In Part 1 of this article, we posited that successful CRM is attainable "even in the presence of significant budgetary constraints "as long as you do not compromise on marketing database content. Part 2 contains two case studies on how this was achieved, and also provides a cautionary tale of database content that is very far from best practices:
Case Study #1
John Craig is Co-Founder and Principal of Windward Group, which offers strategic brand, marketing and merchandising consulting to the direct and database marketing industry. Earlier, he spent over two decades on the client-side of the direct marketing industry, including executive management positions with substantial profit and loss responsibility.
At one of his employers, a multi-channel business-to-business marketer, Craig was a Wheaton Group client. Unfortunately, he did not have the budget to build a CRM system with every bell and whistle. So, Craig brainstormed with experts, asked plenty of questions, and arrived at an innovative outsourced/in-house hybrid solution:
"I outsourced the construction and maintenance of the marketing database, and the ongoing house file processing, including promotional selections and backend analysis," says Craig. "No one in my IT department had the background to do this as well as I could get it done on the outside. Plus, even if I had had the talent in-house, I knew that this processing would always vie with other internal work for priority, and that a sudden resignation would be disastrous."
"Besides, there was no way I was going to compromise on database content," continued Craig. "The project was a real challenge in this area. Our internal systems were not properly documented. We did not have a consistent and unique coding scheme for our thousands of SKU's [merchandise codes]. The way that our operational systems were engineered made it difficult to extract backorder, cancel and returns transactions. And, as a business-to-business marketer, the entity relationships and order tracking were extremely difficult to map."
As for the in-house portion of the solution, Craig took the $50,000 he had budgeted for an Associate Circulation Manager, and invested it in hiring a technical professional who could program in SQL and leverage inexpensive reporting tools such as Crystal Reports. "Out of every update, a copy of the database was transferred by Wheaton Group to the in-house technical professional. She would load it onto her PC and then run all of the necessary reports, ad hoc counts and queries. She manually pushed information throughout the entire organization on a regular basis. It was an unorthodox solution, but it worked. By the end of the first year, I was able to show a very impressive ROI to the company president."
Case Study #2: Another Creative Solution
John Worsley, a former client, had a problem when he was Vice President of Database Marketing for a niche retailer with a substantial direct marketing operation. "I didn't have a budget to build a standard database," says Worsley, "so I went 'skunk works' instead. I was willing to compromise in all areas but content."
Worsley evaluated his options and decided that the one thing he had in-house was intellectual capital. "I had years of hands-on experience with technical database and merge/purge issues, had done quite a bit of graduate work in statistics, and was proficient in SAS. Plus, I had a staff member with database experience. So, I taught him SAS and created a marketing database on PC's, all programmed and managed in SAS."
"The database had top notch database content," says Worsley. "I had tens of millions of promotion history records going back five years, and pretty much a lifetime of orders and items. Plus, I captured returns, backorders, cancels, gross margins and loyalty club information."
Worsley has some caveats. "With an in-house solution, you have to think about what will happen if you get a resignation. Also, be wary of the 'database modules' that are available with the common fulfillment software packages. Often, they do not offer the essential individual-to-household linkages, summary data and promotion history."
Case Study: What Not to Do
Recently, I discussed a potential data mining project with a gift-oriented, multi-billion dollar retail and direct marketing company that, unfortunately, has been in decline. It soon became apparent that the firm's marketing database content would support neither the project nor any other form of meaningful data mining:
Data is archived after 36 months and is difficult to resurrect. Some portions of the database are maintained at the surname ("last name") level and others at the individual level. For surname-level database records, only one individual's identity is retained. This means that if a husband orders the first time, and then the wife orders "say "five subsequent times, the database will reflect six orders from the husband. This is particularly problematic for a gift-oriented business. To complicate matters, the database does not track bill-to/ship-to linkages and the corresponding gift relationships that these imply, nor does it contain gender codes.
Often, the acquisition source is inaccurate, which renders problematic many worthwhile analyses such as long-term value. Also, merchandise coding ("SKU") discipline does not exist, the Website does not allow source codes to be entered, and customer records generally do not reflect post-demand information such as merchandise returns.
Promotion history is essentially unusable because the database tracks massive amounts of "spurious" activity; for example, "event occurrences" such as records that have been sent to the service bureau for National Change of Address ("NCOA") processing. Also, there are significant problems with tying promotion history to specific names and addresses, and email promotions are not tracked at all.
Finally, on the Retail side, distance-to-store calculations are based on imprecise ZIP-to-ZIP Centroids. And, they reflect only the nearest store, not where the actual purchase activity has taken place.
Final Thoughts
When you do not have the budget to do everything you want, it is time for creative thinking. The ultimate solution will vary, depending on your specific circumstances and needs. You might decide that it is best to outsource, go in-house, or "divide and conquer" by arriving at some combination of the two. Regardless, as John Craig and John Worsley learned first-hand, success is possible as long as you refuse to compromise on database content.
