Two Paths for Database Marketers

As we approach 2002, the business world seems at a crossroads. One road takes us to a future in which companies are re-engineering to put the customer at the center of the enterprise, the other to a path of contraction in which companies focus on the bottom line and make minimal investments in relationship building.

I believe there is no right or wrong path. Either can help weather an economic storm, depending on the nature of the individual enterprise.

For businesses that sell commodity-type products (low-margin, high-volume, largely undifferentiated services), retrenchment and conservation probably make sense when times get tough.

But for businesses with a unique value proposition and a product or service that can be cross-sold, sold up or sold again, an economic slowdown sometimes presents a great opportunity to build customer loyalty and market share if marketing resources are available.

When the going gets tough … For some organizations, business actually can improve in an economic slump. At one point in my career, I worked with some large, subprime lenders during good times and bad. As you might expect, the demand for credit among lower-income consumers rises dramatically when jobs are scarce. As long as the lender can judiciously mitigate risk, there are great pockets of opportunity in an economic slowdown.

Of course, that’s not true for the vast majority of businesses. But in my experience, heavy scrutiny of the bottom line can benefit direct and database marketers greatly because it drives organizations away from mass marketing toward a more focused approach to the marketplace. Though many businesses using direct media will forgo investments such as technology upgrades in the next year, just as many organizations that traditionally use broad-based media will opt to spend more of their advertising dollars in a more targeted manner.

CRM: Is it dead yet? Customer relationship management is not dead, but it seems to be morphing into something that strongly resembles traditional database marketing.

Aside from cultural and expense issues, the core problem with CRM is that most of the technologies presuppose that the majority of one-to-one interactions will be initiated by the customer. But I know of no business that can afford to wait for the customer to ask to buy something. Marketing is a proactive exercise. Something has to generate customer interest, and that’s what database marketing is all about.

I have no doubt that at the same time CEOs are putting the brakes on the massive technology and infrastructure investments required to implement enterprisewide CRM, there will be a renewed interest in targeted customer communications that create sales. This is extraordinarily good news for database marketers.

The jaded consumer. My favorite newspaper columnist is Dave Barry, whose humor column in the Miami Herald is syndicated nationally. In his Aug. 12 column, Barry said that “marketing experts know that if you call something by a different name, people will believe it’s a different thing. That’s how ‘undertakers’ became ‘funeral directors.’ That’s how ‘trailers’ became ‘manufactured housing.’ That’s how ‘We’re putting you on hold for the next decade’ became ‘Your call is important to us.’ “

The point is humorous, but it’s also on target. I think consumers have our number. They know that marketers sometimes try to build value out of thin air, and they’re no longer buying it.

My advice to any company worried about the near-term economy would be to take a long, hard look at how it handles customer communications. A concentration on providing real value to its customers and effectively communicating that value should pay big dividends.

Technology vs. strategy. Finally, the prevailing language of marketing at business conferences seems to have taken a positive turn away from technology back to a focus on strategy.

Successful marketing requires a sound strategic underpinning, and even the most advanced technologies cannot compensate for the lack of a good business plan. Installing expensive CRM technologies before a strategic plan is in place is like driving a Maserati in a school zone. It may be nice to brag about at the country club, but it still only goes 20 mph.

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