Multichannel Marketing Class June 2: The Multichannel Database Continued

Joe Stanhope from Alterian built upon what Joe Decosmo from Allant said last night about the importance and also the difficulty of developing a database that incorporates data across functional areas and across customer touchpoints. Joe talked a little bit about Alterian, which leverages its partner relationships to help companies put all the data together and then run analytical software, campaign management software, email marketing software and web content software all using the same customer database. Joe gave an amusing example of his customer contact experiences with American Airlines. In spite of the fact that Joe is an Elite status flier and American knows a lot about him, the company still fails to make relevant offers to him using his personalized information. He has received thirty emails from the company in the last few months but offers are to where he does not fly or for benefits he does not wish to receive.

I completed our database marketing module by talking about how databases are put together. Companies typically take internal information such as customer transaction data and name and address and purchase external information, a process known as data enhancement. From this information, companies create modelled data such as RFM scores (Recency, Frequency and Monetary Value) which are usually computed in the form of deciles (ten groups), or quintiles (five groups). Customers are placed into one of the groups and marketed to accordingly. There are other ways to create modelled data and assign group scores. We talked about an alternative to RFM used by Marriott Vacation Clubs called CAP, but companies also engage in more sophisticated modelling techniques. Thus, the three types of data, modelled, internal and external, make up the basic parts of all customer databases. Types of external data might be lifestyle or psychographic data such as Claritas, PRIZM (You are where you live) which we examined in class. We also talked about how companies like Acxiom, Experian and others take data from different sources and then append that data to outside customer records to add value. These firms also use these different data sources to create their own clustering and segmentation models. Typically, a company will give an outside vendor their file to be cleaned (merge/purge, de-dup) and then records will be matched using a match code and data appended accordingly. There is a great deal of work to be done internally also to keep data clean, such as getting rid of bad records, including change of addresses, and general quality maintenance. Good data quality is a constant process. I talked a little about my research on data quality and the presentation I will make at the Marketing Science INFORMS conference on the relationship between organizational factors like a stated strategy and good teamwork and vision around customer data quality and ultimate data quality. Marketers are worried today about social media and other new marketing tools and using all channels that will be effective should be a priority for markters. However, data quality is a discipline that can reap many benefits as customer data is used across all channels.

Multichannel Marketing Class June 1: Database Marketing and the Multichannel Challenge

Joe DeCosmo, EVP from The Allant Group in Naperville, addressed us on the difficulties of developing and maintaining customer databases to support multichannel marketing. Companies want to address the customer individually with an offer that is relevant and timely, but often don't have the data structure to support that effort. Ryan underlined these problems in his presentation, where he said that his own company has a customer database but does not really use the information to market across channels or just to mine the exisitng data in stand-alone marketing campaigns. Joe outlined a mapping process that we have talked about in class whereby customers are increasingly using a multiple channel approach to purchasing and how companies can get started developing databases that integrates across all customer interactions. Joe suggested that we use the term interactions instead of classical CRM. This terminology would be consistent with our approach in this class, where we have emphasized the importance of interactive marketing from the first day. Joe also stated that the ROI on multichannel marketing is anywhere from $4-8 for every dollar spent.

We talked in my portion of the class about The Loyalty Effect and the Net Promoter score as developed by Frederick Reichheld and the eighty/twenty rule and moving customers up a value pyramid as outlined by Arthur Hughes. We then had a discussion on data privacy and security. Privacy law has been evolving in this country and the internet has made everyone more concerned about data privacy in particular. The European Union has a stricter policy and an explicit right to data privacy. In the U.S., we focus on self-regulation and guidelines, such as the FTC Guidelines, but we still have legislation in the area, such as CAN-SPAM and the Do-Not-Call legislation. Privacy is an emotional issue. Consumers are concerned about privacy but don't really want to go through the effort to select the exact offers they would receive from all their vendors. We talked about a privacy policy as a way to help consumers feel more comfortable about doing business with a company, as well as using privacy seals from a trusted organization on the web site. We also looked into what the future might hold as technology allows marketers to target ads during our private conversations and as we are entering stores and shopping malls.

Multichannel Marketing Class May 27th: Social Media

We had a great introduction to social media from expert Dana VanDen Heuvel. Dana spoke of the crisis in mass marketing as people lose trust in mass advertising and are interested in blocking advertising. He also said that advertising impact is difficult to measure but the same could be said for social media at this stage of the game. Nonetheless, the internet and digital marketing has put the customer in charge and marketers need to monitor what is going on with blogs, social networking sites, customer reviews and the like. Dana said some companies are now using these types of digital media to supplement or even replace traditional marketing research, although I think marketing research will always have a role to play. The problem with monitoring what is being said on the web is that a marketer can't know the demographics of those that are participating and only one percent of those on the web contribute to blogs, reviews, etc. The results of only monitoring web buzz can be biased.

However, there are great benefits and marketers cannot ignore what is going on in blogs and social media. Comcast Cable has a mechanism to track what is going on in Twitter for example and to respond to and fix customer problems before things get out of hand (they responded after a famous YouTube video in which a technician was photographed having fallen asleep waiting for his own company to respond to a customer service call).

The bottom line is that marketers can't afford to ignore these new forms of media. Dana also emphasized the importance of collecting and analyzing data regarding conversations about a particular brand on the web and about particular customers. We talked about using data contextually in advertising to deliver more relevant messages so the material was a nice tie-in to what we will be discussing this week: Creating databases to implement multichannel campaigns and to analyzes the responses.