exact figures are hard to come by, but it is estimated that in Britain, database marketing (dbm) expenditures are growing at the rate of 30% per year.

In the u.s., we know that more than half of all advertising now asks for some kind of direct response action by the consumer.

In Canada, we have seen growth rates ranging from 10% to 20% per year.

Why?

Why? Two reasons.

First, more companies are climbing on the dbm bandwagon.

Second, the technologies that make dbm possible (printing and lettershop technologies, fulfillment techniques and interactive phone systems) have continued to evolve and improve.

Like many companies, you probably have some dbm programs in place, but feel you could get more out of your operation.

Developing and implementing an increasingly sophisticated and effective dbm program requires commitment and perseverance, but it is worth the effort.

Right message

dbm means sending the right message to the right person at the right time. It means getting close to your customers, treating them well, and providing excellent after-sales service.

The key phrase here is ‘Get to know your customers well.’

Good salespeople will tell you they vary their approach depending on their audience.

dbm allows you to find out which groups of customers are interested in which products, so you can talk specifically to each group.

In order to make the pitch, you have to identify niche groups and communicate to each with a slightly different sales message.

This sounds almost impossible, but with today’s computer, matrix and lasering techniques, it is done every day.

The question is, ‘What do all these audiences look like in your database?’

Statistics

Aside from knowing your customer or prospect’s name and address, it is helpful to know what language he or she prefers, his or her age, occupation, number of children at home and their ages, marital status, annual family income, whether he or she rents or owns a home, the type of dwelling, what kind of home entertainment equipment is owned, whether he or she has a personal computer, what are his or her leisure activities, whether he or she is interested in any sport(s), whether he or she smokes, what books he or she reads, whether there are pets and what kinds, what magazines are subscribed to, where he or she goes on holidays, and so on.

You can find out much of the information you need by surveying your own customers on a regular basis, and building a storehouse of information over time. People will respond to your questions if you give them an incentive and respect their privacy.

Consumers also have their own ‘consumption signature,’ which tells you even more about them as individuals – what they buy, and when.

In the old days, dbm consisted of looking after a ‘mailing list.’ Today, you can enhance and expand your reach by using external databases that contain consumer buying history, as well as lifestyle attributes.

You can process this information against your own consumer database to determine the buying and lifestyle habits of your customers and prospects. This gives you the ability to build a more accurate customer profile to more accurately target your market.

When you start grouping these individuals together and analyzing them in a database, you come up with some interesting results.

Reasonable response

It used to be the rule of thumb that a reasonable response to direct mail consumer promotions was somewhere in the neighborhood of 1.5% to 2%.

Rather than having to mail to 300,000 people to promote a product/service, which gets a 2% response, you may be in a position to mail out to one-fifth of that number and get a 20% response. Twice the orders, with one-fifth the expense. Now that is performance.

Market modelling has come a long way.

Modelling programs

Today, you can run your database through modelling programs and come up with an analysis that shows you who has a propensity to buy more products or services based on various kinds of statistical behavior.

It comes back to finding out more and more about your customers and prospects – who they are, what their preferences are, and what they consume.

And, modifying your marketing approach to take advantage of today’s ability to communicate to people in a language that is more specific to their level of understanding.

I mentioned printing technologies.

Lasering and personalization have come a long way over the last couple of years, and while you may laugh at some of it when it arrives in your mailbox, I can assure you it does increase response rates.

dbm success is achieved in small increments over time. Each level of refinement brings another increment on the scale of response measurement.

dbm can be a complicated exercise involving many disciplines, many suppliers and, often times, more than one database.

Several printers

In one program that I am involved with, there are several printing suppliers in two different countries, and two interactive telephone systems in two different countries that are hooked up to 800 numbers with the ability to transfer to several locations depending on the customer’s product interest.

It is not a simple exercise. But the potential to sell more products and services with current database technology is enormous. If you can harness the technology, you can survive and even prosper.

So how do you go about doing it?

The first thing you have to do is get re-educated. At least once a year. If you were a doctor, every couple of years you would go off and take a refresher course.

Marketers should do the same thing. Seminars on database marketing can bring everyone up to date on where we are today and how you can go about implementing the latest techniques.

There are some obstacles you will encounter along the way. Human nature being what it is, a lot of people do not like to change what they are doing, or the way they are doing it.

Here are some of the barriers you will have to contend with.

– Lack of commitment at the right level. Every company that has successfully implemented database marketing did so because senior management could see the benefits and were willing to spend the time (and the dollars) on a corporate basis.

– ‘We already have a database marketing program.’ There are big differences between a marketing database and a mailing list. A marketing database is almost infinitely selectable.

– Shortsightedness. The old ‘Why spend my budget to make my successor look good?’ syndrome. Let us remember corporate goals. The idea is to be profitable, and database marketing helps. Build today, so we have jobs tomorrow.

– Empire-building. Marketing databases are a tool for marketing. However, because they employ computer hardware and software, they are often perceived as belonging under the purview of m.i.s.

Not true anymore. New technologies put the systems and the control right in the hands of the marketing people – the end-user – and that is where they belong.

– Fear. Why risk my job and my future on database marketing? There is really no risk any more. Database marketing has proven itself time and again.

– ‘It will cost too much.’ No doubt about it, when building a database, you can spend a lot of money in a hurry. But it is also possible to build a database gradually, using relatively low-cost techniques.

– Branch-plant mentality. ‘Okay, I’m waiting for them to get the bugs out in the u.s., then I’ll look at it.’ The risk, of course, is that while you are waiting, your competitor is acting. So, sitting on the fence is risky business.

Call your people together and discuss these items openly. It will go a long way to moving things ahead.

If you send somebody off on a course, ask them for a write-up when they get back on what pro-active measures they intend to take as a result of the new knowledge. Get a timetable.

Get your suppliers to show you what is new in dbm technology. Get your agency to tell you what can be done for your business with the latest dbm techniques.

If your agency does not have a specialty in dbm, find one that does, and either change agencies or sign on the dbm agency as well.

This allows you to fast-track the process. The veterans in the business, people who have been around for a number of years and have grown up with the technology, can save you a lot of hard learning experience. This means your company gets moving quickly, with a lot less expense.

Something I highly recommend is examining case studies on dbm.

Here is really where a lot of the ideas come from. Seeing what other people do, even though they may be in a totally different business, can help germinate new ideas.

Why? Because one of the most interesting things about dbm is that it is not the computer that makes it happen. The magic of dbm comes about in the creative ways in which you are able to approach the market because of the tools the new database marketing technologies provide.

Bottom line; get re-educated quickly; make it a point to set a timetable, and move as quickly as you can; find out as much as you can about customers and prospects; seriously consider using surveys; get experienced people; and deal with the obstacles up front.

Lastly, make it your corporate mission to develop and implement increasingly effective programs to build on your database marketing effort.

Do not slow down, keep moving ahead, because your competitors will.

Bob Stacey is director of database technology and operations at Toronto-based The Direct Solutions Group, a division of Padulo Advertising, which specializes in database marketing solutions for various industries.