CARMEL, CA — Epsilon executives, leading customers and a Forrester Research analyst convened here at Epsilon’s Integrated Marketing Symposium 2006 last week for a roundtable luncheon to discuss database and e-mail marketing trends.
Participants included Elana Anderson, vice president and research director, Forrester Research; Jared Blank, senior director, e-commerce marketing, Tommy Hilfiger USA Inc.; Floyd W. Coleman Jr., senior manager, ad product marketing, Yahoo; Al DiGuido; president/CEO, Epsilon Interactive; Karen R. Haefling, chief marketing officer, KeyBank; Michael Iaccarino, president/CEO, Epsilon; and Melissa M. Monk, vice president, marketing operations, Capital One Services Inc. DM News senior editor Melissa Campanelli moderated the roundtable.
Ms. Campanelli: In her presentation, Elana Anderson spoke about the importance of moving from a tactical to a strategic database marketing company. Do any of you believe you are moving in that direction, or are you there at this point? Is this your goal?
Ms. Monk: I think we are on the path to that at Capital One. When you think about the components that Elana was talking about [a strategic database marketing company needs four skill sets: marketing, operational, analytical and technical] and combining all of those things, that has been a focus of ours in how we approach our marketing, which is analytically-based and it is a strategic part of how we run our business.
We acknowledge that strategic [is] how it needs to be done. The conversations about how to do it are just beginning. What you can see is that by managing this in a strategic way, the results are increased response and loyalty from customers. They want to stay where they feel like they are known and they feel like they are treated the way they want to be treated, and that is different for different customers.
Mr. Blank: We almost came at this the opposite way. We came at it strategically, and our issues have been around the tactical piece. We were clear on what we wanted to do … but implementing all the things we want to do has been the most difficult part.
Ms. Campanelli: In general, are your traditional databases and e-mail databases integrated?
Ms. Haefling: Our e-mail activities are integrated with our [offline] activities. It is there, not as much as we want, but it is there, and we are increasing it exponentially. It’s just that there is so much to do.
Ms. Monk: We have a single customer data warehouse. But basically creating [it] and then creating mechanisms to get at that data effectively for all parties that use customer data is a big task. We are in a bit of an evolution. Historically, we have been product-based. We were a credit card company. We now — through lots of acquisitions and development of companies within Capital One — are a broad-based financial services provider. We have to think of things holistically from a customer perspective versus simply, “here is our credit card product, here is our banking products, here is our home loan products.” That’s been our evolution in thinking as our acquisition strategy has heated up over the past several years.
Ms. Anderson: What are the biggest issues? Technology? Process? Organizational?
Ms. Monk: All of those are issues. But on the list of priorities, I think technology issues are one of the lowest ones. You’ll be able to resolve those quickly as you get into it. The big issues are who owns the customer, who thinks about the customer, who makes the marketing decisions.
Ms. Campanelli: Are your campaigns generally acquisition or retention based?
Ms. Monk: Both. We have whole organizations dedicated to both acquiring and then retaining customers, so you’ll see campaigns are based around both — with acquisition of new prospects and as well as cross-pollinating and getting people who are already your customer to either buy more of that same product or to buy more of the products that Capital One offers.
Our retention and acquisition organization reports to the same senior executive, so we do see them as going hand in hand. There are a finite number of people you can acquire, and if you are not focused on keeping them as customers, the investment you have to make to reacquire just doesn’t make sense.
Ms. Anderson: This is a trend. In the credit card industry, we know of one company where of the 80 million households that they are marketing to, 60 million are already their customers. So, this hybrid acquisition-retention orientation is important … The mentality of a two-headed beast, acquisition and retention, is creating churn. The acquisition guys are focused on acquiring the same people that used to be customers.
Ms. Campanelli: What are some of the challenges in database and e-mail marketing?
Mr. DiGuido: There is no technology barrier to doing strategic integration between marketing database and e-mail communications, for example, as a channel. It’s really folks sitting down inside their organization and saying, “OK, if we have the ability to leverage all of this data, what would the relationship look like, and how would we build a stream of messaging to our customers to optimize the relationship?”
Mr. Blank: I think in the online world at least, the complexities lie in that we have a best-of-breed approach, so every vendor is different. And then [we have to] merge site analytics data with front-end e-commerce data, with the back end of the house data, with our e-mail data, with our affiliate data. We are not a database marketing company. Getting all of those things together in some sort of usable format in a company that is used to taking pictures of pretty people and putting them on a billboard is an insurmountable challenge.
Ms. Anderson: The other challenge becomes managing all of the content. How do I create and manage all of that content? The people costs for the creation of the content, ensuring that it is kept fresh, the rules associated with what is valid when. These are issues I am starting to hear marketers complain about.
Ms. Monk: And it is only going to get more challenging. If you think about who the users of the electronic domain are — such as Generation X and Y — and what satisfies them as an interaction, we are going to have to be offering free games online.
Mr. Coleman: At Yahoo we are all about the content, but our challenge is keeping the audience engaged by keeping your content fresh, and making sure you are getting the right message to the right person is very important.
Mr. Iaccarino: Another issue is that in general, e-mail marketing still doesn’t work for acquisition. So, the $64,000 question is how do you get new customers in the door.
Mr. DiGuido: And there are all kinds of legislation out there right now affecting e-mail from an acquisition standpoint. I sit on the DMA Ethics Committee, and there is a lot of discussion about privacy and use of data. So marketers are smart to tread lightly because those kinds of fines are not inconsequential in terms of violating trust. From an acquisition standpoint, it’s part of an integrated strategy. It’s both online and offline. You have to be really careful about the sources that you use, how those names have been acquired and what the opt-ins look like. It’s not as easy as going out there and purchasing a direct mail list.
Ms. Anderson: One challenge I have with e-mail is that it is too darn cheap. It’s so cheap that marketers feel they don’t need to apply analytics or database marketing skills to that channel.
Mr. DiGuido: You are right, but that’s going to change over time. Over time, the value of e-mail is going to go up. There is only going to be a select group of marketers who are going to know how to get that job done, but it is going to happen. You will start to see over time the costs moving up, measurably.
Melissa Campanelli attended the Integrated Marketing Symposium 2006 as a guest of Epsilon.