How Database Marketing is your Catalog Program Solution

In 2009 there is an unbelievably large amount of ways a CMO can spend his/her budget. Aside from the traditional direct mail pieces, tradeshows, T.V. and radio ads… we now have e-commerce websites, blogs, forums, Facebook, Twitter, etc. At the end of the day, just like we had to do when I started in this business,  CMOs are required to investigate their ROI in each effort. Listen to the podcast below or continue reading to learn the latest trends in database marketing and how you can apply new techniques to your marketing program.

 

 

Click on the link below to listen to the podcast.

[download id="3"]

 

Q: In the past, we have always stressed to our customers that the database is the most critical marketing component for direct mailers. Is this still the case?

 

 

 

A: Absolutely. In the last six to 12 months, our customers have been looking to their database for solutions about how to reach their customers more effectively. What we are seeing is that the current make-up of their databases is not working for them as they try to move forward. Our role is to work with the customers to try to develop their database to a point that makes it more relevant and more efficient to perform cross-channel marketing.

Q: What are some of the current trends with respect to database marketing?

 

A: What we see now is that our customers are starting to incorporate more marketing channels than before. The focuses in years’ past were the retail and direct mail channels. Now we’re seeing e-commerce become a strong player, as well as social networking sites such as Facebook, LinkedIn, Twitter, etc. Customers are now taking data from those channels and incorporating it into their database; they’re analyzing that data and looking at the performance of those channels and maintaining as much of the data as they can.

Q: Does segmenting still play an important role?

 

A: Our customers typically segment by recency, frequency and monetary value (RFM). This traditional method will still get them 85 to 90% of what they need, but because of all the data coming in from additional channels now, we can achieve even more finite data. Other methods of segmenting include looking at the different channels…customers that purchase via the catalog versus those that are driven by an email. Another effective method is to look at overlay data, including demographics and lifestyle data. Also, look promotional data. How many times have you sent promotions to a customer and in what time period? If you have sent a promotion to one prospect 20 times in a year with no response, then maybe it’s time to decrease your promotions to that prospect.

Q: What about outside data? Is that still valuable? If so, why?

 

A: Privacy issues and government restrictions have made it tougher to attract/find outside data (demographic, lifestyle data, etc.), but the industry has found ways to work around those restrictions to discover key data about their customers (marriage status, home values, age, etc.). We absolutely see customers using this overlay data in addition to purchase history. To gather the data, they are asking their customers to provide it. They are sending out surveys and offering promotional incentives for responding. Additionally, within the survey, they are explaining why the data they are requesting is relevant and how it will enable the marketer to better target customers’ needs. It is important to gather this data, achieve a solid understanding of it, input it into the database and maintain it.

Q: For years, we have talked about the importance of maintaining a clean database. How often are customers updating their database and what is the best way to do it?

 

A: Updates vary in frequency by customer; some update monthly, quarterly, semi-annually, annually; some do it in conjunction with their mail cycle. The new channels that have been introduced in the past couple years, however, have resulted in a new trend. Channels such as email, Facebook, Twitter, etc. are updated so frequently that we are starting to see customers update their databases on a much more frequent basis…some even daily. If a customer has the resources and the need to update that often, the technology is available now. It is always best to update as frequently as possible. It used to be very costly to do so, but the cost of the technology has decreased dramatically, making it much more feasible to perform frequent updates.

Q: What about promotion history? What’s the value of maintaining that in the database?

 

A: It is important to track how many times you have contacted your customer in every channel…and maintain that history so that you can look back and perform analysis based on what you have sent  and what kind of response rate you’ve seen as a result. Tracking promotion history can also give you a solid understanding of Lifetime Value. Additionally, if mailing or promoting through all channels and you have response rates, you can make decisions about how to promote in the future. If you do not track how many times you have promoted or how much you have spent, you do not have any way to track. The cost of maintaining promotional data is minimal now, as opposed to four to five years ago. The data that you should include when tracking is date of contact and the cost of contact (estimated cost of individual direct mail piece, email, etc.), so that you can measure how much you are spending on each customer and how much you have received in return.

Q: Is it crucial to be able to access your data in a web-based format?

 

A: Web-based formats are certainly the norm for accessing data now. Using some of the available tools like Micro Strategies or some of the custom-made tools like Alterian enables customers to log into a computer anywhere and access their database. Having the ability to access a database and do the analysis from a web-based structure is the cost-effective, and therefore the most popular.

Q: Are marketers keeping their databases in-house or are they outsourcing?

 

A: Everyone is looking to save costs, so a lot of customers are exploring the possibility of maintaining their database in-house. Obviously, from a Service Bureau perspective, we would love to see them house their database with us. What happens is that they try to work with their in-house IS department and that is really not their specialty, so oftentimes the database gets a lot of fanfare initially and then is not maintained, so it does not have the necessary level of integrity.

When data is housed by the customer, purchase data becomes inconsistent and the database is used less because of its lack of accuracy. To provide a good balance between cost effectiveness and data integrity, data service bureaus are now offering much more efficient solutions in order to remain competitive with the in-house “solutions.” One additional advantage of using a service bureau is that if a customer has always focused on one channel, such as retail, and now wants to integrate into another channel, service bureaus have the ability to seamlessly transform the database to fit the new channel. Trying to complete this transition internally can take weeks of programming and will be much more costly.

Q: What’s the most important thing for our listeners to take away from this podcast?

 

A.  Everyone needs to understand their database. If you are using an outside source, go through an audit at least once per year, if not twice to understand what is being maintained, what are the business rules to maintain the data, and what is happening down the road that could change the database. Ultimately, you need to understand the value of your data. If you maintain the database internally, maintain the same type of audit. You need to understand the same principles and also learn what new technology is available and how to adapt that technology in-house. The bottom line is that everyone needs to review and understand what data they have, how it is growing or decreasing and the value of that data so that you can use it to appropriately market to your clients and prospects.

Q: Gary, what is the best way to reach you?

A: 414-248-9151

• Tags:
• catalog mail
• data
• matchbacks

Leave a Reply

Click here to cancel reply.

Name (required)

Mail (will not be published) (required)

Website