The Next Mile

THE NEXT MILE
by Monica C. Smith

As a runner commits to a marathon for the long haul, so a marketer commits to a database. It takes time for the runner to hit her stride. It is also true for the marketer with a database.

The marketing database is still evolving. It has much distance to cover to reach its potential as a necessary and focal tool in today’s direct to consumer world. We have seen many fail and even more be underutilized, oversold or poorly configured, with inadequate training for those tasked with making the databases usable. The marketing database is like a person preparing for a marathon. If its data get a bill of health—or close to healthy—it can slowly start to take up the training regime. You will not find overnight success. However, through the discovery process, you will uncover a history that may be painful but that can be repaired and strengthened. With focused and committed action, you will reap the rewards over the course you take. A database should generate cost savings through efficiencies as well as allow for and support more effective marketing decisions and operations.

Our experience shows that a good benchmark for estimated savings in year one is a 15% reduction in duplicates, plus a 10% decrease in selection time on the front-end and a 25% reduction in time on the back-end for forecasting, together representing about half of a full time employee. Additionally we see that with the improved understanding that comes from using the database, better decisions are made that generally increase response drivers by 5% to 10% and therefore boost top line revenue.

The timeline for year one allocates the first six months to build the database, work through discovery and create the business rules. That amount of time should be ample for the database to be fully functional for pulls and queries. Quickly try to pinpoint problems if there appears to be a time overrun.

The next months are spent learning to use the database effectively and to gain a deeper understanding of its capabilities. Also, this time is spent identifying and training the in-house “super-users” who will be the internal experts in using the database to its best advantage. By the end of the first year, you can expect to be realizing the efficiencies described above. If the build goes beyond six months, there may be a problem, which is important to identify as soon as you become aware of the overrun.

Once the database is operational, one can begin to use the data for creating plans. Typical questions to ask of the data that will provide insight into marketing strategy include:

• What is the lifetime value of pure channels versus multi channel?
• What gender is most important to the Brand? By annual spend? How many transactions does each gender make per year per channel? In how many categories is each buying?
• How many contacts per year will a 12 month purchaser receive? How many does it take on average to get them to respond?
• How many 12 month buyers have only purchased in one product category, two, three plus?

Then the answers from these and other questions need to be converted to metrics which are tracked over time against benchmarks and also measured against competitive data. And, most importantly, the answers need to be articulated to all stakeholders in the Brand to improve overall knowledge AND define the strategic tactical initiatives to which these data point.
Once the straightforward questions are answered, the marketer can build out the contact strategy and budget using the database for segmentation, quantities, and projections. We see these activities as part of the first year of using the database.

In year two, we reach the next mile, where we search for greater insight, understanding and awareness; we seek to answer questions which are more complex than the simple answers to random queries. The questions are often more subjective than strictly quantitative, but need to be quantified nonetheless. We look to understand customer interaction by channel, product, and outcome based upon a scenario. It is where we lay out the business questions that need answers – not just summations of samplings of data points. We use the database to provide data that are actionable for marketing strategies and plans.

Our increased knowledge comes from the ability to segment, isolate, test/hold out, and garner actionable information to move your marketing operations to the next level of achievement. We expect more complex outcomes.
There are five main categories of questions:

1. Number of contacts
2. Impact of marketing dollars on a channel
3. The ability to influence the growth category of merchandise
4. The important need to drill on down on areas of weakness
5. To recognize success immediately and roll it out.

We work with our clients to articulate the questions that delve into these broad areas more specifically for their individual market realities. Here is one example of how data can be marshaled to inform strategy.

EXAMPLE:
Recently, one of our clients asked us a question which we were able to answer using the company’s information in its marketing database: Do our very best customers need to be contacted four times or eight times? We pulled the relevant information and below we show the results. The example points to the use of testing strategies to determine which are most effective. It also shows that testing may be a multi step process before the strategy most likely to optimize performance is identified.

Best buyers in fact do respond to more mailings. Eight mailings produced 13% more transactions, 12% higher sales overall, and a 1.4% increase in contribution. A higher number of mailings generated a higher contribution to the bottom line, but a lower contribution per order.

However, because the overall improvement was not very great, we see the next step here to be comparing six mailings to four in order to determine the optimal number of contacts.

Group A Contact Flow Test

Conclusion
One does not decide to be a marathoner over night. Nor does a Brand go gently into the buy, build, and budget of a database for its organization. There must be a strategy and plan, a directedness that many organizations don’t bring to the negotiating and decision table. A marketing database is not the end all and the be all. It is not a magic button that will solve the Brands problems; it might even add to them. However, it does offer the opportunity for marketers to take their brands to the next level, to go the next mile, with a focused understanding of what to expect and a plan on how to manage the process.

The database can be the tool from which really great marketing comes. The ability to challenge, audit and define, to articulate answers to questions that are often the most sought after in a Brand and the most elusive. By focusing on a pre-determined road map, the marketer sets the stage for a strategy focused on the integration of three core elements – the execution of on and off line activities, the reading of metrics to determine differences in the business over same time last year, and the answer to questions about the customers buying patterns.

Finally, the database allows you to be eloquent and informed on the business model, to lead the Brand with confidence into new territory as a Product authority, identifying products that garner customer dollars through understanding customer purchase habits and drivers. Additionally the marketing database allows for insight into price point relevance, transactional interdependence, and reactivation/retention strategies.

But the database is only as useful as the marketer who knows how to master it allows it to be.

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