1. Building Marketing Databases

2. In-House or Outside Bureau? Outside Bureau: Outside agency that specializes in designing and developing customized databases. Three factors to consider Cost Control Customization

3. Cost Cost of developing a database in-house depends on –Existing workload of the in-house staff –If additional help is needed from contract programmers –Other system development initiatives that will be forgone –Whether an outside resource is quicker and better

4. Control Customer list is the lifeblood of most customer centric companies. External facilities create additional risk of exposure. Companies need to manage risk through procedural and contractual measures. External bureaus should have familiarity with The company policies Initiatives Processing systems, and Data

5. Customization In house systems are more customized to the marketing departments needs. However, end-user departments may be charged by the IT department on a cost plus basis. Sometimes the cost plus charge is costlier than an outside bureau. Service bureaus have very flexible approaches to working with several clients.

6. Customization However, internal IT staff are always available to make last minute changes. Internal IT staff may be trained to work only on standardized systems. However, a dynamic system such as marketing requires special skills to design.

7. External Vendors What if the platforms/software of marketing department and IT department do not match? Time is spent in making the marketing and IT staff speak the same language. Until then the marketing department uses the same archaic information to make decisions. External vendors alleviate these problems because they have previous experience helping previous clients.

8. Combined Approach Approach #1: –Use external bureaus and internal staff for tasks they are specialized in respectively. –For example, Internal staff may be good at design while the external supplier may be skilled in implementation. Approach #2: –Use an external supplier initially, and then migrate the system to internal resources later.

9. What Data is Needed? Three step process: –Identify business and promotional files that should be included. –Review data elements in each contributing file. –Select from each file the data elements required in the marketing database.

10. What Data is Needed? Identify files to be included: Not practical to have all the information that ever existed about a customer. Issue to consider: –Is the file too hard to get? –Will the database contain data on customers or prospects? –How much promotion history is available? –What levels of transaction data is available? –Is the desired data actionable? –Data element coverage.

11. Review of Data Elements Review Data Elements: Detailed reviews of each data element with the data processing or end-user personnel. May take anywhere from one day to a few weeks. Select Data Elements: Include all the data elements identified in the review process– even somewhat critical elements. Review the selections once a year after experience is gained with the system.

12. How will data get into a marketing database? Data extraction by data providers –Standardized programs written to extract data. –Automated when updates are required. –Is not flexible when new data elements are added. Data extraction including creation of summary calculated data Un extracted copies of data to data loader –Provide whole data files to the loader. –Loader decides on what records to include or exclude. –More work for data loaders. –Simpler, and cost-effective when data elements change during review

13. In house Vs Service Bureau Implications Data availability on a regular basis depends on –In-house Workload of IT department (less number of data sources) Co ordination between departments (large number of data sources) –Service Bureau: Billing structure of the service bureau Cost of not having to co ordinate with other departments may be steep sometimes.

14. Consolidating Records Customer data is captured in transaction oriented systems resulting in duplicate records. Data has to be cleaned before it is loaded into a database. Example: Financial service firms –using Unique customer ID or unique account number.

15. Data Cleaning Duplicate Identification –Software used to identify duplicates in mailings –Based on names and addresses Address Standardization –Representative software: Finalist, Code-1 Plus –Verifies if 123 oak street, or 132 oak street, or 123 oat street is correct. –Uses national zip code databases for this purpose.

16. Data Cleaning Logic of address standardization software - The ZIP code matches the city and state portions of the address - The corrected ZIP code contains an Oak Street or Oak Street or both - The street numbers along the street in question lies within bounds of the ZIP code - The street number is a valid address - Whether the address is a business or a residence

17. Data Cleaning Matching Issues - Variations of spelling of an individual’s name - Companies with multiple business files store name and address in different formats - Use matching software in first case and parsing in second case - Duplicate identification may be very important for prospects too

18. Data Cleaning Scrubbing - For financial services companies, registration info my be imbedded in customer record - Use specialized application of parsing and dictionary use - Software would recognize that some terms are not part of names or addresses - Scrubbing software also retains meaning of registration data

19. Data Cleaning Householding - How certain are you (with the data available) that Anthony Smith and Julia Smith are married? - Householding based on names and addresses -Constitute a confidence indicator. - Mail material that promote a happy married life only if you are 100% confident.

20. Data Cleaning More complex households –Type I: Same last name, same address, and joint account. –Type II: Different last name, same address, and joint account. –Type III: Common account, different addresses, may or may not have same last name. –Type IV: Same address, different last names, and different accounts.

21. Frequency of Update or Replacement Frequency of updating determines how well the database represents the actual customer master file. Updates need not be more frequent than the decision making interval. Intervening month’s files need to be accessible to make the update processing.

22. Avoid Access Conflict There is a always a priority conflict between –Analytic users of data: Marketers –Operational users of data: Customer Service Solution is to maintain separate databases with each. But it is too costly, marketers may not have up-to- date information on some transactions. To calculate trends, distribution by list source etc. however, real time data may not be necessary.

23. Other Issues Level of Detail Transactional Vs Summary Update Vs Replacement Determines analysis that can be performed Determines variable cost Conduct periodic reviews to determine changes in business needs and the resultant changes in the databases.