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High ROI Customer Marketing: 3 Key Success Components

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Getting Up to Speed on
Database and Direct Marketing

I spoke recently at an industry conference and had a chance to talk with lots of marketing people about how things are going at their shop.  The common thread in many of these discussions?  People were simply unprepared for the onslaught of CRM, and lack the knowledge to really take advantage of the functionality of this software.

CRM, as frequent readers of this site probably know, is largely database marketing with a new name.  I'm not trying to minimize the importance of CRM and the technological advances that have been made; what I am saying is most of the "marketing guts" in CRM equate to classic database marketing.

An intimate understanding of database marketing is critical to generating ROI using CRM.  Period.  So in an effort to help people educate themselves on the concepts they need to understand and practice, I offered the 5 following suggestions to attendees.  Perhaps you could make use of them as well.

1.  Subscribe to these free offline publications, and read every issue cover to cover, even if you don't think the article is relevant.  You must begin to think like a database marketer, and there is a certain mindset you have to develop.

DM News
Online version of the direct marketing trade magazine.  The offline weekly is a must read for Data-Driven marketing types.  Online article database does not include all articles!

DIRECT Magazine
Direct marketing trade magazine, targeted at the hard core data-driven marketer rather than beginners to the practice.  Here again, the Online article database does not include all articles in the magazine.

2.  Learn the fundamentals of consumer behavior and / or buyer behavior.  Take a night course at a local college or audit the class for a semester.  This is critical, because you have to begin to look at data from the behavioral perspective.  The whole key to database marketing is interpreting the reactions of customers to marketing events.  You have to be able to look at data and say, "Ah, I know what these people are thinking!"  

If you can't find the time to do this, find out which textbooks are currently used in MBA customer / buyer behavior courses and read through them.  This information will be a lot more useful to you than a lot of the "soft shoe" books published by industry pundits.

3.  Hire staff from the catalog industry.  The people you want are the ones in "Circulation Planning" or a similar discipline.  Make sure they are actually in charge of selecting lists and deciding who will receive a catalog or not.  Even better would be also having direct P & L responsibility for a catalog, including control over merchandise selection and positioning within the book.  

If your company doesn't sell merchandise, I  offer you the same advice.  What you are hiring here is a mindset, a customer-focused ROI approach to the business process.  Catalog people already live and breathe this stuff.  Obviously, they have to have some idea of how to apply what they know to your business, but at some level, data is data.  If you have a customer database, these people will know how to organize and use it.  The magazines above both list recruiters who specialize in database marketing people.

 4.  Think like Charles Darwin.  Survival of the fittest is the whole idea behind database marketing - customers, products, divisions, call centers, whatever.  Every area of the business has a fair shot to prove itself, to go into the ring and fight for budget money.  After the fair shot, resources are allocated to the winners, which will grow into even bigger winners.  Losers are written off.  Cut your losers sooner and ride your winners longer.  The challenge is constant incremental business improvement by tracking everything and making decisions based on the facts, which in database marketing, are most always obvious.  No need to play hunches after the results are in.

5.  Test everything like a maniac.  You should always have at least eight or ten tests running at the same time, running underneath the "whatever is working now" marketing that is powering your growth.  Organize these tests in some kind of sequence, so that the results of one test provide feedback for the next.  It's similar in concept to the way many legal systems operate.  Each new law is built upon the laws that came before it, which in turn were built on the laws that came before them.  The goal of each test is not only to discover new ways to make money, but also to provide input for the next series of tests.  Start with very broad, fundamental ideas as your base, and work towards smaller segments and ideas.  Don't get caught up in the CRM / data mining trap of "overtargeting" - creating segments so small they are meaningless to the big picture.

What you are trying to do is build an ever higher pyramid based on the results of your testing.   The peak of the pyramid is every dollar spent generating maximum ROI and you will never get there, but it sure is fun trying!

6. (Bonus)  Read everything on this site.  Look, I don't have any vested interest in you reading the whole site; I don't sell advertising and don't need the page views.  The site was designed to teach you how to get started with database marketing concepts if you don't have any previous experience.  

The site navigation at the top of every page is divided into 4 sections:

Marketing Approach is about orienting people in the basics of how to use database marketing depending on their marketing goals.

Behavioral Analytics is about the theory and techniques used in database marketing.

Customer Models is about simple models you can use right away to create High ROI Customer Marketing Programs.

Web Site is a collection of all the tools one usually finds on a web site - FAQ, Search, etc.

So make use of the site to "Do-It-Yourself" or contact me about scheduling a Database Marketing / Analytics RoundTable.

And of course, it would be a good idea to get the Drilling Down book, because it teaches you a very simple method for making money with database marketing.  Without having a Ph.D.

 

 
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This is the original Drilling Down web site; the advice and discussion continue on the Marketing Productivity Blog and Twitter.

Download the first 9 chapters of the Drilling Down book here: PDF
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