Database Marketing in Tough Times
By David King, chief executive officer of Fulcrum

Economic downturns are tough on everyone. But database marketers usually survive quite handily—their skills are needed by the whole organization.
Here are five ways you can look like a hero.

1. Up the ante—It may come as a surprise to some, but many companies actually increase their marketing expenditures during slow economic times. They see it as a way to gain market share at the expense of competitors who are cutting back, to enter markets where there is more opportunity for growth, or to ensure they have momentum when the recovery begins.

While such a strategy will be made at the highest management levels, database marketers are in a unique position to recommend where the best new opportunities among customers and prospects lie and to implement strategies effectively.

2. Corporate surgery—Good times are forgiving of waste. Unfortunately, companies often respond by arbitrarily cutting back marketing by a fixed percentage when the business climate worsens. A better strategy is to cut those activities that make marginal contributions to profitability. Here, database marketers should be able to evaluate profit against historical spending across several dimensions.

For instance, are customers acquired through a particular channel both lower in initial value and in long-term value? If so, the database team can recommend either making improvements to this marketing program or discontinuing it entirely.

3. Look sharp—Now is a good time to make sure that your analytical assets and capabilities are as honed as they can be. If some of your statistical models no longer seem to be performing as well, or you believe that a different approach could improve the performance of marketing programs, such an investment may be warranted.

Another example: if you cannot clearly identify the financial return the third-party data you buy delivers (e.g. a variable that is critical to a model that in turn supports an important program), reduce the amount of data you are buying.

4. Make it simpler—One area of hidden waste is unnecessary complexity in marketing processes. For example, a dozen or more product-specific statistical models support many cross-selling programs. This means that each model needs to be maintained and refreshed, that scoring the customer database may take longer, and that campaign logic may be very complex.

Newer methods permit a single model to be built and implemented: if the new model can help improve marketing results and reduce the level of effort for the program, then it will be a smart investment even in lean times. This is just one example of how marketing can be simplified and become more efficient in the process.

5. Partner for success—If you are satisfied with your current vendors, but need to obtain cost reductions, sit down with your suppliers and have an honest discussion on how to achieve these savings. In many cases, you will find them to be highly creative in finding opportunities to save money and to improve the business.

If a vendor seems unwilling or unable to help, or if you already have been dissatisfied, now is the time to look at alternate suppliers. The aim is not to get the cheapest vendor, but rather one that can work within your tighter budget, while delivering high quality.

---Source: Multichannel Merchant List and Data Strategies May 12, 2008 newsletter www.multichannelmerchant@pbinews.com. David King is chief executive officer of Fulcrum. He can be reached at dking@fulcrum.com