user groups obtains a measurable benefit from the database, the database will be a success and the organization will profit from its creation. Failure to obtain a benefit for even one of these groups can have a dramatic effect on ROI. That said, it is important to examine how to ensure that each group benefits from the database.
Executive management. To make sure the database provides value to executive managers, it's necessary to understand what their business concerns are. Concerns may range from improving lifetime customer value to managing channel conflict to minimizing attrition. Once these concerns have been identified, it's necessary to develop ways in which the information contained in the database can address the concerns. Just as important as correctly identifying management's concerns is fine-tuning the methods through which the results of database analysis are delivered to executive management.
Business analysts. Armed with directives from executive management, business analysts can use the information from the database to conduct their analysis. Analysts' effectiveness will be driven in part by the quality of data housed in the database, the breadth of content available to use in each analysis and the tools available to perform the work. Each of these factors should be considered before building a marketing database. In the end, the business analysts must sign off on the proposed solution and feel confident that it will enable them to perform their function in an efficient and effective manner.
Statisticians. Arguably, the biggest and most immediate contributor toward ROI is predictive modeling. The statistician will focus on data accuracy, breadth of data content and availability of the proper tools. Although this sounds like an overlap of the business analyst, the similarities of the business analyst and the statistician end here.
The statistician will likely have different data content requirements and may be more concerned with time-series variables. The statistician also will require a different set of access tools with modeling functionality. Again, these issues must be addressed before deciding to build a marketing database. Decisions must also be made in determining the number and types of predictive models that are necessary.
Campaign managers. The efforts of the other three user groups should help the campaign manager with his job. Using analytical information and incorporating modeling scores into a segmentation plan is only part of the goal. The marketing database must also be able to develop and manage contact strategies.
The process of composing a campaign, creating test cells, obtaining counts and executing a contact strategy must be as efficient as possible. The mission is not merely to automate the existing campaign execution process, but to engineer a contact strategy that improves response rates and increases profitability.
Generating a substantial ROI in the database marketing arena is readily achievable, but it takes more than the application of generally accepted data warehouse practices to succeed. Organizations also must commit to the development and implementation of corresponding business processes. By conducting a thorough needs analysis and addressing the specific resources of key user groups, database marketing can be a success.
Bob Gaito is vice president of database services at Experian, Orange, CA.