Sophisticated relationship marketing allows companies to capture, analyze and distribute information more efficiently and cost effectively than ever before.
Once the domain of sales and marketing departments, now customer relationship management systems distribute information across the enterprise to all points of customer contact, but often the primary focus is technology and development. Optimal results, however, come from a holistic approach focused on several strategies:
Business alignment. The objective is to align the database marketing initiative with business objectives and with customer need. Alignment requires analysis of organizational barriers to include cultural, resource and the company's ability to take action.
Cultural issues include management understanding and objectives; cooperation and commitment; organizational structure and the ability to change; decision-making styles; and marketing/information orientation of the business. Resource issues include initial financial justification and ongoing funding of both marketing and technology expenses and skill sets. Action issues include the ability to process, comprehend, prioritize and act on information to gain competitive advantage based on organizational objectives.
Customer development strategy. While companies often profess long-term commitment, frequently they are impatient for immediate returns. When they do not materialize, initiatives might receive less funding or, in the worst case, might be shut down.
A database marketing program must be implemented with a clear understanding of its benefits, objectives, performance metrics and agreed upon success criteria. Marketers must develop both long-term and short-term (low-hanging-fruit) customer development programs in order to show more immediate progress and maintain momentum.
Short-term programs, while also a component of the long-term program, are activities that can be addressed with immediacy to demonstrate progress and real world results — such as reducing average cost-per-customer acquisition expenses, reactivating prior customers, cross-selling current customers, developing a customer segmentation scheme and conducting customer, product or market research. Long-term programs include demonstrated customer retention/loyalty, gaining or maintaining market share, impact on product development, improvement in customer service and satisfaction, deployment/linkage of information across the enterprise, expansion to new markets and/or sales channels.
Information strategy. When developing this strategy, decisions regarding customer development objectives and organizational intelligence goals must be taken into account. A data audit is its foundation. The audit should evaluate what is available commercially and identity items to be captured through proprietary means. Prior to investing in acquisition, a discovery phase should be incorporated testing data quality, accuracy and promotional performance in an analytical environment.
A phased approached should be taken to the information strategy to contain both expense and the potential for information paralysis. Generally five categories of information must be examined: promotional, transactional, descriptive, behavioral and database administration information.
Technology strategy. The most valuable tool in developing this strategy is a clear, concise Request for Proposal that is based on a needs assessment. The RFP will be your requirements document if outsourcing development or will provide a functional blueprint for the IT department if developed inhouse.
When developing the technology strategy, five key questions must be answered, since they will drive the balance of strategy: Is this a departmental (single purpose) or enterprise (multipurpose) system? What are applications and key business functions will be supported? Will the database enable centralized, decentralized (or both) applications? What linkage is required to presales support, fulfillment and post sale relationship management? Is open system architecture or interface compliance a requirement?
As part of strategy creation, a phased approach to development and investment should be considered. Advantages to this approach are an ability to maintain organizational interest in the initiative and the ability, sooner rather than later, to demonstrate results and the potential for ROI.
The success or failure of a database marketing initiative ultimately hinges on how well it aligns with and supports organizational objectives. Recent best practices research conducted by Oxford Associates, Inc. supports a holistic approach to strategy and suggests that the following elements are critical to successful implementation: Position database marketing as a corporate asset; integrate database activities across functions, channels and markets; judge database marketing success on measurable economics; outsource non-core competencies; link activity through a common technology infrastructure; coordinate a corporatewide planning, management and performance tracking system.
Jennifer MacLean is president of WhiteSpace Inc., Chicago, a database marketing consulting firm that specializes in a holistic approach to customer relationship management.