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What Utilities Need to Look for in Vendors

While financial services was the industry that pushed database marketing to the forefront, most watchers of this industry agree that the key segment to watch going forward is the utility industry.

The need for utility companies to respond to deregulation, combined with an influx of marketing talent, is causing the industry to undertake more and more database marketing projects. And as such, almost all the vendors have decided that this is a key vertical for them going forward. Because of this, it's easy for marketing practitioners in the utility industry to feel highly important as the vendor community wines and dines them. The downside is that in many cases, these vendors have not done their homework to ensure the success of projects for this industry. In fact, many utility companies run the risk of seeing their projects fail because they are not conscious of what to look for in the product offerings of the various vendor consortiums.

So what should the marketing professional look for from vendors that claim that utilities is one of their key verticals? Experience from other industries that went through the same transformation (retail banking, telecommunications and cable TV, to name a few) point to six key factors of success.

Vendor really recognizes your industry. This is more than simply having utilities as a listing on vertical product offering collateral. It means offering a vertical solution tailored to that industry. To accomplish this, vendors have to understand your needs, your business cases and your goals. They should have references in this industry and veteran practitioners who understand what goes on in the halls of firms such as your own. This shows that they did more than create vertical marketing literature.

Data model is flexible to your needs. If someone is not experienced with database marketing, they may not understand the concept and importance of the data model. Simply put, the data model is the structure, details and unique aspects of how a firm keeps track of their customer data. Static data models allow for faster implementation. But they also mean that your business better look identical to the one that the data model was based on. Since most data models were built around other industries, a static model is going to bear little or no resemblance to your organization. A flexible model, on the other hand, will take more collaborative work between yourself and the vendor, but it will yield a much higher quality product in the end.

Iterative approach. Because the industry is new to database marketing, it is highly unlikely that any firm or vendor is going to be able to get an implementation right on the first try. As such, you want a solution flexible enough to allow you to learn as you go, and incorporate that knowledge into the implementation. This includes a flexible data model, discussed above, but also means the ability to add information as you go, the ability to start with one channel and add others, the ability to train different levels of users and the ability to work with different kinds of data and different data sources.

New skill set. Even with the influx of new marketing professionals into the industry, most utilities will not have the types of people they need, initially, to use a sophisticated marketing database system. In addition, they may not have the strategies to use such a system even if they had the right people. The vendor should be able to help you transition. Some provide several options such as outsourcing until ready to migrate inhouse and consultative services to include such areas as actually running your campaigns for you until your people are fully trained. Make sure the solution matches your real needs.

Multichannel support. Many people think that database marketing equals direct mail. Traditionally true, but not so going forward. Database marketing now means multichannel, incorporating the call center, mass media and the Web, along with direct mail. Clients may only need one channel today, but their vendor better support more than that already. The last thing you want is to have your marketing plans held up by the dictates of the software you purchase.

Vendor as partner. Finally, the vendors that have real solutions in this space want to be your partners. They want to learn about the industry as much as you want to learn about the applications. Their proposals should show that and give you credit for the early adopter role that you and your company will be playing as database marketing migrates to yet another key vertical.

Success on these types of projects is not a given. But with careful planning, and a simple checklist like the one above, firms are much more likely to find their implementation not only successful, but helping their firms to gain competitive advantage.

Scott Nelson is vice president of strategic marketing services at Prime Response Inc., Denver.

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