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Use Data Wisely to Cut the Clutter

It's a difficult time to be a marketing professional. Brand loyalty is under attack as the number of companies competing for consumers' money is at an all-time high, as is the expansive array of these companies' products and services.

With this increase in choice has come a surge in the number of messages — marketing and advertising, e-mails and telephone calls — to which consumers are exposed. In 1985, consumers experienced an average of 650 such messages a day. Today, that figure is 3,000.

A recent survey by Accenture of 175 senior marketing executives in the United States and United Kingdom found that 70 percent of respondents regularly encounter difficulty cutting through marketplace clutter to capture customers' attention. The days of running a 30-second television ad and waiting for the sales to pour in are gone.

Many companies, however, are making great strides in increasing their operational marketing capabilities, letting them create more personalized conversations with their customers. Companies leading the way in transforming operational marketing recognize that customer insight plays a large role, as do data mining and data warehousing, which continuously harvest customer information from various contact points.

These businesses turn this information into insights that drive ongoing marketing efforts and break through marketplace clutter to reach their customers with personally relevant messages. While some create personalized campaigns and offers for segments of their customers, others find it effective to customize messages to each individual customer. The most effective strategy depends on factors such as the size of the customer base, the product or service sold and the level of effort and money associated with personalizing for increasingly granular segments.

New England Business Systems, Groton, MA, a direct marketer of forms and services for small businesses, has found success using an off-the-shelf software package to help determine which customer segments are potentially more valuable and then develop personalized marketing campaigns to reach them. With its base of 1 million customers and 12 million prospects, creating different communications for each customer would not be feasible. Thus, the company focuses on segments of customers who are looking for the same things.

By contrast, online wine seller Virgin Wines, London, uses a variety of customer data to recommend wines to each customer that it thinks have a high probability of matching the customer's specific tastes. With only 60,000 customers, the company has found success targeting its messages at the individual level. Virgin Wines is so confident of its customization capabilities that it offers a money-back guarantee that its wine suggestions will please each customer.

It is important to note that the efficacy of personalization efforts will be compromised if they are not based on real-time access to an analysis of customer data. Typically, companies try to execute personalized marketing campaigns based on batch analysis of data, which because of the lag time between the request for analysis and the processing of the request doesn't always provide the most current picture of the audience. Such results can produce embarrassment, offense or even termination of the customer relationship.

Effective use of real-time customer data to target more narrowly offers measurable benefits for companies of all sizes. Virgin Wines notes that shoppers who use its personalization tools are nine times more likely to be repeat buyers than those who do not. The company recently sold its millionth case of wine, a testament to its success at targeted marketing. New England Business Systems' personalization efforts are boosting cross-sell and upsell rates, which, combined with the cost savings that personalization has generated, “adds up to significant incremental revenue,” said Rhonda Bertozzi, the company's market manager.

In Accenture's survey of U.S. and UK marketing executives, a large percentage reported that the effectiveness of their campaigns is diminishing because of outdated or inaccurate data. For 60 percent of these individuals, more than one-tenth of their data is inaccurate or outdated.

Twenty-one percent said at least one-fourth of their data is suspect, making it difficult for them to craft and launch highly effective campaigns. Sixty-eight percent said fresher, more accurate data could help their campaigns.

Access to real-time customer data is proving to be the difference between the haves and the have-nots today. It is not merely a luxury for a company to have access to the kind of data needed to customize marketing messages to reach its customers better.

With Global 1000 companies expected to spend $1 trillion on marketing by 2003, there is no time like the present to prepare for what will only be a noisier, more competitive marketing environment.

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