Demonstrating ROI: Look Ahead When Building Database Marketing Processes

This week at the DMA 2005 Annual Conference in Atlanta, Scott Cone, vice president/client leader for database marketing services provider Merkle, is leading a session entitled “The Data Management Process: Building Your Cornerstone Database Marketing Process for the Next 20 Years.” This article is based on that presentation.

“Marketing is about measurement and action, and marketers are, in turn, being required to demonstrate the ROI of their organization’s marketing campaigns,” says Lanham, MD-based Merkle’s Scott Cone. “Marketers who are held accountable and can attest to the effectiveness of their campaigns are moving beyond a qualitative ‘gut feel’ mindset to a quantitative, data-driven approach.”

According to Cone, several dynamics that are at work today will require marketers to be accountable for their programs in the years ahead. These include complex permission, privacy and measurement issues, as well as the increased need for marketing to demonstrate its direct impact on key metrics such as cost per acquisition, opt-out rates, and media ROI.

Nonetheless, says Cone, “database management is a complex topic, and as a result it is often put on the back burner or ignored altogether. Marketers must have a clear understanding of data management concepts such as source history tracking and data capture at the time of usage. Only then will they gain a clear understanding of the impact of data quality on marketing results.”

Cone predicts that marketing will evolve into a highly data-oriented, intelligence-driven practice that focuses on consumer-driven, permission-based interactions. To prepare for what’s in store, he says, marketers must master both the tactical components and strategic actions of their campaigns to realize results and show a clear “cause-effect connection” between their database marketing programs and their ROI.

Tactical actions include

  • introducing content management and source history, at least via offline analytics
  • measuring data quality over time through the use of update control reports and input profiling
  • categorizing data by source, accuracy, and value

Strategic actions include

  • building a comprehensive data management plan
  • capturing only valuable data that contain actionable content
  • building a next-generation infrastructure that enables the use of source history, derived data, and time-based variables

Overall, according to Cone, the marketing department must be the primary owner or “steward” of data management planning. “When this function falls to IT personnel, they typically have conflicting priorities and opportunities that prevent them from balancing the speed, detail, and inherent complexities required for modern data management,” he says. “Marketers who will realize the biggest benefit over the next 20 years will be the ones who own and drive all database marketing efforts and formulate a solid plan based on a thorough understanding of the requirements involved.”

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