The Ecstasy and the Agony

In our business, you have to have a champion at the top, or there will be no database marketing program. In most industries, database marketing is not the main marketing vehicle-it is something new and additional to whatever is already in place. Often it is viewed with suspicion or fear by other units in the same company. These rival units include sales, advertising, dealers, agents or top management. If you look good, you might make them look bad. You might steal their customers, commissions, bonuses or budgets. It’s dog-eat-dog in the corporate world.

This is the story of a couple of guys who developed a highly successful database marketing program, only to have it killed in its fourth year by a new executive who had other ideas. It is a fable of modern corporate life.

David Christensen is vice president for consumer marketing at office supply marketer Acco Brands. Back in 1992, David was director of marketing of the Outboard Marine Corp. (OMC), manufacturer of the Johnson and Evinrude outboard motors. OMC had a 50% brand penetration in a very stable industry that has about 4,000 independent dealers nationwide. There are only two big domestic manufacturers, OMC and Mercury. Yamaha led the growing foreign competition.

In 1992, David realized database marketing was ideal for his industry. There was a finite, identifiable market with about 10 million U.S. households owning an outboard powered boat. OMC had a database of 2 million customers who had filled out warranty cards. In 1992, OMC decided to launch a new series of products to meet the Yamaha intrusion into the U.S. market. David called on Stanton Lewin-director of client services at Chicago direct marketing agency LKHS-for help.

They decided to build a database of boat owners to drive those customers most likely to buy a new outboard in the near future to dealers. They focused on saltwater boaters, because saltwater is very corrosive to outboard motors, destroying most in three or four years.

OMC was launching a new motor. They decided to conduct a major test in Florida, which has a large number of saltwater outboards, with 750,000 boats registered in the state. Their goal was to create a Florida boater’s database identifying those boaters who would need a new motor in the near future. Secondly, they wanted to do research to determine the right message and offer.

The database was built by combining the 750,000 registered boats in Florida with the 2-million-name OMC customer database. The data included the size, type, age and propulsion system of the boat. From this data, they were able to pinpoint 250,000 Florida households that owned a boat at least 3 years old, which was used in salt water and was the right size for the type of outboards they were selling. They divided the group into customers and prospects.

Christensen and Lewin tested seven different messages-reliability, durability, technology, warranty, corrosion resistance, made in America and price-and creative executions. They tested the messages in focus groups in three cities in Florida. The winning message was technology. The new engine had more stainless steel, and hence would last longer in salt water. “Their warranty is written on paper…Ours is written on stainless steel.” After several tests, their stroke of genius was a free gallon of oil for anyone who would bring the coupon to a dealer to check out the new motor.

To get the program started, Christensen and Lewin had to get the support of dealers throughout the state. If the field sales force was not on line, such a program would not happen. The pair visited dealers from one end of Florida to the otherto sell the idea. The dealers had to understand the program and stock plenty of oil, which was paid for by OMC. The dealer message was reinforced with trade advertising to communicate the battle cry and rally the members. Before the campaign began, they introduced a dealer communications package reminding them of their commitment to stock up on oil, and to reiterate their role in the program.

The direct mail pieces and the fulfillment to TV and print respondents contained local dealer names. Callers were asked five questions, including when they planned to purchase. Hot leads were sent daily to the dealers, many of whom followed up by phone. The media was highly integrated-even though they used consumer ads, direct mail, TV and in-store materials, all media had the same look and feel.

As a part of the 250,000 selected for the mailing, 20,000 were set aside as a control group. This group received no mailing, but were tracked in their purchases.

The results were dramatic. Over a 16-week period, they stunned the competition with OMC’s most dynamic product launch ever, and their efforts directly increased OMC’s market share for this segment by 17 points: For every dollar spent, they increased gross incremental profits by $1.21. With this type of initial success, they had no trouble in getting the budget necessary for a national rollout. In the second year, their marketing budget was increased by 400% to multi-million-dollar size. They used this to create a mega-database.

Their new database was the largest listing of registered boaters in the United States. It combined 46 different sources of legacy data, including 39 state registrations, 2 million customers, subscribers to publications, show attendees and demographic data from Polk.

The database included 30 key element fields in all 7 million records, including type of water craft and year, type of propulsion and year, recency and frequency data, type of boating application, age, income, education and spending indices.

The database became a shared corporate resource. The company did 32 mailings a year, setting aside 32 control groups to validate results. They used it not only to sell the new motors, but also parts and accessories. The result: parts sold 24% more to the test groups than to the controls. They sent videos to dealers to educate them about the program.

In all, 800 dealers nationwide-comprising the largest boat dealers in the United States-participated in the lead-generation program. They mailed 2 million pieces a year for the next three years. Some dealers experienced an 8% response to the mailings. The average response rate was 2.83%. In subsequent years, the saltwater program was broadened to bass boats, freshwater fishing and performance outboards. It was a highly successful program, well researched and tested.

Then it all came to an end.

They lost their champion. When the original vice president of marketing left, his replacement supported their efforts-once he understood what they were doing.

After a couple of years, he was replaced with a new man who was totally hostile to database marketing. One of his first questions was, “What idiot came up with the oil thing?” The database project was abandoned. OMC went back to traditional marketing, such as advertising in the swimsuit edition of Sports Illustrated, plus ads in enthusiast publications and sponsoring fishing tournaments.

This is the story of corporate America. You lose your champion, you lose your program.