Beware of Becoming a Database Abuser
Database and business intelligence technologies have revolutionized customer relationship management. Powerful interfaces provide direct marketers with the ability to access and manipulate massive amounts of data in seconds. In fact, today’s database access tools give just about anyone the hands-on ability to analyze data, draw their own conclusions, and present their findings in the form of eye-catching reports and dashboards.
Technology has succeeded in democratizing the analytic process. And therein lays the danger.
Database access tools can become weapons of mass destruction when they fall into the hands of individuals with sub-par or no formal analytical training. After all, false “insight” is worse than no insight at all because it leads, rapidly and inevitably, away from the truth.
The wise marketer is able to differentiate between the sorts of hand-on data investigation he or she should handle, and those which should be reserved for formally trained data miners. After all, there is a difference between what it is possible to do yourself, versus what you ought to do yourself. If you confuse the two, you will be in danger of becoming what I refer to as a Data Abuser.
How can you tell if you are a database abuser? Consider the following scenario:
Your company has been aggressively collecting e-mail addresses. As a result, , the percentage of customers who have provided an email address has been going up
A year ago, you supplemented your customer-side direct mail promotions with well-coordinated e-mail blasts. And, when planning and executing the blasts, you have always made sure to take full advantage of your inventory of e-mail addresses.
You have done your own after-the-fact database analysis, employing a powerful access tool. What you have discovered is astounding. Customers who received the e-mail blasts generated 36% more in revenue than those who received no e-mails. And, because the e-mail blasts cost almost nothing to generate, the revenue increase has been accompanied by a 36% bump in profit.
Clearly, the e-mail campaigns are driving significant incremental value. So, you report to senior management that e-mail has done much to “move the needle.” In fact, you are beginning to think that e-mail is such a powerful promotional channel that perhaps you should start scaling back on direct mail.
Sound reasonable? If so, then congratulations, you qualify as a Database Abuser.
The issue is not the value of integrating e-mail with direct mail. That is almost certain to be a worthwhile undertaking. The problem is that, with the scenario as presented, the conclusion has been attained without any rigorous analysis. Consider that:
* Most e-mail addresses are provided during the order fulfillment process. For example, e-commerce sites typically request one for order verification and tracking. The same is true at well-run call centers.
* Therefore, the more a customer has ordered, the more likely it is that an e-mail address has been provided. Likewise, the more recently a customer has ordered, the greater the chance that the e-mail address on record is still valid. Finally, the more loyal a customer, the higher the probability that he or she has not opted out of the blasts.
Therefore, the customers who are receiving the e-mail blasts are fundamentally different from those who are not. They are, in short, better customers. And, this intrinsic edge in quality is driving some portion of the 36% advantage in revenue and profit. How much? We do not know for sure. Figuring that out requires rigorous testing and analysis.
Jim Wheaton is principal and co-founder, Wheaton Group.
