Some Thoughts on 1999

1999 not only marks the end of a decade, but the end of a 10-year period during which direct marketers were constantly urged to change their management practices.

By sometime in the early ’90s, many if not most DMers accepted the argument that in order to survive, no less prosper, they needed to become database-driven marketers. Then, in the mid-’90s, they were urged to become even more customer-focused, to attempt to become one-to-one marketers. Most recently they are being advised to reinvent themselves again, as interactive Web-based marketers.

While 1999 may be the year when many direct marketers accelerate their move online, it may also be the year when many re-evaluate how well they’ve utilized their investments in database technology.

Now that we’ve used database marketing methods about as well as we can to manipulate data, predict buyers’ behavior and segment customers, it’s time to ask if we’ve really learned how to use these tools to cost-effectively change customer behavior.

Do our loyalty and reward programs really increase lifetime value or do they just reduce margins? Have we learned how to optimize customer contacts, or have we yet to figure out how to test and evaluate all the possible options our database technology can support? Or have we, in our quest to become ever more sophisticated and play with the newest tools, overlooked the fundamentals of managing a closed-loop business?

Putting Technology Before Marketing My guess, based on questions I’ve heard at seminars, is that we’ve probably let our fascination with technology get ahead of basic marketing and direct marketing skills.

The danger is that should such a re-evaluation of our marketing strategies and programs prove negative, it will result in a decision to stop enhancing our tool sets.

A state-of-the-art hospital facility equipped with every medical technology known to man won’t save a single soul without a staff of well-trained doctors and nurses. But that doesn’t mean one should destroy the hospital.

When marketers rely on technology alone to solve marketing problems, they can’t simply blame the technology when it doesn’t work.

Get Proof What can senior managers do to get their marketers to focus more on marketing and less on technology? Ask for proof. Proof that your marketing strategy is better than other strategies.

By forcing your marketing people to test alternatives to your current plan, you can ensure that some degree of creative marketing thinking is taking place. And the database technology you paid for in the ’90s can help you test, measure and evaluate these competing alternative courses of action.

Net Speed Is a Problem No matter what you did in the last couple of years regarding the Internet and e-commerce, now is not the time to evaluate it. Except for the truly devoted, the Internet as it exists today is too slow to support significant business. The problem may have something to do with your site and the way it’s designed, but the core problem is bandwidth. It’s too slow.

Sure, if you want to buy a book from Amazon.com and you know the title, or even the subject matter, the Internet is fine; actually it’s amazing. But if you really want to go shopping, the process is still much too slow for the average person with average patience.

This will change. I just came back from a cable conference in Los Angeles and can tell you high- speed Net access from both cable and telephone companies is technically here.

Those industries are now trying to figure out how to get their customers to upgrade to these services, and competition is causing all players to move as quickly as they can.

DMers Could Benefit It’s interesting to think about this: If the cable or telephone companies were able to succeed in providing widespread, high-speed direct access to the Internet, one of the principal beneficiaries would be direct marketers, especially catalogers.

Given our industry’s ability to communicate benefits, and the cable and/or telephone industries’ need to sell additional services, there should be a way for us to work together to solve this problem to our mutual advantage.

In 1999 I think this may well happen.