DIRECT MARKETING: The heart of the matter

Cathy Bond looks forward to the DMA’s conference on database marketing

taking place next week

‘Customer data is the DNA of the organisation. It’s the blueprint for

the customer’s relationship with the brand and it’s right at the heart

of strategy.’ So says Maboob Momen, a managing consultant with the

Merchants Group, which devised the Direct Marketing Association’s 11th

conference on database marketing, taking place in London next week.

The outlook is bright for early adopters of new technology - and new

thinking - initially to locate best profit prospects and then speak to

those customers individually. It’s not surprising, Momen adds, that

companies are keen to see the database written into the balance sheet as

a corporate asset.

This is, after all, flagged as the ultimate tool for making every pound

spent on marketing communications generate a return. ‘Direct marketing

can and must be used to build brands,’ says Garth Hallberg, worldwide

director of differential marketing at Ogilvy and Mather Direct in the

US, who will discuss the theme of his recent book, All consumers are not

created equal, at the conference.

‘For most brand marketers, it’s the case that only a very small group of

consumers really control their business,’ he explains. ‘Direct

marketing can target these, so its principles have to be applied to

general marketing. If we don’t stop talking about above- and below-the-

line we’ll reach the end of the line, in advertising terms.’

The opportunities to define and refine seem limitless. But the rise of

the database, ‘the new marketing paradigm’, is taking place against a

background of technological change which is so radical that balanced

thinking is under threat, according to conference speaker Melanie Howard

of The Future Foundation.

‘There is always the danger, with all this data coming in, of losing

sight of the customer’s heart; the risk of marketers seeing them as

mechanical creatures,’ she says.

It would be ironic, investing money, time and effort to create a complex

web of information designed to feed individuals what database

intelligence says they want, only to find out that the customer isn’t

happy with his part of the bargain at all.

‘I’d like to think that there will be some lessons for organisations

which might have become rather complacent in their drive to establish

loyalty schemes,’ adds Howard. She will be revealing initial results

from a three-year research project, the first stage of which deals with

how people see themselves as holders of information they realise is

critical to the profitability of the companies which sell to them.

‘They know that a growing number of companies are going to want detailed

information about them and that new media means there will be more ways

of getting hold of that,’ says Howard. This has the dual effect of

giving customers a taste of power and making trust the basis of all

business transactions.

But early research, she says, shows that database-savvy consumers might

already be growing cynical. ‘They are aware that companies want the

information, but they don’t think they are getting the right benefits in

exchange.’

It’s clear that the equation balancing rewards against customer

expectations is a complex one. What’s more, no solution is likely to

provide the final answer. The relationship between the seller and the

customer, like the database itself, is dynamic and needs constant

attention to protect the fundamental bond of trust.

One aspect of this is privacy. While it is unlikely that a company would

overstep the mark in extracting and using personal information, where it

isn’t actually illegal there’s still the risk of losing the goodwill of

the customer. Care and vigilance is essential as database marketing

begins to spread through new media.

‘Direct marketers should be broadly familiar with the rules of the

game,’ says Elizabeth France, the data protection registrar. ‘However,

changing technology means that we have to stay on the alert. We need to

cope with media such as the Internet. The law is not technology-

specific: there is the same requirement to disclose how information will

be used when it is obtained. But consumer awareness of this is

essential.’

At the conference, she will underline the fact that while it is simply

not in the interests of marketers to act irresponsibly, the sheer pace

of change could force errors. ‘We are concerned about the amount of

data that retailers, for example, are picking up via customer clubs. If

people want to sell their privacy for Air Miles, that’s their privilege.

My job is to make them understand that’s what they’ve done, so they go

into it with their eyes open,’ she says.

Her concern about online marketing communication is shared by the Direct

Marketing Association, which is already looking at ways to regulate

unsolicited e-mail. Techno-gurus of direct marketing, however, would

dismiss electronic junk mail as unbelievably crude: in their world, even

the sophistication of super-refined lifestyle databases falls short of

the mark.

Take Firefly Network, a Boston-based company set up last year to sell

over the Internet using intelligence agents: software which, in essence,

uses the data it has acquired on individuals to judge which messages

will be sent to those people.

‘It builds communities of like-minded consumers via the Internet,’

explains Saul Klein, Firefly vice-president, who will be revealing

Firefly’s various applications. ‘Consumers control the kind of data

they receive and businesses can prioritise the information they send.’

Meanwhile, Shikhar Ghosh, chairman of US Internet company Open Markets

predicts that online systems will overturn the traditional role of the

middleman in the marketing chain. In theory, retailers on the Net offer

only what is relevant, at prices reflecting their freedom from expensive

overheads, such as property and staff.

‘With the ability to customise services at every level, the marketer on

the Internet can for the first time target economically a segment of one

person - and that person can interact,’ says Ghosh. He will be

highlighting examples of this technique in practice at the conference.

The issues facing database marketers, says Momen, ‘have set the agenda

for the next decade. We’re beginning to see the impact of new media, and

an empowered consumer. Companies have new tools for managing the

dialogue with customers. How they do this will be the very essence of

their business.’

The DMA’s 11th Database Marketing Conference will be held at the QEII

Centre, London on Tuesday November 26. Details from Johanna Higgleton on

0171 321 2525

This article was first published on Marketing