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Database Marketing: An Introduction

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Dat a base Marketing: An Introduction © Single Click Solutions Ltd – 2005- 2011 www.singleclicksolutions.net

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All organisations deal with people: Prospects, customers, suppliers, employees, volunteers, stakeholders who are the ‘constituents’ of an organisation. If there are only a few they are easy to communicate with

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But what if there are thousands, perhaps millions of people an organisation needs to reach? And what if the organisation needs to build and maintain a personal relationship with each of them?

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Charities have thousands of volunteers and banks have thousands of customers and they need to treat each of them as if they know them personally Advertising to the world at large is not enough

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They need to find ways to personalise their mass communications in order to build relationships with their constituents

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Mass personalised communications to the constituents or prospective constituents of an organisation are commonly referred to as Direct Marketing

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Direct Marketing personalises mass communications by: Using personal communication media (e.g. phone, email, letter); and (2) Personalising the content of the communication (e.g. using the name and other details of the person being contacted )

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Database Marketing (DBM) is the evolution of Direct Marketing (DM) DBM uses one or more databases to maintain huge numbers of constituent records together with substantial details about each constituent in order to add a large degree of sophistication to an organization’s DM operations

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Direct Marketing is a very powerful tool for targeting, recruitment, retention and development

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DBM makes DM even more powerful by introducing: Profiling The Lifetime Journey and Communications Planning

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The ‘Constituent Profile’ is formed from the personal details of individuals, their transaction history, recency , frequency, value criteria, their likes and dislikes, whether and how they wish to be contacted, demographic data and anything else that helps classify constituents into target groups and determine how best to appeal to them.

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The Life Time Journey While with an organisation constituents undergo a ‘journey’ e.g. customers journey from prospects through to becoming regular contributors to an organisation’s income; employees and volunteers are recruited, trained and developed to become a valuable asset; and suppliers are engaged to innovate, be competitive and reliable.

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All constituents have a Life Time Journey with an organisation. Without planning the LTJ can be very short. With the right planning it can be perpetual.

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The Communications Planner Planning, therefore, is an essential part of Database Marketing. An organisation plans the LTJ for each constituent, it plans what to communicate, how to communicate and when to communicate in order to maximize the Lifetime Constituent Value to the organisation.

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Each communication is plotted on the communications planner and a campaign is born

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Campaign Management usually involves the following : Establishing the objectives Targeting the right constituents Creating the proposition An invitation to take action Correct timing Measuring and Evaluation Reviewing the Planner in the light of campaign responses

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Targeting the right constituents There are a number of good reasons why organizations do not mail everyone in their databases and on any other list indiscriminately . It is wasteful and costly It does not allow for Lifetime Journey Planning and would have a negative impact on the growth potential of an organisation. Data Protection Legislation restricts such practices

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Careful selection, therefore, instead of indiscriminate mailing is the key to a successful Database Marketing policy.

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Campaign Responses Mass communications typically achieve 1-3% in responses and only 0.05% conversion to actual revenue*. A Campaign Manager, therefore, needs to estimate the revenue goal and work backwards as to the number of communications that need to be made and to whom in order to achieve the campaign goal as well as the LTJ for each constituent. It is a numbers game * Even if a campaign objective is not revenue, an organisation still has to place a value for success and budget for the costs of a campaign accordingly.

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Warm and Cold Lists To get the right numbers, a Campaign Manager may have to use a combination of ‘warm’ and ‘cold’ lists after removing duplicates and suppressions*. * Suppressed records are constituents that should not be contacted because, for example, they are deceased, are no longer at that address, details are incomplete, they have asked not to be contacted or not contacted in this way etc. Apart from internal suppressions, there are various external registers that are applied e.g. The Mailing Preference Service and Mortascreen

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Warm lists usually come from within an organisation’s databases. They are classified and prioritised according to the estimated response rate to the appeal so that the likely high responders are selected first. Cold lists are usually bought-in. Responses depend on the quality of the list and the type of appeal and generally the rate is much lower than that of warm lists. It follows that Campaign Managers are keen to minimize the use of cold lists to reduce costs and disappointing results

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Selection Criteria Campaign Managers rely on Data Analysts to match responses to certain constituent profiles. This analysis is constantly revised and forms the basis of the selection criteria used in campaigns. Data Analysts draw constituent profiles by drilling into constituent records and assigning classifications to them. This process is called segmentation.

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Segmentation Segmentation takes three forms: Segmentation by category; Segmentation by Value ; and Category, Value and Exclusion combinations

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Segmentation by category simply assigns a code to the constituent e.g. Employee, Golfer etc.

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Segmentation by value assigns to the constituent a code that has a value e.g . Date of Birth: 15/07/2080

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Combinations assign a code made up of two or more category and/or value codes and possibly exclusions e.g. Prospect, less than 50 years old, not a golfer

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Campaign Counts and List Production Before Campaign Managers can arrive at the final list to be used in a campaign, Data Analysts need to give them counts for the various segments to be targeted. After the numbers have been agreed Data Analysts have to import the cold lists and de-dupe them against existing records before the final list is compiled

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This is a time-consuming process for Data Analysts and frustrating for Campaign Managers It is a loose-loose scenario

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The production cost of each of these lists can run into thousands. The waiting time for settling counts comes at an even greater cost: workflow suffers and campaign managers do not have the benefit of instant results and the flexibility of playing around with data. Thus, important golden nuggets can be and often are missed and compromises have to be accepted due to time constraints. Obvious and Hidden Waste

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What if … there was a desktop application that instantly showed target group counts, allowed drag & drop compilations, removed suppressions and produced lists ready to mail-merge or export?

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What if it allowed users to drill-down to specific data and import external lists for comparison and inclusion or exclusion? What if it kept communication records and allowed users to refresh data based on previous selection criteria? DexPro does all of these and more… For more details see DexPro Guides