lack of a forceful leader

If you are planning a database in your company, be sure you have found a strong leader and that he or she has been delegated the responsibilities and authority to make it work. Without this, your database will never get of the ground.

How to do things right:

- Put yourself in the customer’s shoes - Build a database team

- Think small and act fast

- Keep your eye on the bottom line

17. Database types that succeed

There are really to separate (but related) forms of database marketing:

a. Relationship building with current customers

b. Marketing to prospects selected by developing profiles of the most profitable customers

Examples where relationship marketing works if done correctly Figure 17-1 on page 348, with examples of products and services.

Difficult relationship marketing situations

Figure 17-2 on page 348, with examples of products and services.

Criteria for success:

- The provider has a well thought through database marketing program

- There must be a payment system for the product or service that makes it easy to get names, addresses and purchase behavior - The product or service involves periodic repeat purchases - There is a definite affinity group from which a database can be

constructed

- The provider can construct a frequency reward system with significant benefits for both parties

When it will not work:

- The product is a commodity with a markup that is too narrow to finance relationship-building activity

- The purchase is made seldom and unpredictably

18. Choosing Business Partners

What functions can you outsource?

- Strategy development

- Designing and building the database - Customer service and communications - Telesales

- Building a website

- Maintaining a database and website - Fulfillment

Why would you outsource?

- Experience: the mistakes they made in the past will not be repeated

- Expertise: some companies have achieved unique knowledge of particular fields

- Speed - Economy

- Entrepreneurship: for external service bureaus you business is money, they will work hard to keep you satisfied and can hire more people if necessary.

The first step in an RFP is a definition of the work to be done. There are several parts to a scope of work:

- Background: company, products and its customers

- Problem: you would not be writing this RFP if there was not some problem to be solved

- Solution: what do you think the outsiders can do to help? Give your ideal answer

- Goal: a one-paragraph statement

- Strategy: the big picture and how this project fits into it - Customers

- Size of the work: how big a solution are you looking for right now?

Don’t think to big, start with small successes.

- Project phases

- Quantitative measures: give your prospective partners some idea of the numbers they are dealing with

- Organization: who is involved in the process - Timing

- Pricing scheme: give them some sort of numerical measurements to price out; otherwise you will be comparing apples and pears.

- Budget: if asked for it, only provide a range

- Competition: provide a small test to let them show what they can do

- Evaluation criteria: criteria including any weighting that you want to include

- Confidentiality agreement

Rules of the RFP:

- Due date

- Questions (where and how to ask) - Digital submission (allowed or not) - Where to send

- Extensions (will extensions of time be permitted)

- Bidders list (sometimes it is a good idea that all bidders know what they are up against)

“The psychology of management tells us that your effectiveness as a manager is determined by the extent that you allow your employees to influence you. If you listen to what your employees say, and us your

influence to carry out the good suggestions that they make, then they will feel that they are an important part of the company. They will put their hearts and minds into the work. You will be successful as a supervisor. The same principles apply to outsourcing functions. Treat these companies as partners and you will reap significant benefits.”

Key questions to ask to potential partners:

- Company history

- Their solution to the problem - The training involved

- Who owns the software - Innovative ideas

- Biographies of the leaders - References

- Cover too much in one document - Not enough time to fill it out - Boring

- No money - Scam RFP - Gullibility

19. Database Marketing and the Internal Struggle for Power

“In our business, you have to have a champion at the top, or there will be no database marketing program. This is the story of corporate America.

You lose your champion, you lose your program”.

(Case: OMC, manufacturer of the Johnson & Evinrude outboard motors) Database marketing cannot prove itself unless it receives:

- Enough funding over a three-year period

- Launch of a group of relationship-building programs - The establishment of control groups

- The measurement of LTV change during the three years Two ways database marketers can get the resources:

- Educating top management

- Demonstrating results through successful experiments

“Just as a CFO can look at a balance sheet and an income statement and determine a profitable direction for company activity, so can an alert marketer look at the information stored in a customer database, and learn of profitable marketing opportunities. Such knowledge in the hands of a skillful marketer is market power”.

Steps to knowledge:

- Build a customer marketing database with complete purchase history and demographics

- Develop an active marketing program

- Build a website that involves the customers - Determine LTV

- Use the database and the website to analyze marketing activities - Use the knowledge to obtain sufficient resources

Modern database marketing uses everything that we know: strategy, organization, use of RFM, use of the web and personalization to recreate the old family grocer. If you can create a chart like this for your company, you will be a database hero and a success at our work.

Good luck!