In this day of Web 2.0 of blogging, websites, search engine marketing, and You Tube, we lose site of the most important fact in marketing. Each of these vehicles represent different contact points of your business’ prospects and customers. The “central nervous system” of all this information was (and still is) a “marketing database”.

The late Bob Stone in his book, “Successful Direct Marketing Methods, 7th Ed (co authored by Ron Jacobs), defined direct marketing as follows:

Direct Marketing is the interactive use of advertising media, to stimulate an (immediate) behavior modification in such a way that this behavior can be tracked, recorded, analyzed, and stored on a database for future retrieval and use.

The database, and I will refer to it as a “marketing database”, is a central part of direct marketing. Without a means of collecting all the information into a logical and meaningful order, your marketing will fail because you lose the ability to track and analyze each campaign’s effectiveness and ROI. What is a database? It is a collection of information stored on a computer. A “marketing database” is more than a name and address of an individual or company. It is a collection of customer and prospect information from all contact points. Contact points include in part:

  • Search Engine Marketing visitors to your site (that left some contact information)
  • Inbound telephone
  • Direct Mail Responses
  • Sales orders-on or off line
  • Prospects: website visitors, catalog requests, BRC’s responses, post cards for additional information, subscribers, past customers etc.
  • Responses from Infomercials

A marketing database collects and organizes this information and has at least the following pieces of information:

  • Name
  • Address
  • Telephone number
  • Source of customer or lead
  • Email address
  • Ongoing sales information related to each contact/purchase-(date of sale, sale amount, number of purchases, skus purchased)
  • A unique identifier for each record on the database
  • Responses (and their key codes identifying the specific campaign and media) from all campaigns linked back to the specific recipient.

Having this information, you can begin to develop multiple initiatives. They are designed around the data collected to improve marketing initiatives, and identify historical customer value to your organization. These are not mutually exclusive. The more analysis you perform improves future marketing campaigns. These initiatives fall into two broad categories:

  • List segmentation for marketing campaigns
  • Customer analysis of data

List Segmentation

  • Segmentation by Sales -conduct an analysis by RFM-Recency, Frequency and Monetary variables. These are three metrics found on any transactional database. Having this kind of analysis will identify the old “80/20” rule. 80 per cent of your sales come from 20 percent of your customers. Identifying who they are and having the ability of scientifically selecting them saves a lot of wasted advertising dollars.
  •   Select by trigger event-maintain and update RFM information on each customer. Evaluate the change in behavior month-to-month. If there is a decrease at a set amount, say 10%, pro-actively create marketing programs to change the customer’s behavior.
  • Segment by Communication Channel response information to identify best customer or channels of communication. For example, you can evaluate ROI by channel. You might find that a two step lead generation and telephone follow-up produces a higher ROI than mailing a large catalog for an immediate sale.

Data Analysis