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High Performance Marketing:
Understanding What Type of Marketing Database is Right for You

online columnist Steve Schultz     Column published in DMReview.com
March 10, 2005
 
  By Steve Schultz

This month's column was contributed by Paul Becker, president of Quaero Corp.

Last month we discussed why an organization would need a database. This month, we will discuss the differences between proprietary database marketing applications and more robust "best-of-breed" database marketing solutions.  Additionally, we will discuss the factors that would drive the need to migrate from a proprietary database marketing application to a best-of-breed one. 

Historically, many industries have leveraged single-purpose proprietary software packages to maintain master repository of customer information, analyze that information and market to customers. One example of a category of proprietary database marketing software solution is the marketing customer information file (MCIF) system, commonly used in the financial services industry. Often these solutions leverage a data structure that provides a snapshot of the customer at a point in time. This data structure tends to be of finite length and exists in a flat file environment in which each time period is stored in a separate flat file.

In recent years many long-time users of proprietary database marketing software applications have chosen to move their marketing database capabilities to best-of-breed systems. Best-of-breed systems represent the next generation of the direct marketers' workbench. They are anchored by a general-purpose relational database management system (RDBMS) rather than a data structure designed solely for marketing analysis. Other packages typically implemented with the RDBMS include extraction, transformation and loading software (ETL), business intelligence software (BI) for reporting, campaign management software (CM) for marketing execution and statistical analysis and data mining software for predictive modeling and segmentation. 

Reasons for the trend of migration to best-of-breed systems include:

  • Discontinuation of vendor support - some marketing system vendors have announced product support sunset dates after which enhancements and technical support will be discontinued.
  • Customer base size limitations - in some marketing systems there are limitations on the number of customers, accounts or households that the database can hold and these limits are being exceeded as businesses grow.
  • Record size limitation - in some marketing systems there are limitations on the amount of information about a customer, account or household that can be stored as part of the periodic snapshot file.  This limits the amount of relevant information available to the marketer about a customer, account or household. 
  • Lack of trend analysis capabilities - marketing systems generally are designed to maintain a current snapshot of the customer's accounts and other attributes and therefore do not enable any type of analysis of customer behavior over time.
  • Limited capability to "drill into the details" - marketing systems generally provide a robust set of reports but lack the capability to interactively explore the interesting numbers.
  • Limitations on campaign management functionality - next generation campaign management systems enable much more sophisticated and measurable direct marketing activities, such as event-driven marketing, understanding and managing contact across different contact levels (e.g., account, customer and household) and leveraging information external to the data structure.
  • Electronic report distribution limitations - reports on customer behavior often are valuable throughout the enterprise; however, proprietary database marketing systems typically do not offer a cost-effective method of electronic report distribution (i.e., no additional software licenses).

In today's multiple-channel, customer-centric marketing world, most organizations that use proprietary database marketing systems will be faced with the challenge of compromising their data and data use needs or migrating to a best-of-breed solution.  Ultimately most will conclude that to be able to compete effectively the proprietary database marketing solution must be abandoned in favor of the best-of-breed solution.

Any system migration has certain inherent risks associated with technical viability, timelines, etc.  However, the most daunting risk associated with best-of-breed solution implementations is managing the perceived and actual usability of the new environment by the marketing staff.  There are a number of important steps to take to promote the usability of the system.  These steps are focused on the design of the relational database model, the training of the user population and the provision for technical support.

  • Data Model Design - Implementation of best-of-breed marketing systems offer the opportunity to custom design a marketing database tailored to the specific needs of an individual business.  Typically these underlying data models are constructed using data warehousing techniques, such as dimensional modeling, since most marketing relational databases are essentially special purpose data warehouses that accumulate customer behavior over time and across many other dimensions.  During the design process, usability must be the highest priority design goal.  It is imperative that the data modeling process start with an understanding of the current and future selections, queries and reports to be executed.  Strict adherence to data warehousing principles (e.g., normalized data storage) can and should be compromised in favor of ease of understanding and ease of use by the marketing staff.
  • User Education - A necessary condition for implementation success is that all marketing users can perform the same functional inquiries and tasks in the new system that they could in the previous generation system.  In addition to training in the mechanics of using the new tools, there must be significant education around the relational data model itself.  Proprietary systems typically present to the user a flat view of the data comprised of a single list of data elements.  Relational databases present a more complex view involving multiple linked tables.  The user education program should include an understanding of the subject areas that comprise the data model, the content of the primary tables and the relationships between tables and the naming conventions for data elements in the new database.  Tools to assist in this education should include example queries for commonly asked questions, query template libraries, a cross reference between old and new data element names and an accessible data dictionary that provides information on the source of data, values, scarcity and other information (metadata) about the data.
  • Technical Support - Operation of a best-of-breed marketing system will likely require more technical support staff than was required by the previous generation system.  This should be planned as part of the overall migration.  Certain user operations that are straightforward in proprietary marketing systems can be quite complex in relational database environments.  Two examples are 1) queries that return information on households that meet certain criteria based on the accounts within the household and 2) cross-sell/penetration reports that sum balances and number of accounts across segments for selected households that have multiple products.  Most marketing users will need assistance from technical support staff members who understand the intricacies of the relational data model and RDBMS in order to accomplish these operations.  In addition, the composite skill set of the technical support team must span all the components of the best-of-breed system (RDBMS, ETL, BI, CM, etc.).

Today's competitive marketplace almost mandates a best-of-breed solution as a cost of entry for any organization that expects its database and direct marketing to create value.  Further, the key to any robust best-of-breed solution is the database design.  In next month's column we will review how to ensure high quality design.


Quaero President Paul Becker brings 25 years of experience developing and implementing complex information systems, with the most recent 10 years focused on delivering CRM solutions for Fortune 500 clients in the financial services and telecommunications industries.  Becker leads Quaero's talented staff of marketing, analytic and technology consultants to provide integrated CRM solutions to Quaero's clients.  Quaero's service offerings are focused on leveraging client's customer information to enhance the value of their customer relationships.  Specific services include customer data repository implementation, marketing automation, marketing analytics, and customer contact programs.  Contact him at beckerp@quaero.com.  For information about Quaero visit www.quaero.com.

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For more information on related topics visit the following related portals...
Database Marketing.

Steve Schultz is a leading customer relationship management (CRM) practitioner who combines an understanding of information technology with extensive business process design experience and information-based decision-making methodologies. As executive VP of Client Services for Quaero (www.quaero.com), he helps clients identify, justify, implement and leverage leading edge analytical CRM environments to create or/and improve their database marketing capabilities. Schultz has worked with companies in the financial services, telecommunications, retail, publishing and hospitality industries. Contact him at schultzs@quaero.com.

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