Database Marketing 101: Part 2

In the offline world, most seasoned direct marketers are also database marketers. They regularly flag their customer files with enhancements such as family and lifestyle data, whether they’ve purchased one or more times or one or more products, what they’ve purchased, and so on. When it comes time to mail, marketers then split-test these lists to determine which enhancements boost response.

That’s direct marketing in the terrestrial world: Segment the customer file, mail it, and analyze the results. Then do it all over again.

Comparatively speaking, email marketing still falls short, for the most part, as far as capitalizing on the strengths of a database goes. Sure, as we saw last week, we’re seeing personalization become more the norm in email promotions. And there are more than a few customer retention efforts out there that actually deploy more than one generic version.

But we’ve still got a long way to go.

The true strengths of database marketing within the email channel are still underutilized — that is, the behavioral and transactional information that can be gleaned from an email promotion “done right.” Information that traditional direct marketers would give their eyeteeth for.

For example, say you market a site that sells kitchenware. Once every three weeks or so you send out an email promotion to your current buyers and prospects. During one particular promotion to a certain segment of your file, you notice a strong click-through on one of your Calphalon saucepans, but not a strong conversion.

This type of result would normally indicate that the promotion’s landing page needs work. Perhaps the copy on this portion of your site needs to be tweaked.

Dig a little deeper, however, and you discover — through analysis of the historical and behavioral data of the individuals within this particular segment — that price point is really the issue.

In other words, your analysis shows that a good portion of this particular segment purchases only products that fall within a certain price range. And while the out-of-range price was listed on the landing page, where response was soft, it was NOT on the initial email promoting the saucepans, where response was high.

That small example demonstrates the potential superiority that email database marketing has over its offline counterpart. Offline marketers would not have been able to measure how many customers “opened the envelope” (the click-through) against how many actually bought (the conversion). Nor would they have been able to analyze this level of information about their customers — information that can dramatically increase the strength of their future promotions. Email’s combination of interactivity and trackability makes this possible.

Unfortunately, online marketers are constantly under the gun to come up with the “next great offer.” Because the most basic results — that is, whether a promotion is profitable — come in very quickly (within three to four days, in most cases), subsequent promotions also turn around at lightning speed. There’s very little time for in-depth analysis of transactional and historical data.

But the times, they are a-changin’. The powers-that-be are beginning to realize the rewards of “marrying” their email database with their terrestrial database, taking their house file’s historical information and merging it with their existing email file’s transactional information. They’ve simply got to take the time, and commit the resources, if they’re going to do it right.

Think of the potential: Marketers can develop strategies around their customers’ buying (and clicking) patterns and trigger points. They can model their house lists to come up with profiles of their most responsive customers, the ones who spend the most money — their top prospects. They can hone in on what their customers really want to buy (and what they don’t).

They can do all of these things, and more… almost to the point of getting to know each of their customers on an individual level — their intricacies, tastes, and desires.

Look at it this way: Imagine sending out a direct mail package to 10,000 customers. You know going into it which products and offers they’ve responded to in the past.

You go to each of their homes as they check their mailboxes and watch them as each opens up (or discards) your promotion. And finally, you get to see which part of your offer makes them say, “Yay!” Or, “Nay.”

It just doesn’t get any better than this. That is, until the next great marketing tool comes along.

Those who act now, however, are sure to take the prize.