Editorial Down to a science

Marketing has always been a delicate blend of science and art, a decision-making process requiring equal elements of hard fact and gut feel.While it would be hard to assess at what stage in the evolutionary cycle the artful side is today,...

Marketing has always been a delicate blend of science and art, a decision-making process requiring equal elements of hard fact and gut feel.

While it would be hard to assess at what stage in the evolutionary cycle the artful side is today, there is no doubt the science of marketing is growing by huge proportions.

And database marketing – the systematic collection of data for use not only as a straight source of information, but also as an analytical and executional tool – is leading the advance of science.

It is growing in size and sophistication.

The reasons are varied, some of them obvious and others more subtle, as columnist David Foley points out in a special report on database marketing that begins on page 12 of this issue.

Says Foley: ‘The dramatic reduction in the cost of computing power over the last decade, the availability and low cost of ready-to-run database software, and the high cost of a substantial media advertising campaign all contribute to the growing importance of the attitudes and behavior of customers as an integral part of marketing planning.

‘A new relationship is emerging between a company [or service provider, retailer or manufacturer] and its end-users, based on direct communications between the parties,’ Foley writes.

In another column, database marketing specialist Bob Stacey tells us that in the u.s., more than half of all advertising now asks for some kind of direct response action on the part of the consumer. Stacey says that database marketing expenditures are growing at the rate of 30% a year in Great Britain, and by 10% to 20% a year in Canada.

Marketers everywhere are taking old customer lists and are melding them with new information of all kinds to develop an ever-sharpening marketing tool through databases.

The Canadian Imperial Bank of Commerce, for instance, is using a database marketing program called predictive modelling to help identify customers the bank is in danger of losing. Every bank client is ‘scored’ using such variables as timely payment of credit card bills, consolidation of loan payments, or the transfer of rsp funds to other institutions to predict whether the customer is planning to move from the bank. The bank then mounts an aggressive, tightly focussed communications campaign at those clients the bank fears it might lose.

The program makes particularly good sense when you consider that it is five or six times more expensive to win a new customer versus keep existing ones.

Another interesting aspect of database marketing is that unlike other marketing alternatives, such as media advertising which tends to foster battles over share of marketing budgets, database programs have a greater partnership potential. They tend to be complementary with other products, as documented in another story in this issue in which the Apple computer company used a multi-faceted direct marketing program – including an issue of Profit magazine – to get its story across to the 30% of Canadian small businesses that have yet to computerize.

As the name ‘database’ suggests, this marketing activity, once considered a little outside the mainstream, could easily be the foundation of it all.