Working With Databases

Questions to Answer about a Database System What functions the marketing database is expected to perform? What is the initial and continuing investment cost? How long it would take to install and to complete a set of baseline capabilities? What would be required, and of whom to recover and profit from the initial investment?

Key Issues One size does not fit all. “off-the-shelf” marketing database systems do not work. Possible reasons: –Marketing systems are dynamic –Marketing is largely creative –Based on moving targets of opportunity

Cost Justifying the Investment Costs easy to calculate accurately. Profits/returns from implementing a marketing system is not directly observable. Marketing database systems affect the bottom line through marketing programs developed based on them. Effects of the database systems depends on the efficiency of the marketing programs. Effects of the marketing programs may take years to realize.

Cost Justifying the Investment Possible return estimation methods: –Published results of other companies. –What-if scenarios: Find how much of acquisition, retention etc. is required to recover the cost. Do a cost-benefit analysis based on how attainable the values in the previous step are.

Learning to Live With Imperfect Data Data is not either “good” or “bad”. Marketing database system users need to understand that Error in data are possible due to entry errors, processing errors, limited sources etc. If the errors are within acceptable limits it is OK. Good co ordination and interaction is required between IT managers and marketing managers.

Learning to Live With Imperfect Data Marketing database systems are developed because a company now has new marketing objectives. New objectives require restructuring of the department. Personnel may need training, or new personnel with different skills may need to be hired.

Managing Expectations Expectations about the benefits of the system needs to be made clear early on. During the planning process there should be agreement on –Which applications the database is expected to support? –Anticipated costs, schedules, and benefits.

Objectives, Processes and Requirements Marketing objectives and IT processes and requirements can be designed sequentially or simultaneously. Simultaneous is preferred because IT personnel can quickly point out if the objectives of the marketing department is cost effective and feasible from a database viewpoint. Difference arises due to issue regarding flexibility in access versus standardization across all users.

Marketing Tools Marketers should focus on possessing a set of information delivery and usage channels. Use the channels on a needs-basis. The common tools marketers need include: Research/analytic projects and software Standardized reports EIS/OLAP Ad-hoc query tools Analysis Desktop software Promotion implementation support software

Business Needs and Functional Requirements-Queries Queries- Ad-hoc questions about the characteristics and behavior of customers or prospects. Type I- Answered directly and fully using the marketing database system. What is the age distribution of purchases of Air Jordon? Type II- More complex, require additional analysis beyond what the database is designed to provide. How many same-product mailings are required prior to conversion?

Business Needs and Functional Requirements-Queries Campaign Planning –Software that assists in finding customers that qualify for a campaign. –Identifies the criteria for selections. –Provides groups of customers in each segment that is being promoted. –More sophisticated systems automatically Feed campaign specifications Update annual marketing plan management system Allocate random customers to control group.

Business Needs and Functional Requirements-Queries List selections- –select a list of names for a promotion and track responses Event driven promotions- –Update process that identifies particular events that trigger promotions Scoring models- –Facilitate the creation of statistical models and the subsequent implementation of model results.

Selecting Names based on Model Scores The database system should –Incorporate model equations –Execute the equation to evaluate customer scores –Store the scores produced by the equation –Sort the file in descending sequence by score –Dividing the file into a number of equal sized groups –Assigning customers to appropriate deciles based on their scores –Providing a facility for selecting names based on the deciles or raw model score

Tracking Promotion Results and Profiling Tracking of promotions is performed to Evaluate actual, and expected circulation/contact quantities, gross responses, net responses, sales volume etc. Profiles of responders and non responders Comparisons of test and control groups Predicted Vs. actual scoring model performance Profiles are based on queries

Tracking Promotion Results and Profiling Uses of profiling customers include: –Evaluate scoring model results by customer group –Compare scoring model results across multiple criteria –Evaluate the demographic and lifestyle differences between deciles –Evaluate the characteristics of the responsive and least responsive segment Used to design creative customized messages based on the differences between groups.

Turnaround Time Information requirements should be ordered by priority. Turnaround time is the time between when a job is submitted to the database and when the results are obtained. Marketers cannot have all the information immediately. Cost of computer hardware needs to be considered in designing database systems

Developing a source data strategy Step 1: Determine value of data for all groups and applications - develop data proforma Step 2: Evaluate and maximize internal data-gathering resources - what data can you get from customers? - evaluate ways to communicate with your customers

Developing a source data strategy Step 3: Evaluate and maximize external data gathering resources Step 4: Evaluate and maximize custom data development options - custom surveys - research panels - customer participation promotions - warranty programs - relationship enhancement programs

Developing a source data strategy Step 5: Confirm the correct mix of source data for database marketing applications - whether to maintain data identified in proforma - what is bottom line impact of maintaining data. - did it allow you to 1. Learn about your customers or market 2. Develop better products 3. Upsell or cross-sell product 4. Develop new customers/ keep customers Step 6: Develop corporate strategy for mkt database