6 Steps to Creating a Successful Marketing Database
Why Invest in a Marketing Database?
An organisation that has an ineffective marketing database, multiple databases that cannot communicate with one another, or even no marketing database will undoubtedly experience the negative effects on their marketing strategy, performance and profitability.
Organisations in the situations described above have identified a number of business issues which are caused by not having a successful marketing database and are common across businesses worldwide:
•
Campaign responses and new customer acquisition rates declining•
Increase in customer churn•
Decreasing market share•
Operational inefficiency as multiple databases but no central view of customers•
Increase in cost per acquisition of new customers•
Business grown beyond capabilities of current systems•
Hindered expansion of the business to sell through multiple channels•
Launch of a new product / service limited by database capabilityThese issues are invariably caused by the organisation’s inability to create a single consolidated view of a customer, containing transaction history and demographics, across the whole organisation. The impact of this will affect an organisation’s ability to:
•
Implement a CRM programme and build customer loyalty•
Calculate customer lifetime value•
Effectively operate a customer services support facility•
Speedily react to competitor activity•
Recognise duplication and conflict of information across multiple data silos•
Increase the volume and frequency of marketing campaigns•
Cross sell and up sell additional products increasing customer lifetime value•
Target new prospects based on customer knowledge•
Grow market share•
Reduce customer churnAfter implementing a successful marketing database an organisation will increase their ability to:
•
Increase volume of customer campaigns and campaign turnaround•
Initiate a CRM programme to increase customer knowledge, loyalty and lifetime value•
Create a single customer view to improve customer intelligence and cross sell opportunities•
Increase accuracy of matches to customer data ensuring only real prospects are targeted•
Reduce data acquisition costs by creating a prospect database•
Improve organisational efficiencies by centralising data into one location•
Reduce customer churn based on increased customer knowledgeStep 1 – Obtain Enterprise Wide Management Buy-in
When planning a marketing database, it is vital that all stakeholders must input into the overall management plan. Representatives from marketing, sales, customer service, finance, operations and IT should all be involved. The goal of the plan should be to create a system that enables the organisation to recognise and understand their customers.
Gartner says many companies attempt customer information management plans ‘with no idea of what they are hoping to build in the long term. One solution is haphazardly joined with another, initiatives come and go, and soon enthusiasm is waning throughout the enterprise’.
A business case will need to be built that is based on tangible, measurable results. These may include increased response rates, decreased churn, improved market share or a lower cost per acquisition. Fundamentally the investment is about the business reducing cost, increasing revenue and generating more profit.
To support your business case a ‘Return on Investment’ needs to be calculated. A specialist database management organisation can assist you to quantify duplication levels and data quality issues within your data. This will assist you to then assess your direct marketing costs per database name per annum and to calculate the current levels of wastage that could be avoided by investing in the marketing database. The ROI can incorporate a combination of several measurable benefits as a result of a database implementation. The database management organisation you work with may also help you calculate the ROI. Once the ROI is established you should have a significant business case that can be presented to senior management for investment approval.
Finally you need to ensure that the resource requirements are available to enable you to support the enterprise wide plan. Where necessary, liaise with the database management organisation, or employ a specialist consultant if there are gaps that need to be filled.
Step 2 - Identify Input Data Sources
You've been given management approval to move forward with your initiative. This is where the real work begins, and you start to deliver a return on your investment.
You will need to survey the organisation’s databases and data storage. It is advisable to enlist management support as you will need different departments to spend time discussing their data with you. Don’t be surprised to find data tucked away in drawers, or data you never knew existed.
You need to understand:
•
Where are the data silos?•
What kind of technology do they use?•
What kind of data is in them?•
Who uses the data and how do they use it?•
Where did the data originate from?•
How current is it and how frequently has it been updated?After gaining an understanding of what data is already in existence you may need to assess whether any other external data will need to be purchased to ‘gap fill’ existing internal data to enable you to meet your business objectives.
Step 3 – Develop an Address Template
In order to make database update simpler and more effective in the long term, you should consider developing an address template which should then be used for all response devices in your on-line and off-line material.
All data sources being loaded into the initial database build will need to be reformatted into this template configuration. All external suppliers, such as fulfilment houses, call centres and data capture centres, should be briefed on this template as well as all in-house points of data capture and name and address management. You will need to ensure that they present all new data to you in this format. A database management organisation will be able to assist you in getting this crucial step of the project correct.
Prior to loading any data in to the database you should monitor data quality before importing it into your marketing database. You may need to set a series of quality metrics that the data can be benchmarked against. In addition these metrics may form part of future supplier performance evaluations.
Step 4 – Handling Transactional Data
Consolidating complex customer transactional data as well as customer lifestyle and demographic data often present the largest challenges in developing a sales and marketing database. This is particularly the case if the data was captured for different purposes, by different departments or onto different databases. Without there being a standard format, and an overall data management strategy, information can become confused, mislaid and inaccurate. An even more complex scenario to manage is where product codes are allocated and then reused at a later data, but for a different product. This requires complex data management.
One option to resolve transactional data issues prior to building your marketing database, if your product range is complex or particularly if you sell multiple products to the same customer, is to consider developing a demographic coding table. This will aid you to understand real customer worth, lifetime value, purchase preferences and retention
A database management organisation will be able to work with you to fully understand the data presented and to investigate the complexity of the business rules that will need to be built into the database to effectively manage all of the transactional and customer lifestyle and demographic data elements.
Step 5 – Specifying Database Build Requirements
A marketing database should be designed for marketers (and not programmers) to use. Marketers should be able to interrogate their database, plan campaigns and run extractions by a simple point and click mechanism that requires minimal training and computer literacy.
A good marketing database should provide the following features as a minimum:
•
Accurate consolidation of all data sources into a single customer / prospect view•
Compatibility with your server specification and networking environment•
Multiple customer level views (individual, household, address) with lifetime value reporting•
Fast processing of data, even on large data sets, for database updates•
Secure, real time access from all offices and remote sites•
Ability to accurately enhance, cleanse and de-duplicate all new data prior to loading•
A suite of sophisticated business rules designed to get the very best performance from your transactional and demographic data.•
A database architecture based on proven methodologies designed precisely around your operational requirements, eliminating functional redundancy•
A powerful, simple and visual point and click interface to run campaign queries, selections and extracts, however complicated the queries may be•
Consistent URN’s and the facility to store URN’s from other systems•
Ability to create and customise reports•
Extensive analytical and data segmentation capabilities•
HTML batch email capability (where appropriate)•
Privacy controls ensuring compliance of Data Protection requirements•
A flexible, scalable architecture able to adapt to your future needs, with minimal future investment.Step 6 – Appointing a Database Management Organisation
You now have a clear strategy that is supported by management across your organisation, a complete understanding of the data held within your organisation, ongoing data being collected in a standardised way and all existing data being reformatted into a consistent template, and a full list of specifications to build into your database.
It may be that you have the internal resources to develop and manage the database in-house. However, don’t underestimate the complexity of the task. Many organisations prefer to outsource the build of their database to a specialist provider with extensive experience in the field.
A good database management organisation will become a ‘partner’ to your business. They will need to understand your business, its strategic direction, data issues and objectives, and what they are expected to deliver. Many organisations can build and manage databases; however, it is the subtle differences, the ability to understand your business requirements and the level of service provided that will make a real difference to your database success.
Factors to look out for when appointing a database management organisation include:
