Comment - July'07

Database hoarding, don't do it!
Avoid turning a company asset into a missed opportunity

Good marketing as Seth Godin says is to "make big promises; over-deliver". And we all know the old adage about how much more it costs to acquire a new customer than to retain an existing one.

So, it baffles me every time I encounter a marketing organisation which hoards its database. Database hoarding is a corporate disease where companies would most certainly over time lose customers, market share and brand image.

There are many degrees of sufferers but they fall under 2 broad types:

Type 1 sufferers are those companies that collect your customer details with a promise of offers or newsletters but you never ever receive anything from them or if you do, it is months or years later.

Type 2 sufferers are organisations which collect and track every single transaction with you and have you fill out every box in their detailed forms or preference centre but still keep jamming your mail and in-boxes with offers that are completely irrelevant to your needs, wants or preferences.

An internet company I worked with collected a couple million of names and emails through their email newsletter opt-in process over a five-year period. Not a bad acquisition by any means. But during the 5 years, they never once sent a single communication to their customers. When they finally got their act together and sent out their first email newsletter, 30% no longer existed and another 10% chose to opt-out.  

The good news for this company is that the sales generated in the email campaign over a one-week period more than paid for the entire email marketing solution they subscribed to for a year.

A database is a company asset but only if it is being utilised correctly and where good marketing principles are applied to it.

Companies need to get the obvious that there is an actual person behind the name.  Not just a number, unique key or ID, but an actual person who has a memory and loves to share his/her experiences, good or bad.

There is no worse way to destroy a customer's trust than not fulfilling your promise. Look at what has been communicated and promised to your customers and what is not being fulfilled and start to address each of these. So, if you say you'll send a newsletter or offer a promotion, do it already.

Marketers also need to start being more accountable with their programs and campaigns. There, I said it. Your actions as a marketer must ultimately drive sales.  So go back to your database and start to value the person in your database. Work out the value per name (VPN) on your database based on actual and projected sales revenue. It is only with an assessment of VPN, do you have a real benchmark to budget the amount to spend for acquisition or growth. 

And start to segment your database already. Really delve deep into the database and do a proper segmentation based on RFV -- the "recency" of their purchases, "frequency" of purchase and their lifetime "value" to the company. The results may just surprise you. With clear segments defined, you can then allocate resources accordingly and spend more on those who will generate a better return.

In this age where technology allows for mass customisation, develop marketing programs just so. Yes, that means women get a promotion on Brazilian waxing and men get a promotion on aftershave products. Stop mass mailing. 

Finally, always feed the results of your marketing programs back into your database. Who's responded to what and when? Keep refining your segmentation and your marketing programs. 

Your database can be a real company asset but only if you use it right. Each person behind the name can be worth thousands of dollars to the company. Start to put more emphasis around smart marketing to the database as it can bring real, measurable and tangible results. Continue to focus on acquiring new customers by all means but put equal emphasis and resources around optimising their value to you.

Sonia Tay
Strategic Services Director
Responsys Asia