Is Database Marketing the Holy Grail of Increasing ROI?

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I have held a number of high-profile corporate marketing positions with IBM, HP / EDS and American Airlines and over the years I have consistently seen a gap that has yet to be filled. When looking for marketing support you could easily find a good traditional advertising agency or you could quickly find a good digital or social media agency, but it was almost impossible to find a third-party resource that was good at both. I was always trying to bridge the gap between the two worlds and many times I had to hire multiple agencies in order to meet my end-to-end needs. Finding a good database marketing agency that is also highly creative could be the answer.

With extensive experience at analyzing buying behavior, determining profitable market segments and defining next best product strategies, a full service database marketing agency may provide the missing link you are looking for. They provide the "science" behind the "art" on how to engage customers and their deep understanding of customer behavior transcends the tactical aspects of both online and offline marketing. In a way they have the ability to create the perfect storm by bringing together the benefits of insightful data analytics, creativity and being able to support the entire marketing mix that includes both online and offline channels. Leveraging their expertise could be the Holly Grail of marketing and be the answer to reducing the number of agencies you need, developing greater continuity between your push and pull strategies and driving a greater return on your investment (ROI) by following a more integrated approach.

The Great Divide: Regardless of whether you put more emphasis on digital marketing or use more traditional offline programs, the effectiveness of your strategies is quite heavy on how well you understand your target audience's demographics, lifestyles, buying behavior and other factors. The need to gain insight about your customers and to know how to spark their interest is a fundamental element that does not change across the various forms of marketing.

Customer is King: Best practices related to buyer segmentation, data analytics and testing were first pioneered by the database marketing industry and are the same techniques now being used and applied to the online world. Do not get heard up in all the hype around Social Media, because the fundamentals needed to execute effective marketing is still the same. Social media is just one channel to leverage that is part of a greater marketing mix. The customer is king and knowing how to move them to action is the most important under-pinning.

Universal Techniques: It is up to you whether you decide to use multiple agencies to meet your needs or try to select a full-service database marketing agency. Knowing the following data-driven marketing tactics and go-to-market methodologies will help improve your success:

  • Buyer Segmentation: Is the science of defining segments that have similar characteristics, is large enough as an overall group and representations a community of like-minded consumers that can be motivated. Many times you will find that 1/3 of your customer base are the buyers that make up 2 / 3rds of your revenue. Do not you think they might deserve a little more attention than the others?
  • A / B Testing: Used originally to test the effectiveness of different direct mail pieces, this type of testing is also being used to evaluate different types of online offerings and landing pages on your Website. It is a simple way to see what message resonates the best and what offer is the most effective in motivating them to take action.
  • Life Stage Segmenting: This is the process of taking a look at your customers and understanding that they are made up of different sub-segments that are at different points in their lives as defined by age, family situation, income status, etc. Younger couples with younger children are usually focused on purchasing a different set of products and services than a segment that has recently entered the empty-nester stage of their lives.
  • Next Best Product: Based on data related to a buyer's purchasing history and using behavioral modeling this is a strategy that attempts to anticipate what will be the next best product your target audience is most likely to want to purchase. First used heavily in the direct marketing industry, this practice is now very common in the online world. When you receive that special offer by email or receive a special pop-up it is probably based on the fact that you have a habit of traveling on vacation to the beach. Given your history, you might also be a good candidate to buy a cruise to the Caribbean.
  • Nurturing: Understanding the fact that many customers are not yet ready to buy is the key to this strategy. While your target might be thinking about buying there may be many reasons why they have not yet dropped out their credit card. Nurturing is the process of keeping your product and brand in front of a prospect customer so that when they are ready, you are top-of-mind. This requires a longer term program effort to build a relationship and a connection with that customer and it is the centerpiece of most Social Media Marketing initiatives.

The fundamentals of how to drive a greater return on your marketing investments starts with the customer. Regardless of your go-to-market strategy, business model or the size of your marketing budget, you can benefit from the techniques pioneered by the database marketing industry. When looking for the right agency support, find a partner that is accomplished at the "art" and "science" of marketing analytics. Your Holly Grail could be the full-service agency that possesses those qualities and who has developed a broad online and offline expertise. While hard to find, agencies that have transformed themselves and have come from the database marketing industry could be the missing link. They could provide the bridge you are looking for to increase your online / offline ROI.

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