Published in DM Review Online in February 2005.|
Printed from DMReview.com
High Performance Marketing: Marketing Databases: The Root of the Solutionby Steve Schultz
Over the last six months, we have focused on defining your direct marketing application technologies needs. More specifically, we have focused on some of the primary applications that have the potential to make your organization's direct marketing planning and execution processes more effective - MRM, real-time marketing and campaign management tools.
In the next several months, we would like to take half a step back and focus on a core investment that enables much of direct marketing's success, the relational database. Specifically, we will be discussing:
Today, we will focus on the first of these three issues.
What is a Marketing Database?
There are several alternative views of what constitutes a database. The first is a narrow definition that includes only the hardware and software that support the construction and maintenance of the database. This mandates that the implementer choose a hardware environment (i.e., mainframe, UNIX, Windows, etc.) and database software environments (i.e., DB2/UDB, Oracle, Teradata, SQL Server, etc.).
The second would extend the first to include the hardware and software to support scheduling and storage/backup activities. The scheduling tool would enable the database load, update, archiving and backup processes to be managed or automated. The storage/backup utilities would support archiving information that is not ready for discarding entirely but is not required to be part of the immediately accessible marketing database environment. For some organizations these activities are not required to be part of a database as they exist to support all operational and database environments. In others, there may be limitations or gaps that need to be addressed as part of your marketing database consideration process.
A third definition would further enrich the second to include hardware and software to address data quality and ETL (extraction, transformation and load). Generally, we encourage organizations to think about databases in this last and most comprehensive manner. The reason for this recommendation is that the creation of the database is, in large part, a foundational element of a CRM or direct marketing strategy that provides the means to an end rather than being an end unto itself.
Building a database rarely produces significant organization benefits; rather, it sets the stage for the use of the data to develop insights that create value and the implementation of applications that improve efficiency of marketing processes. Therefore, we recommend that organizations understand the total cost of the foundational elements at the beginning of their undertaking; rather, than addressing them piecemeal over time.
Does Your Organization Need a Marketing Database?
Having defined what is encompassed in the phrase "marketing database," how can an organization determine whether or not it needs one? Typically, the marketing database investment is justified based one of three factors:
Process Efficiency. Databases can be used to enable nearly every aspect of marketing from the planning and budgeting processes to campaign design and execution to creative development and delivery to content management to tracking, reporting and analysis to knowledge management. Understanding which of these processes your organization would like the database to support will help you to define what types and how much data will be required. The greater the number of processes and the larger the volume of data associated with these processes, the greater the need for a marketing database.
Insight Enablement. As noted above, it is not the creation of the database itself that generates value for your organization; rather, it is the use of the data to generate insights about customers and marketing spend. As such, it is important to understand how the data to be provided by the marketing database is expected to support greater insight (without consideration to any new applications). Most organizations find that increases in the timeliness and relevance of the data, even without more advanced applications, enable greater customer insights (offer tailoring or personalization) that improve the value of the existing customer relationship. Overall, if a marketing database will provide your organization with more comprehensive prospect and customer information or/and more timely access to such information, the value of the marketing database to the organization is higher.
Data Access and Consistency. In organizations where all information comes from a single source, the value of a separate marketing database is minimized as data consolidation errors tend to be infrequent. However, in organizations where the customer or prospect data is sourced from multiple operating systems, the marketing database can provide significant value through its creation of a comprehensive, consistent view of the data that supports product, customer, channel or organizational perspectives. Additionally, the volume of data that an organization has can impact the potential value derived from a marketing database. Specifically, in an organization with low volumes of data, the typical antagonistic pressures of OLTP (transaction processing) vs. OLAP (analytical processing) are reduced or can be mitigated through super-charging the hardware environment and therefore the value of a marketing database can be minimal. However, in environments with large volumes of operating system transactions and prospects or customers, such super-charging is often cost-prohibitive and the use of a marketing database can provide a lower cost solution to accessing large data volumes.
Overall, many organizations can benefit from the creation of a comprehensive marketing database. To the degree that your organization has multiple data sources, large volumes of transactional data or/and prospects and customers, multiple marketing functions that leverage similar data and applications that do not require proprietary data structures, your organization is likely to benefit from the creation of a comprehensive marketing database. The next steps are to design, develop and deploy that database. Over the next two months, we will highlight best practices that can increase your odds of a successful outcome.
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 email@example.com.
Copyright 2006, SourceMedia and DM Review.