Experts weigh pros and cons of online

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Internet marketing has had a huge impact on b-to-b marketers, and database marketers are no different.

BtoB convened a virtual roundtable of b-to-b database marketers conducted through e-mail to discuss the ways online has changed the way they do business, as well as the challenges for database marketing in a multichannel environment, the rise in the use of modeling, the challenge of measuring database marketing results and what we can expect in the future in the database marketing discipline. Roundtable participants were: Terence "Terry" Jukes, CEO of B2B Direct Marketing Intelligence, a consulting company; Terry Flynn, general manager at b-to-b cataloger Hello Direct; Paul Pellman, exec VP-marketing & business development, Hoover's Inc., an online information provider; and Cathy Zajack, director of circulation for Business and Legal Reports, a b-to-b provider of compliance training materials for HR, safety and environmental professionals.

BtoB: What effect does the Internet have on your database marketing efforts?

Cathy Zajack: E-mail marketing and well-established audio conferences have proven to be extremely successful and very profitable. The primary driver for success is low cost and relatively high conversion rates. In addition, our sales model requires that we diligently source new lead sources from the Internet, including, but not limited to, PPC [pay per click], organic search, press releases and RSS [really simple syndication] feeds.

Terence Jukes: In a word, it is unprecedented. Adding the effect of online communications to the mix complicates our already complicated database marketing efforts. The tracking, analyses and interpretation become more complicated. ... Complexities have similarly increased on the prospecting side. At the same time, having the additional tool of the Internet presents many opportunities to add additional customer interactions, updates and personalized offers quickly and cost-effectively.

Terry Flynn: Incorporating Web activity with our traditional channels has been a real challenge. We are moving towards an integrated contact model and find ourselves spending a great deal of effort looking at cross-channel buying activity as a result of promotion activity in another channel. Web purchases driven by the catalog are dramatically increasing for us.

Paul Pellman: The Internet creates new vehicles for acquiring leads and prospects that we can then add to our database marketing efforts, including paid search, organic search/SEO [search engine optimization], online media, e-mail and viral marketing. We use paid and organic search to drive prospects to sign up for a white paper, which then allows us to enter them into our prospect database for remarketing/lead nurturing.

BtoB: In what way have CRM [customer relations management] and analytical tools changed the nature or practice of database marketing for your company in the past 12 months?

Pellman: All new Internet media channels have increased our ability to definitively track and measure our marketing efforts. For various online media, we track click-through rates and conversion into a lead/prospect. On online banner ads, we can also track post-impression responses. This gives us the ability to track someone who sees our online ad unit and then subsequently comes back to our Web site to sign up as a lead/prospect.

Jukes: The larger, more sophisticated companies can invest in the systems and the manpower to reach the next level in analytics, and the tools are getting better, cheaper and faster. However, many database marketers, I think, are medium-sized companies that are still struggling with effectively using RFM [recency frequency monetary analysis] and P [product].

Zajack: Over the last several years we have experimented with many new analytical tools. We license a third-party CRM tool to manage and maintain leads and opportunity records for our sales staff. We continually mine our data both internally and externally to gain business intelligence and adjust list segmentation as results dictate. In addition, we participate in transactional databases and continually refine models to maximize campaign profitability and/or limit risk depending on the sales channel.

BtoB: How do you handle tracking in a multichannel environment in order to determine the effect of each channel?

Pellman: We look at each channel along standard metrics-cost per lead, cost per sale and ROI. This allows us to compare effectiveness of different channels and different approaches. We use CoreMetrics for a good amount of our Web site tracking and analytics. We use SalesLogix for our sales CRM tracking and have created a feed of SalesLogix data back into CoreMetrics to give us end-to-end reporting from the CoreMetrics platform. In addition, we use DoubleClick's DFA platform to track and optimize our online media program, and we use the search engine's resident reporting platforms to track and optimize our paid search program. As these different platforms are not all mutually exclusive, we also many times still use spreadsheets to pull together data from different sources.

Jukes: When we add the online communication channel, our multichannel environment gets more complicated. It demands new ways of coding and tracking to help us determine the effect of each marketing action. There is much that can be done beyond simple source codes in improving our tracking. Unique URLs, prices, offers, 800-numbers, item numbers and other tracking mechanisms can help us properly identify where our orders are coming from rather than how they are being placed.

Zajack: Tracking in a multichannel environment is a relatively large challenge for us, as we provide products and services across multiple verticals and have a product portfolio in excess of 200 products. We analyze results within each sales channel as well as the totality of all efforts and adjust list segmentation as analysis dictates.

Flynn: We are using matchback services to consolidate tracking. Simply put, we work with our database partners to compare the account data on our orders with both our house file and our promotion history to see if an order without a promotional key code can be attributed to an account we have promoted to recently. Instead of simply trying to match "Mark Smith at ABC Company" to a catalog sent to "Mark Smith at ABC Inc." at the same address, we have also found it is more important to match at the site location. This means we want to consider all buying activity at ABC Company compared to all promotional activity to various recipients at ABC Company, regardless of matching names. We are finding site-level aggregation more valuable than contact-level aggregation-total return at the site-level allows a better view of customer value in our environment.

BtoB: How are you using database knowledge to build your business today versus 12 months ago?

