Direct marketers know how to turn data into dollars. And today, they’re expanding that skill through database marketing.
But the migration from a flat-file database, used for direct mail, to a relational database built for business intelligence takes a bit more energy than flipping a switch. It requires companies to re-engineer their marketing processes and develop fresh expertise.
The key is staying on a practical course of planning, testing, measuring and proceeding. Yes, it seems obvious. But database marketing is not like buying a mailing list. It’s a major investment in your company’s future, and many businesses leap too far ahead as they advance their marketing capabilities.
So don’t burn through budget and overextend your resources. Here are tips on how to inject a little reality into your database dreams.
Invite your database architect and marketing chief to lunch. Your first step must be to articulate exactly what you want to accomplish, then communicate it to the team that will build your database. These examples illustrate the degree of exactness you need:
· Increase overall gross demand by 4 percent under the current marketing plan.
· Increase average order value 10 percent.
· Shorten the campaign cycle between need identification and execution.
· Target campaign offers based on customer purchases, behaviors and preferences.
You must present these goals as a blueprint for a database architect, who should return the favor with a detailed project plan, an honest budget and timeline.
Without this exchange, you’ll suffer the fate of a specialty retailer that bought a high-priced marketing automation tool and began developing a marketing database. The goal was to channel customer data into its boutique stores. Well into the project, the retailer’s marketing team realized the company lacked the operational infrastructure to support full use of customer data. As a result, the company could not realize the planned return on its investment.
This happens all the time. Had the retailer identified where customer data needed to be and in what format, a database architect would have ensured that the retailer had the marketing tools and technology infrastructure to succeed.
Document current activities. Before developing a new marketing system, thoroughly survey your marketing processes. The reason: Database marketing calls for the integration of several initiatives, from list procurement and data integration to predictive modeling and campaign management. In a database-marketing environment, you don’t simply scrap your current marketing structure. Instead, you upgrade many of your processes to make them more effective and efficient.
To achieve this, you must forge a cross-functional team of experts who will examine the state of marketing and define steps of improvement. Detail any similarities and differences in marketing activities among business groups or product lines. Here are several questions you might ask to aid this process:
· Is there any overlap in house-file and prospect list use? What should exist?
· What forms of standardization and hygiene are used? Can differing services or software be standardized?
· How is external enhancement data being used? From where is it purchased? To what degree is this data shared internally?
· How do data use and quality requirements differ among internal users?
Companies find this enlightening and often discover new marketing intelligence. It is not rare to find a division or service unit that is clueless to customer knowledge being managed in a neighboring cubicle, such as repair transactions in the service department being used in a customer loyalty upsell campaign.
Segment your needs. Once you define specific objectives that align with the business strategy and map your current marketing capabilities, compare them and decide which opportunity to tackle first. Again, you can’t do it all at once.
Certainly redundancies and inefficiencies should be eliminated right away. But you need to prioritize your goals based on time, budget and operational constraints. For example, you may find that it is easier and more affordable to increase cross-sell and upsell response rates using channel data not previously available versus developing predictive models using a new tool that requires staff training or expert hiring.
Measure your expertise. Database marketing involves unique skills that may require several new specialists. These include database architects and managers, database administrators, data analysts, business intelligence experts and professionals skilled in data integration, documentation and access. This integrated team will develop a marketing solution capable of running highly targeted campaigns based on a continual analysis of consumer preferences, response patterns, purchase history and attrition factors. If this sounds daunting, remember that you can add staff as needed, gain immediate expertise through niche consultants or outsource parts of the solution depending on your defined objectives, timing and budget.
Test and proceed. The widespread failure of customer relationship management provides database marketing with this lesson: test and proceed. After you assess your goals and readiness, proceed with caution once more. Chart several paths that lead to the desired outcome. Then, define criteria for success at logical phases.
You should develop separate vertical and horizontal plans. For example, start small by upgrading a single company division. When challenges have been met and success is clear, you can fold in other divisions. Another strategy is to implement limited improvements across several divisions and proceed with further improvements when the system is operating as planned.
A financial services company tried to integrate data between its divisions and that of a recent acquisition. The total project was strategically valid, but required more effort than the company could muster in the time required by senior management. Instead of first integrating the data they knew best and then delivering results before expanding the effort, they overreached and failed. And they lost financial support on additional plans.
Database marketing blends art and science to move companies closer to their customers and prospects. It lets companies deepen their customer knowledge at the individual level and target their marketing more efficiently and effectively. With a well-defined and managed plan, any company can make this transition to realize immediate benefits and be positioned for new capabilities.