Creating an Internal DM Database

An interactive media and Web development company suddenly finds itself in the distance-learning business. A traditional cable company is faced with marketing high-speed Internet access to businesses as well as to consumers.

The old way of guessing the target market does not seem to apply anymore. The sales team may not even know where to begin its prospecting efforts, and the marketing department might as well pull the plug on external promotions.

Sounds like it is time to create a direct marketing prospect database from start to finish. With the help of an experienced data consultant, you can build a highly targeted, well-qualified list of your most valuable prospects – even if you are lacking a historical transactions file.

It may make sense to build an internal marketing database from scratch if:

• You are launching a new company that does not have the advantage of an existing customer file.

• You are preparing to launch a new product or service that will appeal to a different market from the one you serve.

• Your company is entering a deregulated market, as has been the case for numerous telecommunications, cable and energy businesses.

• Your business has not kept a customer database and wants to step up its marketing efforts and provide qualified leads to the sales force.

Certainly, there are costs associated with building a prospect database from the ground up, but if done correctly, the investment will prove invaluable.

When building a prospect list from scratch, your best bet is to start with geography. Try to determine what territory or region you initially plan to serve. If you are a regulated industry or franchise, you may have service boundaries. Start there.

Next, consider your priorities. Is the goal market saturation, or do you just want to get your name out? Do you have a limited budget? Are your prospects businesses or consumers? Your initial file will be selected based on these parameters.

Assume, for example, that you are targeting consumers and you want to achieve market saturation. For the largest universe, you might start with a resident/occupant file because it has the greatest number of records. From this file you can extract records based on the targeted geography.

Your next step is to use other source files to append basic information such as household name and phone number, then add behavioral and lifestyle details so you know as much as possible about this list of prospects. Using multiple sources will allow you to achieve the greatest number of matches and, therefore, a more enhanced file.

Now you need to determine which prospects on this huge list are most likely to become customers. If you have historical files – say, transaction history of past customers – you can use this information to build a profile of your target.

Without the history, you will want to use an off-the-shelf estimator that will allow you to better predict what prospects are most likely to become your most valuable customers. These formulas even include purchasing and usage estimators, so you do not have to waste time and money trying to qualify raw prospects. Models are available for most major industries, including telecommunications, energy, cable and retail.

Once you have the base file of prospects, you can use advanced data processing services to segment your file. For example, you may want to cross-index it with multiple lists and use an “intersection” process to flag records that are common to more than one file. Some companies will use magazine subscriber and mail-order catalog lists that serve a similar market. If a consumer appears on more than one of these lists, they reason, he is more likely to be a company’s best prospect.

If your marketing includes Web-based interaction with customers, you may want to determine who from your prospect database has Internet access and have those records key-coded. Or you could use an opt-in e-mail campaign to create a list of permission-based e-mail records to use for time-sensitive promotions.

Once you have gone to the trouble of building your new prospect database, you should commit to preserving its integrity and value. That means you should perform periodic hygiene services, including National Change of Address and locatable address correction service processing. Scrub any records that are to be added to the database, including standardizing addresses, verifying names and phone numbers and purging duplicates.

If multiple users will need access to the database, you will probably want to use a data warehousing system that gives you real-time access via the Internet. These systems allow you to do unlimited queries, 24 hours a day, 7 days a week with unlimited downloads. The cheapest way is to outsource this process, as building such a system and keeping up with changing technology are cost-prohibitive. This will also prevent the frequent complaint by marketers that their data are being held hostage by information technology departments. Having your request delayed for days until the IT staff can get around to pulling records just does not cut it in the fast-paced environment of real-world marketing.

One energy company in a soon-to-be deregulated market faced the reality of having its previous and current customer records taken away as one of the requirements to “level the playing field.” In an effort to retain those customers as the market opened up to competition, the company needed to understand who its customers were – and determine who among them were most profitable.

The company started by determining its marketing territory. Next, it used a database of prospecting records with key household-level demographics to build its base file. Because the company did not have access to historical files to determine its most profitable customers, it used a modeled data selection of energy usage to help predict its best prospects. The resulting database allowed the company to transition from simply corresponding with its rate payers to using direct marketing techniques to build one-to-one customer relationships.

A manufacturer of gate operators for the retail market knew little about its customers, but it did have basic information from warranty registrations. The manufacturer’s goal was to learn as much as possible about past customers in order to determine future prospecting strategies – including media placement.

First, the warranty registrant file was appended with behavioral and lifestyle characteristics. Next, the company chose a comprehensive, external database and selected records based on geographic targets to create a base of prospects. Because the company’s product was available through big box retailers, it chose addresses that were concentrated around those retail locations in the United States. Then these records were appended with demographic, behavioral and lifestyle details. This list was then bumped up against the warranty registration list to find commonalties, such as do-it-yourselfer, pet or livestock owner and young children in the household. Through this and other data analysis techniques, the company was able to create a list of prospects with the highest potential to respond to future marketing campaigns.

A company’s marketing database can be the foundation of its success. Investments in the strategic creation of an internal marketing database should pay off for years to come, as a correctly constructed database can be among a company’s most valuable assets. Using advanced data analysis can help take the guesswork out of choosing likely prospects and can help eliminate those who are unqualified from your marketing database.

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