Focus on metrics

Meeting the needs of entire organizations, an increasing movement toward software as a service, an emphasis on multichannel and building prospect databases will be some of the issues database marketers will be focusing on next year.

At least that’s what database marketing experts from Alterian, Harte-Hanks Inc., KnowledgeBase Marketing Inc., Merkle Inc. and Teradata said will be some of the key challenges and opportunities they will be facing.

“I believe the critical issue facing database marketers in 2007 involves how to address the enterprise needs of today’s complex marketing organizations,” said David Williams, president/CEO of Merkle, Lanham, MD.

“Database marketing is moving out of the backroom and firmly into the strategic fabric of the marketing organizations,” he said.

Kathy Calta, corporate officer and senior vice president at Harte-Hanks, San Antonio, TX, agreed.

“The customer database is a veritable goldmine, one rich with valuable insight that can deliver value far beyond the walls of the marketing department,” Ms. Calta said.

“Sharing that value throughout the enterprise is called ‘socializing the database’ and the responsibility falls squarely on the shoulders of the marketing department, the organization’s Center of Customer Truth,” she said.

“And that means that in 2007, marketers need to move their thinking from just marketing to the overall customer experience, focusing as intensely on the inbound interactions as they do the outbound.”

In 2007, marketers will also need to embrace multichannel in a meaningful way, according to Ms. Calta.

“They’ll need to focus on strengthening their multichannel capabilities to ensure seamless and consistent customer experiences across all touch-points and channels,” she said. “And they’ll need to focus on collecting and leveraging data from all touch-points in order to influence future communications efforts.”

Another challenge next year will be the increasing movement towards software as a service rather than software being installed in marketing organizations, per David Eldridge, CEO of Alterian, Chicago.

“As a result, demand will continue to grow for database marketing firms who can deliver a broad spectrum of offerings to marketers based on market leading software that the marketer simply accesses over the Web,” he said.

Richard N. Tooker, vice president and solutions architect at database marketing firm KnowledgeBase Marketing Inc., Richardson, TX, said trends that will most affect database marketers in 2007 include the increasing emphasis on building prospect databases, an emphasis on finding skilled practitioners and the rise of the Internet as an available marketing channel.

He also pointed to the fact that overall, consumers are becoming increasingly more jaded and less trusting of marketers they don’t know.

“Their disinterest is the direct result of the tidal wave of advertising impressions they’re subjected to each and every day, and the mistrust is a consequence of the press sensationalizing every instance of data mishandling that comes to light,” Mr. Tooker said. “Unfortunately, neither will stop in 2007.”

Also, marketers will need to find more and better ways to measure their activities and account for them.

“While measurement and accountability both have been a part of database marketing for years, they are now finding their way into general advertising as well,” Ms. Calta said. “New analytic approaches, such as marketing mix optimization, aim to help marketers determine ideally where to place their precious marketing dollars for maximum impact and return on investment.”

Merkle’s Mr. Williams was on the same page.

“The key to all effective marketing activity, including brand and direct, is to positively influence customer/prospect behavior,” Mr. Williams said.

“Too many marketers today do not fully understand how their current campaigns, programs, and processes and services across media affect customer value over time,” he said. “This is both a huge challenge and opportunity for most marketers.”

As for the most important development in 2006, Mr. Tooker said that by far it has been the increasing awareness in the C-suite that a large chunk of money spent on image advertising and branding could and should be redirected to something more measurable and ROI-based.

“This has fueled growth in the database marketing/CRM space and will continue to do so in 2007 and beyond,” he said. ” The trend is being accelerated by the difficulty in achieving reach as convergence of media and consumer choices for entertainment and information explode.”

Another tend that will continue in 2007 is the rise of advanced analytics, said Judy A. Bayer, director of advanced business analytics for Europe at the Teradata division of NCR Corp., Dayton, OH.

“Companies with data warehouses now routinely build predictive models to support CRM activities,” Ms. Bayer said. “In 2007, this work will be extended.

“Companies now realize that customers are different not only from a marketing perspective, but also from a modeling perspective,” she said. “We wouldn’t expect a single marketing campaign to apply to all customers. Why should we expect a single model to apply?”

As a result, companies are beginning to implement customer segment-level modelling, such as creating churn models for high-value customers and other churn models for medium-value and low-value customers.

“There are different drivers of behavior for different types of customers, so having more focused models helps the CRM practitioner make more money,” Ms. Bayer said.

So what should direct marketers using database marketing tools need to do to stay successful in the next year?

Mr. Eldridge said they should find great partners to work with.

“Find a database marketing firm that has a differentiated point of view, an analytically led approach, and the latest technology underpinning its delivery, and that you can work with hand in glove to take your marketing effectiveness and efficiency to the next level,” he said.

Mr. Tooker said the key is to focus on metrics.

“If there is an inviolate rule in database marketing, this is it,” he said. “The number of direct marketing initiatives implemented each year without any prior planning as to how they are going to be measured is surprisingly large.

Ms. Bayer suggests the key to being successful is to focus on the customer by integrating customer and behavior data.

“Marketing departments may be siloed on product, but this makes no sense from a customer perspective,” she said. “Keeping all the data about customers and their behavior integrated is the easiest way of implementing a truly customer-focused CRM program.”

Meeting the needs of entire organizations, an increasing movement towards software as a service, an emphasis on multichannel and building prospect databases will be some of the issues database marketers will be focusing on next year.

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