Survey Reveals the Most Valuable Database Metrics

First, the obvious. When marketers were asked which one campaign metric was most valuable in determining ROI for their data-driven campaigns, near-equal numbers cited increasing their total number of customers, a rise in top-line revenue and a jump in bottom-line profits, according to Direct magazine’s most recent survey of database practices.

Others mentioned an increase in brand awareness and in the share of their customers’ wallet as the most important element.

Responses varied depending on which customer segment each respondent targeted. Consumer-focused firms were most likely to cite increasing their profits, while respondents from business-to-business firms were more likely to place the highest premium on increasing their customer base.

Here’s a tip: Those wishing to maximize the return on their systems should customize, customize, customize. Nearly two-thirds of all respondents use their database systems to personalize products, service or marketing communications. Of those, half indicated that the lift provided by personalization covers the additional expense of an individual campaign. Another 40% either weren’t sure, or didn’t measure its effects – but personalized nonetheless.

Business-to-business firms and companies that market to both businesses and consumers were the most aggressive about customizing their offerings on an individual, per-campaign basis, trailed by marketers who primarily target consumers.

While half of all marketers may be aware of personalization’s effect on an individual campaign, only one-third of respondents calculate the lifetime value of their customers. Perhaps if more did, they would see the benefits of personalization: Forty percent said that the lift provided by customization efforts pays for itself during the entire lifetime of the customer.

Firms that market primarily to consumers, or to both consumers and businesses, were more likely to view their personalization expenses in light of total lifetime value. Nearly half did so, compared to the three-in-every-ten of B-to-B firms.

The strongest endorsement of personalization’s ROI came through respondents’ anticipated 2006 budget for these activities. Eighty-six percent said their budgets would either increase or keep at the same level, while only one percent indicated they would cut back on spending for these activities. And as above, the consumer- and mixed-focus marketers were more likely to foresee increasing their personalization budgets.

Asked about the data points that provided the highest return, prospect names understandably led the field in terms of the most valuable information held in a database. Among existing customers, however, RFM – recency, frequency and monetary – information was most often cited, followed by competitive products used and household demographics.

The full results will appear in the July issue of Direct magazine.