Guest Column: Database Strategies Come Full Circle

After a few wild years of software that did everything except make coffee in the morning, people are wondering what direction database marketing will take next.

We learned from the dot-com and CRM craziness that you need a profit-driven business plan and must build from the ground up — the long way around — to get back to what we all learned in B-School.

Yes, being first to market with the newest strategy has advantages. There are excellent examples of the success of this strategy. But now, being first must be measured against the tradeoff costs or loss of revenue when a changeover occurs.

Trends are emerging that will help define the future of database and direct marketing. Here are some of the themes:

Strategy has taken the lead over technology. For several years the theory was, “If you build it, they will come.” Tools were the talk of the town. A tight economy has changed the conversation. People now say to define the strategy first, then search for technology that will deploy DM. Strategy and differentiation are growing more important. It’s hard to use technology to define points of difference if you don’t understand how it fits into the existing business processes.

Collaborative teams are being formed. Marketing databases used to be run by marketing or by IT. Now everyone is realizing that to achieve business goals, both groups must be involved. IT organizations are appointing an individual or a team to serve as the marketing liaison and get the specifications right from the beginning. It’s a combination of talents and collaborative efforts that is driving the ROI.

ROI is more than an afterthought. A marketing database investment in the old days often was viewed conceptually rather than concretely. Now, more organizations ask the important questions upfront. Measurement is planned in advance, and the database is designed to support the planned outcome. The underlying theme for most CEOs today: If it can’t be measured, it doesn’t exist. They want proof that there is real analysis being given to ROI, not just the flash and dash in the hallway conversations.

Technology is supporting the entire relationship process. With more marketers succeeding by using technology in their programs, DMers now think of e-marketing and microsite data collection as part of the overall planning process rather than just an afterthought or an independent program. More often, the new customer information collected from the microsite is much better than the mainframe information collected from third-party suppliers. This fresh information gives the marketers something to work from right away to cross-sell or upsell. Naturally, costs associated with this type of selling are less and ROI is higher.

Databases are growing smarter. With more mature databases, the depth of data on each customer is growing. Contact strategies are being added. Complex opt-in and privacy rules are beginning to be supported, as is segment scoring. All of these techniques transform the database into a smart marketing tool.

With more complex customer relationships and customer expectations growing, databases need more intelligence built into them. This will be a growing frontier, since off-the-shelf software packages lack the ability to be intuitive to the customer.

The database is contributing to the plan. As part of the strategic planning process, the database is becoming a starting point rather than an execution tool. How many of our best customers are in the database? What do they look like? How much do they spend? How can we find more who look like them? What is the right investment in each customer?

These are important questions that are starting to shape marketing strategy. Naturally, behind all this is the data. Data quality and data management will grow very important in the future. Outdated, inaccurate or null values in the database leave it helpless at extracting intelligence or being interactive with the customer.

In short, database marketing is coming full circle to support all the buzzwords: CRM, relationship marketing, integrated marketing, e-marketing, eCRM. As we believe in our business, all roads lead to the database. And in 2003, more marketers will rely on the intelligence that sits on the server.

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