Now that you've built a data warehouse, what are you going to do with it? Too many companies today invest sizable resources and dollars building data warehouses without understanding how to use these information repositories for more than just query, report and trend analysis.
Campaign management application software utilizes information in the data warehouse to plan, manage and track marketing campaigns designed to alter customer behavior. Campaign management software can help organizations:
- Identify the current and potential value of customer relationships;
- Help determine where and how to best allocate marketing dollars to improve the value of their customer relationships; and
- Shift from product productivity to customer profitability.
Companies use campaign management software to automate and accelerate their marketing process. That process might begin with an idea for a marketing campaign, followed by customer segmentation, campaign planning, campaign execution and campaign evaluation and refinement.
Analysis vs. Action
Campaign management, data mining and on-line analytical processing (OLAP) are terms often bandied about loosely, yet they represent very different ideas and technology. The integration of these tools and applications can dramatically improve the effectiveness and profitability of database marketing--the utilization of information to better understand customers and prospects. However, to understand the importance of this integration, we must first define these applications and distinguish between:
- OLAP and data mining software tools that analyze information stored in the marketing database or warehouse; and
- Campaign management software--applications that utilize findings from analytical tools to take some "action" that changes customer behavior.
Essentially, data mining tools and on-line analytical processing (OLAP) software perform a variety of analytical functions, but by themselves do not reach out to customers to alter their behaviors. In contrast, campaign management software incorporates the insights from these analytical products to build and execute direct-marketing programs designed to directly influence customers.
Defining the role of basic marketing applications should help a company choose products that can automate its marketing process.
What is OLAP?
Within database marketing, OLAP software enables marketers to query against the warehouse and visualize summarized data. For example, OLAP might show within a bar chart that educated males between the ages of 35 and 40 are the largest group of buyers of digital cameras priced over $1000. However, OLAP tools lack the means to turn that information into an action plan or marketing campaign that would generate profit for the organization.
What is Data Mining?
Skillful analysts use data mining software to build "models" that analyze volumes of information to predict customer and prospect behavior. An analytical model then assigns a "score" to a customer (or prospect) in a database, indicating, for example, each individual's likelihood to purchase certain products across product lines, respond to an offer for a free gift or sever their relationship with the firm. But again, scoring by itself is not a marketing initiative.
What is Campaign Management Software?
Campaign management software enables companies to deliver to customers and prospects timely, pertinent, coordinated messages and value propositions (offers or gifts perceived as valuable). The software manages and monitors customer communications across multiple customer touch points such as direct mail, telemarketing, customer service, point-of-sale and interactive Web. Campaign management software automates the design, execution, assessment and refinement of possibly tens to hundreds of highly segmented campaigns running monthly, weekly, daily or infrequently. The software also runs campaigns that are triggered in response to customer behavior or milestones.
Take, for example, customers of a bank who only use the institution for a checking account. An analysis reveals that customers, after depositing large annual income bonuses, wait for their funds to clear before moving the money quickly into their stock-brokerage or mutual fund accounts outside the bank. This represents a loss of business for the bank. To persuade these customers to keep their money with the bank, marketing managers can employ campaign management software to immediately identify large deposits and trigger a direct-mail or telemarketing promotion as soon as a customer's account rises by more than a predetermined amount, say $10,000. Furthermore, based on the size of the deposit, the triggered promotion can provide an appropriate incentive, encouraging customers to invest their money in other available products within the bank. Finally, the campaign management software, by tracking responses and following rules for attributing customer behavior, can also capture and help measure the impact of the campaign on the bottom line.
Integrating Campaign Management and Analytical Software
Through this example, we see how results from OLAP and data mining operations often provide ideas to marketers for campaigns they might build. The campaign management application can then reach into the database and select individuals with characteristics matching the analytical profile. Customers in the database are automatically tagged so they can be pulled into direct-marketing campaigns, which are run at the appropriate times, in an effort to retain customer loyalty or cross-sell or upsell products and services.
For example, marketers might use statistical tools and analysis to identify a customer segment of households in a high-income bracket interested in lavish vacation resorts. By "scoring" households in that segment through the use of an analytical model, marketers can eliminate individuals unlikely to respond to an expensive direct-mail catalog, sparing production and mailing expenses and increasing response rates. A campaign management application can then use model scores as part of the criteria used for selecting individuals for a campaign. In other words, analytical modeling can be employed by campaign management software to further refine segmentation schemes.
Unfortunately, campaign management software has evolved separately from analytical products, so feeding the results from the analysis into a campaign has been a manual, error-prone and time-consuming process. Over the next year, these products will become increasingly, if not seamlessly, integrated, eliminating several problems and bottlenecks. Currently, if a database marketer wants to add scores to a defined segment for use within a campaign, a model is used that scores the entire database, not just individuals within a particular segment. Since information changes every day, this time-intensive task may be incapable of keeping pace with campaigns slated to execute weekly or daily or run in response to some customer "trigger" or lifecycle milestone. Without the integration of scoring within campaign management software, campaigns dependent on model scores will not always be able to reach customers at the right time.
Through the integration of data mining and campaign management software, the latter will automatically determine which records within the database to score and when to score them--typically just before the running of a particular campaign, possibly every night. By enabling marketers to score customers and prospects within campaigns "on the fly," the integration will increase the speed, accuracy and efficiency of campaign execution. This "dynamic scoring" will only grow in importance as the number of highly targeted campaigns grows.
Organizations that ran just a few large campaigns yearly are already segmenting customers into much smaller, more focused groups and pulling them into many more highly refined campaigns. Given this level of complexity and granularity, campaign management software must be used to manage campaigns across the enterprise, capture customer history and assess customer behavior.
Take Action on the Information
In summary, campaign management software utilizes information in the warehouse to manage and coordinate communications to customers across touch-point channels and to positively impact customer (or prospect) behavior. It is important to understand that the analysis of information does not directly translate into "actionable" value. Campaign management can turn information in the warehouse into coordinated actions that impact corporate profitability and increase the ROI of your data warehouse and marketing investments.
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