Channel integration, interaction software key trends in ’07

Integrating online and offline data and interaction management technologies are just two of the trends that database marketers will be employing in the year ahead.

These were predictions gleaned from leading database marking analysts interviewed either in-person or via e-mail by DM News recently. We asked these experts their thoughts about current and future database marketing trends and how database marketing/CRM firms are changing to meet their customers’ needs. They were also asked for advice to give direct marketers to make sure their database marketing programs stay successful.

“One of the biggest trends I see is the integration of online clickstream data into targeting strategies,” said Kevin Hillstrom, a database marketing expert and author of “Hillstrom’s Database Marketing: A Master’s Complete Method for Success.”

“You will see more companies looking to categorize key elements of Web site visitation behavior and then integrate that information into purchase transaction databases,” he said.

For instance, a customer who always visits a site from search exhibits certain behavior, while a customer who always visits a Web site from e-mail displays different behavior. A customer who visits because of a recommendation on a blog will act differently.

“You will see more companies incorporate this behavior into e-mail and catalog targeting strategies in the future, and you are likely to see vendors start providing integrated solutions,” Mr. Hillstrom said.

Database marketing and CRM firms are slowly shifting their product offering to support a digitally driven marketing strategy, Mr. Hillstrom said.

“This is a challenge, because direct marketers don’t always know how to truly articulate their digitally-driven marketing strategy needs,” he said.

Eric Schmitt, executive vice president and senior principal at Allant Professional Services, Naperville, IL, agreed. He is noticing more activity around deeper integration between offline channels and the Internet.

“Few companies have their arms fully around multichannel, but nobody wants to own the world’s last great direct mail-only database, either,” he said.

Mr. Schmitt said that as much as we all like to talk about the latest trends, it’s important to remember that the work many direct marketers are focused on right now is more fundamental.

“Aggregating data, keeping it clean, setting up control, test and learn environments, finding and hiring good people, effecting organizational change – these are the things that never go out of style, and for good reason,” he said.

The idea that agencies and marketing services firms can specialize in one area – analytics, technology or pure marketing – is vanishing, too.

“Clients need these disciplines integrated, and that’s why they look outside their organization – because it’s hard to do it internally,” Mr. Schmitt said. “This is triggering a remarkable shift in the marketing services world. Direct marketing agencies and database service providers are in each other’s knitting more than in the past. The agencies come from the creative and program management sphere, while the database crowd starts with technology. There’s a fight in the middle, over analytics.”

Mr. Schmitt’s money is on the database providers, because data is the fuel for analytics.

“But it will be quite an adventure,” he said. “I don’t think it’s an exaggeration to say that the agency holding company model may change dramatically in coming years.”

He said we are going to see more mergers and acquisitions between Internet-only and traditional marketing services firms.

“Publicis’ acquisition of Digitas is one obvious example,” Mr. Schmitt said.

“On the software front, Alterian and Unica have purchased e-mail and Web analytics companies,” he said. “And of course there was the recent binge of e-mail acquisitions by data and database companies, though I’m not sure all of those have panned out as planned. Regardless, we’ll certainly see more in the future.”

Suresh Vittal, a senior analyst at Forrester Research, said more firms are looking at a category of analytic marketing software Forrester calls interaction management.

“Most firms use simple business rules to drive their inbound marketing activities,” he said. “Unfortunately, rule-based solutions lack the flexibility to manage thousands of real-time interactions that incorporate customer profile information, contextual data and hundreds of potential offers. Enter interaction management technologies.”

Mr. Vittal said that interaction management technologies create a real-time customer profile based on historical and contextual data, apply business logic and real-time analytics to make decisions and provide tools that allow marketers to plan, test and execute programs.

Mr. Vittal said many marketers are planning to include these technologies into their marketing programs or have already done so.

“Last year, we surveyed marketers about their plans to target messages in inbound channels like the call center, Web, point-of-sale and ATM,” he said.

The report found 85 percent of marketers were practicing inbound marketing or planning to in the near term.

“Growing consumer impatience with the volume and irrelevance of outbound communications, the desire to enrich the experience of each interaction, a captive and attentive audience and the opportunity to reinforce the brand all make inbound marketing a compelling solution,” he said.

The analysts also offered a few tips to help direct marketers stay successful.

“If there were one piece of advice that I could give direct marketers, it would be to begin fully integrating summarized online visitation data into a corporate purchase warehouse,” Mr. Hillstrom said.

“In other words, it is no longer good enough to produce funnel analyses out of a Web analytics tool like Coremetrics. Direct marketers must summarize online behavior in a manner that allows the data to be used in e-mail and direct mail campaigns.”

Mr. Schmitt suggested that direct marketers go back to the fundamentals.

“Set aside 10 percent of every week to thinking about how those principles apply to today’s world,” he said. “We have more channels, more data and much shorter cycle times today.

“Setting up test plans, provisioning the right technology infrastructure and figuring out how to allocate budget is much harder than it used to be, but the laws of direct marketing physics don’t change. We just need to figure out how they apply in the new environment.”

Another key concept is operationalizing analytics, Mr. Schmitt said.

“That’s the state of the art – not only manufacturing customer intelligence, but applying it to communications in an automated way,” he said.

“Many companies are moving quickly down this path – bad news for the competitor who is still struggling to build a basic usable customer data mart.”

Mr. Schmitt another key to success will be staying abreast of consumer communications.

“Young consumers interact with each other, the world and your company much differently than older ones do,” he said.

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