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Monday, March 29, 2010

Get ready for the kill!

‘Marketing database’ is increasingly becoming a strategic weapon for firms to win over their competitors in an overcrowded marketplace...

It’s said that the role of marketing is to “create customer”. By identifying the right need, right prospects for that need, creating the right solution for the need, and then communicating the value of the solution to the prospect, marketing can indeed create a customer. In fact, moving from mass marketing ‘then’ to targeted marketing ‘now’ has definitely added to the ability of marketing to create a customer.

Further, the use of technology for marketing and connecting to the customer is gaining salience. Kevin J. Clancy and Robert L. Shulman in their book – The Marketing Revolution – write “With enough computing power, you have got a marketing department in a box”. That’s a powerful statement, but then, that’s the reality. Your marketing database can provide you with the strategic weaponry to win in the market place. It can even change your ability and effectiveness to communicate with the customer.

Rob Jackson and Paul Wang, in their book – Strategic Database Marketing – write, “The efforts of some database marketers have provided momentum for a fundamental change in the use of a database as a communications management tool”. Jackson and Paul go on to say “Customer contact marketing has three fundamental principles. The first principle is, view the customer as your primary asset. The second is, create an outside-in marketing philosophy. The third is, manage the communications process.” Clearly, if you believe that customer is your primary asset and not your product or service, marketing database about your customers and prospects becomes your primary and strategic asset. Further, if you were to put a monetary value to your marketing database, it may come as a surprise. For instance, a typical average cost of getting a new contact is $20 and even if there are just 25,000 contacts in marketing database of a small business, it means the database can be directly valued at $500,000.

Marketing database is key to success in the marketplace – whether it’s to get new business from new customers or expand business with existing customers, or even in the event of crisis management. The advent of customer relationship management (CRM) systems and implementation of such systems in many large organisations did improve the marketing database quality somewhat, as many operational computerised systems started interfacing with CRM system, which necessitated that the CRM database is accurate. However, the penetration of CRM systems is still far from satisfactory and smaller firms are yet to automate their sales and marketing operations covered by CRM systems.

While the task of creating a central marketing database is not trivial, the real key to ongoing success is the maintenance of the data to keep it current because of the speed of change in customer and prospect organisations. Business data degrades at the rate of 3% to 6% per month. This may mean, one third of your information on business buyers and prospects may be inaccurate and ineffectual for sales and marketing use by the end of each year.

In fact, a search study by Sirius Decisions found that from 10- 25% of B2B marketing database contacts contain critical errors – ranging from incorrect demographic data to lack of information concerning current status in the buying cycle. Ardath Albee, CEO of Marketing Interactions and author of the upcoming book ‘E-Marketing Strategies for the Complex Sale’, says “You can lift revenues by 70% by cleaning dirty B2B data. And yes, that 70% lift is true for strong organisations utilising clean data.”

Thus, targeting contacts with relevant messages from an accurate database is the key. But, without clean, complete and accurate data, this is not possible. Marketing departments need to provide increased attention, effort and budgets to create, expand, update and utilise marketing database, which is increasingly becoming a strategic resource in ‘creating customers’ for the business.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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