Most Companies with Databases Still Don't Get It

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.RelationalDatabaseSmall.jpg

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.

Posted on May 12, 2008 .