Zajack: We rely more heavily on modeling for our traditional print products when campaign planning via conventional market- ing methods. In addition, we continue to monitor and refine our recency, frequency, monetary analysis and loan-to-value (LTV) models to maintain overall profit targets. We are also in the process of converting our circulation planning and analysis to a Web application that will allow us to build circulation plans on the fly; deploy campaigns without third-party intervention; and conduct analysis at both global and individual campaign levels.

Pellman: We've built more robust database marketing capabilities to marry new media acquisition vehicles with traditional "match and append" capabilities. For example, we're using D&B data to create targeted lists of prospects and matching leads generated from other lead sources against this "suspect" list. Our prospect database gives us much better campaign set-up, execution and management capabilities than we had before. We are now able to better segment our audience for more targeted follow-up and remarketing efforts. The net result is we're able to do more campaigns. In addition, we are now able to better monitor and manage total customer and prospect touch points.

Flynn: We're focused on site-level LTV analysis and are using that to manage our promotional spend. The main gains we are looking for are in retention and site sales growth. In our business, individual customers tend to have a long repurchase cycle (our products last for two to five years depending on category). Because of this, we have tended to be short-sighted in our ROI analysis of marketing promotions. With new database work, we have begun to establish that in companies without centralized purchasing functions, one buyer in a company expands into multiple buyers at the same company over a 24-month period-allowing us to spend more profitably on site penetration instead of simple, new customer acquisition.

Jukes: I see all the best brains in my client companies being applied to the marketing strategy that ultimately sets up the database. No longer is it just the domain of the marketers, as it [the database] has become the "spinal cord" of the business. There is also increased realization that to have the most effective marketing database, you need to really know how you are going to both contribute to it and use it in all areas of your business. The old "marketing database" has evolved into the new "intelligence base" that drives all areas of the business.

BtoB: What is the biggest challenge to doing successful database marketing in a multichannel-catalog, phone and Internet-environment?

Pellman: Social and viral marketing opportunities are a bit harder to track and incorporate ... because you can't fully utilize tracking cookies, etc., that you are able to use for other online media efforts. You get around this by setting up unique landing pages, for example, that are only available from these viral and social campaigns. Or you ... just associate everything you "can't" track to these [particular] campaigns. We do selectively use these channels and are looking for such new ideas and concepts as they are very cost-effective, even with their reporting challenges.

Flynn: Linking data and cause/effect across channels. The matchback process is still more art than science. In b-to-b, we have both the decision-maker/purchasing agent link to make many times, but often we have as many as 10 possible response-generating contacts to weigh when attributing ROI: numerous e-mails, calls, mail pieces and search engine marketing, to name a few. For example: I have one purchasing agent for XYZ Industries and five localized decision-makers. An account manager speaks frequently to the purchasing agent and to two of the decision-makers. Three of the decision-makers are receiving e-mails weekly, and four are receiving catalogs and/or other direct-mail pieces monthly. Two decision-makers have visited our Web site and clicked on a paid search ad to get there. When we get an order without a specific promotion code attached, there are various strategies used to allocate responsibility across active promotions, but all have limitations. For now, we have found it remains more important to hold a view of the sum of all investments against the site ordering activity to manage return on marketing dollars.

Jukes: Without question, it is assembling the right group of talented people who can really see the whole picture and drive it from a business strategy perspective, not just a marketing perspective. This takes experienced direct marketers and new talent that understands the technology and how to use it. These skill sets must come together and work together effectively. I see very few companies actually achieving this today.

Zajack: Accurate tracking of conventional and Web marketing activities. Measuring the impact and achieving the right balance between online and offline products in a multichannel environment is also a challenge again, given our product portfolio and the verticals we serve.

BtoB: What future trends do you see in terms of database marketing?

Zajack: Off-the-shelf ASPs [application service providers] that are customizable [is one trend]. Such applications are relatively easy to deploy and reduce the total cost of ownership. Keeping up with emerging database technologies can be a full-time job for both database and IT managers.

Pellman: Incorporation of more viral, word-of-mouth marketing and tracking efforts. The Internet actually makes it easier for companies to utilize word-of-mouth marketing, as Web users have more and easier options for spreading the word, either by forwarding or sending an e-mail, reading and commenting on a blog or forwarding an RSS feed.

Flynn: In the customer acquisition arena I expect to see bigger co-op databases with a greater density of multichannel contact data per record. Eventually we should be able to select on channel preferences, pull from a full collection of contact options and target new customers with the full range of options.

When it comes to managing house files, I expect that companies will be focused on channel contact mix strategies-what combination of contacts has the greatest yield based on company profile. To take a channel-neutral view and not have three or more sales/marketing heads optimizing channel specific budgets, and optimize segment yields, organization structures may need to change. The tools of portfolio management from the financial industry will likely appear in our industry in some shape or form. It will be a challenge to get the balance of investments right, but that's what keeps everything interesting.

Jukes: What we know today as database marketing will give way to intelligent marketing systems driven by computers. Brilliant marketers will set up the parameters, CRM systems will feed in the data and the computers will guide customers based on their actions/data points to the next desired step in customer development. In short, the speed at which we perform the database marketing functions of collecting data, analyzing it and responding to it with our next marketing action will shorten to a nanosecond.

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