Most Companies with Databases Still Don't Get It

Written By Ted Grigg

You might be tempted to ask why I am still harping about the state of the database in corporate America.

The answer is that many of my clients still struggle year after year with improperly integrated databases following mergers and acquisitions. Or in some cases, the name file does not automatically attach purchase or inquiry information at the record level.

Top management in most companies simply does not understand the critical need for a reliable and fully functional relational database to compete effectively in today's world.

This state of affairs makes it nearly impossible to evaluate direct marketing efforts or segment the database to improve response and customer service to say nothing about getting better returns on marketing expenses.

Forrester researched the State Of The Database Marketing Organization in 2008. They interviewed 107 database professionals including 52% with budgets exceeding $10 million. And 61% of them say their budgets make up at least 21% of the overall marketing budget.

Forrester found that funding models vary widely within these companies and that customer analytics is the BIGGEST area of growth.

So reading this gives some hope that a few companies generally recognize the need for the database as a major contributor to marketing intelligence.

But disturbingly, only 27% of them use customer communication strategies, analytics or CRM strategies across all product lines sold to the customers listed on their databases. The overwhelming majority of the interviewed companies limit their database to market singly by product line or business unit.

The report adds further that the adoption rate for strategic, enterprise wide contact ownership has not grown much since the last report in 2005 because 43% of all of the databases are set up and work within a single line of business. The other 34% are funded by various individual lines within the company or on a volume/project basis.

My perception:

Businesses that remain product driven rather than customer driven will never set up relational databases.

They do not view the customer as buying multiple products across the company's lineup. They see their business model as selling various product lines with independent profit centers that happen to have customers.

Only about a fourth of these companies attained the goal of leveraging the database to gain global knowledge about their customers' multiple purchases across product lines.

This all represents a deplorable record considering the available technology and evidence that supports the value of strategically driven databases.

This Forrester report made the strong recommendation that companies centralize funding at the corporate level acting as the arbiter between lines of business. I agree completely with this recommendation.

You can purchase the full report directly from Forrester Research here.

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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