Database marketing: Making the most of customer information

The growth of e-commerce is producing reams of consumer information, much of which is being mishandled. In this week's Tech Watch, columnist Bob Weinstein discusses how to use database marketing to make the most of your information-collection efforts.

If you thought the shortage of database administrators (DBAs) was bad, the search for database marketers (DBMs) is even worse. With the explosive growth of e-commerce, companies aren’t using the reams of information they’re compiling to good advantage.

Enter DBMs, whose job is to first determine what information is valuable and then begin the painstaking task of sifting through truckloads of data to find it.

Once considered at opposite ends of the corporate spectrum, DBAs and DBMs now find themselves in complementary roles. DBAs are needed to handle the technical end of the information management puzzle, whereas DBMs must manage this vast quantity of information from several vantage points to learn more about customers.

Sound simple? It’s not.

What DBMs do
Broadly defined, the job of the DBM involves analyzing the characteristics and needs of customers and harnessing technology to find out which marketing methods work.

Where DBA and DBM were once separate functions, smart organizations are merging the two, according to Jeff Snedden, vice president of OffRoad Capital Corp., a San Francisco, CA-based Internet investment bank for private equities.

“Marketers must become more technical, and similarly, DBAs have to become more adept at the marketing process,” Snedden said. “Technical organizations have to become suppliers to marketing organizations. The DBA’s role is not just to maintain a production environment but to create an environment marketers can use to analyze customer behavior.”

In other words, the DBA becomes the linchpin between the production systems and the analytical systems and, thus, is tied to the migration of data so it can be analyzed.

It’s all about techies and marketing mavens squashing and isolating information so it can be used to learn more about customers. The more you learn about people’s buying habits, the more stuff you can sell them. Everyone wins. Customers get what they want, and business owners and staff get rich in the process.

Like most smart marketing people who are passionate about their jobs, Snedden sounds almost evangelical when he speaks about the impact of information.

“Data is absolutely powerful in helping us understand customer behavior and value,” he said. “The key to customer behavior is usually past behavior, which is highly predictive and correlated to future behavior. By analyzing bodies of history about customers, it’s possible to use a variety of advanced statistical methods to group customers together who are going to behave similarly and whose value you can predict into the future.”

Why is DBM important?
All this priceless marketing information completely reshapes the way businesses acquire and interact with customers.

Many companies have been slow to understand cardinal marketing tenets. But, as companies aggressively fight for a commanding Web presence, they’re quickly realizing the impact of marketing information.

“The Web has opened up possibilities for many companies that don’t have direct relationships between themselves and their customers,” Snedden said. Web log files, for example, have ascended to a critical marketing tool.

Initially, credit card companies were the first to realize the value of information about their cardholders, but others were quick to follow. Soon grocery chains were evaluating consumer data, followed by financial services firms and virtually all companies with aspirations of getting bigger.

Want to learn more about DBM? If you’re working for a moderate- to large-size company, talk to the DBAs and DBMs on staff. Also check out organizations like the American Marketing Association.

Most important, do some homework on your own. Plug into the DBM’s world and learn the lingo. Find out what terms like “data mart,” “data migration,” “data mining,” “data mirroring,” and “data modem” mean. Data mining, for example, is a highly specialized marketing niche all its own. It can be done manually by sifting through data until patterns surface or it can be done with programs (OLAP, DSS, EIS) that analyze data automatically.

It wouldn’t hurt to find a Jeff Snedden clone and ply him or her with questions. They enjoy turning nonbelievers on to their marketing gospel.
Are you using DBM in your enterprise? Do you outsource these responsibilities? How valuable is DBM to your company? Tell us in an e-mail or post your comments below.

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