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Questions…I’ve Got Questions

  • October 01 1999, 1:00am EDT
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It’s July 30, 1999, and 102 degrees in Chicago. Walking out of the Hyatt on Michigan Avenue there was one question on my mind, "Can I get a taxi with air conditioning?" This year’s summer National Center for Database Marketing (NCDM) conference was based in the Windy City. After finding a cab I asked myself a second question: "What is the current state of database marketing and where is it headed?"

From a business standpoint, it seems to be pretty obvious where organizations are going. From Fortune 500 companies to the CD store down the street, firms want to have a complete understanding of each customer’s preferences and his/her value to the business. This information is critical in developing effective loyalty programs. Organizations want to allow customers to interact with them on the customers’ terms, and they want to deliver the same level of service and recognition at each channel. Every business wants to lock in the customer and make the cost of switching to a competitor too high.

Call it one-to-one marketing, relationship marketing or common-sense marketing. The real issues were, How do we get there? What are the challenges? The NCDM conference was an ideal place to get feedback from marketers in the trenches and take the temperature of database marketing professionals.

Stages of Customer Understanding

The most prevalent comment in my informal survey was that most organizations are still trying to understand consumer behavior and segment their customers around these behaviors or other attributes. We can categorize these companies into three categories:

1. Flying Blind. This group doesn’t have a customer database, but is desperately trying to raise awareness and funds to build one. In some cases, the organization missed "that whole data warehousing thing" and has recently found themselves in a very competitive market space. For some companies, their marketplace has been invaded by a company. In any case, they are a business flying blind, and that’s not good.

2. Too Much of a Good Thing. These companies invested significant funds and resources in data warehousing and built colossal data stores. The problem with that? Either these data warehouses are too large to make sense of the data, or they aren’t customer-focused. These qualities make it difficult to do the required customer research or make the research actionable. Currently, marketing departments are trying to formulate strategies to create data marts for customer research and validate the data. For many, this is the first time the data has been truly audited. A lot of data isn’t always a good thing.

3. Tasting Victory. This category of companies has finished a customer database and is currently building applications for churn analysis, customer profitability, lifetime value and campaign management on top of these databases. They are tasting bigger profits through targeted marketing efforts and customer-focused information.

The conference included a smattering of companies that already have successful customer research programs. Most of these businesses had been performing customer analysis for quite some time and were still using some fairly old technologies. The most frequent use of the data was for customer segmentation, response analyses and prediction, or churn management. Many of these companies are now trying to finely segment their customer base, evaluate new technologies or perform massive campaign testing to understand customer preferences.

The "e’s" Have It

Any article would be incomplete without a heavy dose of the "e’s." e-marketing, e-commerce, e-this and e-that. Many conference attendees were interested in learning more about driving marketing strategies through the Web.

What was on everyone’s mind? Capturing relevant customer information, tracking the success of a Web site, creating passive Web campaigns, utilizing e-mail as a direct marketing method and integrating the marketing database with an e-commerce site. However, I am not sure if all of the following questions were answered for everyone:

  • What is the functionality of the Web site?
  • What is the technical architecture?
  • How sophisticated does the marketing database, marketing department and/or Web site have to be to make this work effectively?
  • Which comes first, a marketing database or Web marketing?

There were several sessions that helped people understand e-mail 101. However, some may have left with unanswered questions about tracking and answering responses to e-mail campaigns. It will be interesting to see which vendors come out ahead in this race – front-office software, outsourcers or the campaign management providers. Many attendees were very concerned that although e-mail campaigns could provide a tremendous response rate, promotions become virtually worthless if businesses can’t provide effective follow-up to electronic responses and inquiries.

Is there Gold Up In Them There Clicks?

As I traversed the hospitality suites and after-conference parties, the conversation around e-marketing started getting real interesting as the drinks started to take effect. The number one question during these conversations was: Does clickstream analysis produce results? Over the course of the next few months, I think we will start hearing some detailed case studies from companies such as MatchLogic or DoubleClick spending serious money on the topic.

Other post-conference questions I heard included: Can anonymous site visitors be profiled by their clickstream? Can Web site effectiveness be determined through the clickstream? Are personalization and dynamic online promotions leading to sales? Can you determine visitor needs and wants from clickstream?

Everyone I talked to would like to see some concrete clickstream proof before investing. However, I would advise organizations to start their own analysis and not wait for results to become public. If there is gold in the clickstream, I think the knowledge may be considered strategic and confidential.

Hi, My Name is Larry

Many NCDM attendees found the networking aspect beneficial in that they realized most of their peers do not have very evolved Web strategies – let alone integrating with marketing strategy and execution. It seemed that there was almost a large sigh of relief at the end of the conference from most people because they were not too far behind – despite all the hype. But one thing was clear: the pressure is mounting, and marketing and IT organizations need to combine their Web and marketing strategies. Organizations without a clear understanding of their customers’ behavior (and the database to back it up) will have difficulty providing the necessary value-add for their Web site visitors.

Campaign Management City

Like traffic lights in a suburb of Chicago, there were campaign management products as far as the eye could see. Just like query tools at the beginning of the data warehousing boom, campaign management tools are flooding the market in all shapes, sizes, prices and industry segments, and they’re all verticalized, horizontalized and CRM’ed.

The big, new feature for most of the campaign management vendors was the introduction of the Web as channel for e-mail campaigns and personalized promotions. Prime Response unveiled their latest version that included personalized e-mail campaigns and showed attendees how to generate specific Web content (passive campaigns) based on the site visitor. Recognition Systems unveiled their new product, Protagona, that tackles e-mail and Web campaigns while focusing on workflow. Protagona may be one of the most sophisticated in the e-Channel among top campaign managers who previously dominated more traditional marketing channels such as direct mail.

One of the biggest hits of the show was E.piphany. Their new E.4 product was consistently demonstrated before packed audiences. The product has new campaign management features, new analytic applications such as cross-sell/up-sell, Web site analysis, sales analysis, bookings, backlogs and billings. E.piphany’s approach of providing clickstream analytical applications with campaign management that feed e-commerce applications was very well received.

Jumping the Gun

The database marketing world is moving fast. The Web is scaring people into starting Web marketing programs before they have achieved a solid customer research base. Many attendees were relieved to hear that their colleagues are also struggling with the same issues and very few are actually executing serious marketing strategies via the Web. However, the pressure is intense to use this new, low-cost channel to provide serious personalized service in order to increase customer lock-in. Marketers that have a solid understanding of their traditional customers now need a solid understanding of their e-customers. Marketers that don’t have a solid customer understanding need to remedy the situation quickly or risk using the wrong strategy on the Web. Organizations need to answer the questions: How does our current marketing strategy transfer to the Web? What unique opportunities present themselves to increase customer loyalty or increase customer profitability?

Nonetheless, the most frequently asked questions at this year’s NCDM conference were:

  • •Is there any free bottled water?
  • Don’t you think last year’s food was better?
  • Did you know Chicago could get this hot?
  • Will you be using those drink tickets?

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