DATABASE SCREAMS!
The DMSI e-NEWSLETTER... Rants and raves from the database pros at DMSI.
Serving 3500+ Marketing Pros

In This Issue:

Dear Friends,

Benchmarking: can it help your Database Marketing focus? This issue features news on a benchmarking study completed for AARP in Washington D.C., which yielded impressive results. We also revive the ongoing debate of Statistical Modeling versus RFM, with contributions from three experts.

DMSI is happy to announce a new feature in our WiseGuys Marketing Software - MatchBack Response Reporting. And finally, because so many of our readers are "Database Superstars," our clients and colleagues are asking that we assist in their recruiting - position openings are listed below.

As always, please let us know how DMSI can fit into your database plans!

Bruce Gregoire,
President and founder,
Desktop Marketing Solutions, Inc (DMSI)

Adjunct Professor, Marketing Information Systems
Johns Hopkins University Graduate School

DMSI Benchmarking Helps AARP with Strategic Focus
Our DMSI Database Consulting continues to assist both large and small organizations with their Database Marketing needs. A case in point is AARP, based in Washington D.C. With over 35 million members, AARP is the leading nonprofit, nonpartisan membership organization for people age 50 and over in the United States. Recently, DMSI was asked to perform a Benchmarking study to establish the current Database Marketing maturity level of ASI - an AARP division devoted to partnerships with for-profit organizations. The objective of the Benchmarking study was to show where AARP needed to strategically focus their resources to continue their marketing database excellence.

Solution: DMSI looked at 5 operational areas: marketing requirements, organizational requirements, informational requirements, technology requirements, and financial requirement. Each area was evaluated using a "gap analysis" according to the following baselines:

• Level 1:   Data Capture level - this is best described as a "looking in the rear view mirror" approach to marketing. A sometimes simplified, sometimes primitive level of database marketing maturity.

• Level 2:   Reactive level - this is best described as "steering through traffic". This category describes a level of maturity that allows some flexibility in real time to overcome challenges, but lacks a strategic pro-active capability.

• Level 3:   Pro-active level - this can be described as "knowing what is ahead, and adjusting". It is very strategic in nature, with vision and foresight built into the database marketing methodologies.

Results: With the results of the DMSI Benchmarking study, AARP was able to identify where it wanted to be, from a database marketing maturity standpoint, and isolate the gaps with their current focus. In this way, AARP moved ahead to resolve these strategic differences.

Learn More: Call DMSI offices at (703) 941-8109 and we can explain how a similar Benchmarking study may help your organization.
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Modeling Versus RFM - Which Works Best for You?
RFM (Recency, Frequency, and Monetary Value analysis) has been a tried and true method for predicting customer response for many years. However, the debate continues as to which customer scoring approach - RFM or Statistical Modeling - really works best for direct marketers. We have summarized three views below, but we are also interested in your own results. So please feel free to chime in by contacting our office, and we will publish selected views.

In a recent article in Catalog Success magazine entitled "Modeling vs. RFM," ¹ Steve Trollinger adds to this discussion. Trollinger concludes that "for an active housefile of less than 250,000 customers, RFMP segmentation with firmagraphic enhancements probably is the best way to go. Models certainly can help cut some of the fat from your mailings, but they may not generate the kind of lift you'd expect at the top of the file. But if your file is large enough, and you're a frequent mailer, modeling may be the way to go.

In a case study ² to be presented at the 2005 summer NCDM conference, Patrick Hanrahan of Eagle Eye Direct makes a case for statistical modeling over RFM. Hanrahan studied the results of both approaches for a national non-profit fundraising campaign of 2 million active names. He concluded that the vast majority of mailed names were chosen by both the RFM and the model analyses. But the RFM approach also included a large number of unprofitable names that the model did not include. Thus, his preference was to use modeling to save on mailing costs and still achieve comparable profits.

Strategic Database Marketing, by Arthur Hughes, is an excellent text that I use with my graduate marketing students at Johns Hopkins University. Hughes makes the point that both approaches have great value, and that indeed "a good model, properly run, can outperform RFM." But he goes on to say that good models are often more expensive and difficult to run. They require statistical expertise, whereas RFM is strictly mathematical and can be understood by marketers. In summary, "to determine whether to use a model, you must accept the idea not only that the model has to be more accurate than RFM (which it probably is) but also that it gives you enough lift in response to pay for the model, plus beating the RFM lift. Except in the case of a very large database, this is seldom true." ³

Learn More: It seems that the take-away from this debate, as my students often say, is "it depends." For more thorough discussion, you may want to attend the NCDM July 11-13 in Chicago. For details, see www.ncdmsummer.com
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WiseGuys Matchback Response Reporting - See What Works!
Flyfishers know. Gamblers like to think they know. Know what? Know what works! Without in-depth response reporting, however, direct marketers are more like gamblers. Response Reporting can be described as the single biggest unmet need among direct marketers. With sound response reporting, marketers can answer the questions:

  - What worked?
  - What didn't work?
  - Which prospect list performed?

WiseGuys Marketing Software now provides answers to these questions. MatchBack Response Reporting matches incoming customer orders against a mail history file (previously stored). Depending on a set of parameters described below, WiseGuys can establish how well each mailing segment performed.

1. A mail file is selected in WiseGuys, and a mail date is recorded for each mailing address.
2. Subsequently, order entry staff key incoming orders following the mail campaign (using your own order entry software). Most users will record both the order date and (optionally) the source code on the mailing piece.
3. By linking to your customer database, WiseGuys can match orders with mailing addresses, to show successful responses.

1. Response Window - you establish the maximum number of days that can elapse between your mail date and a successful subsequent response.
2. Source Code matching - you can (optionally) require that the source code of an incoming order match the key code of the outgoing mail piece.
3. Pass along response - you can measure the pass along response of your mailing within the same organization (for B-B) or household (consumer).

The Results:
MatchBack displays the percentage of customers in each mailing segment that have been linked to a subsequent order. This is done for both prospects and customers. In a future release, MatchBack will calculate the ROI for each mailing campaign.

Learn More: Call DMSI offices and ask for a free demo: (703) 941-8109.
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Database Marketing Positions Available
DMSI clients and colleagues have taken note of the quality of our readership (now 3500+ database marketing pros and former JHU students), and have asked that we publish the following position openings:

Database Marketing Manager
Top-tier strategy and solution firm with U.S. and international locations seeks database marketer(s)/marketing manager(s) for its marketing practice. Position requires experience with Fortune 500 B2B markets within an agency, strategy firm, cataloguer, or DM-centric enterprise (e.g., Dell). Contact recruit@market-bridge.com and mention DMSI.

Two positions at the Smithsonian Catalog
The Smithsonian Catalog supports the Smithsonian Institution via the sale of products related to the Institution and its collections.

Catalog Marketing Manager Manager responsible for the analysis and review of prior marketing and circulation efforts and the development, execution, and coordination of circulation plans to meet the needs of the Catalogue and ecommerce business. Contact twilliams@si.edu

Catalog Marketing Analyst Prepares circulation plans based on the statistical analysis of past promotion performance. Analyzes information from all targeted customer groups including the existing customer file, Smithsonian members and prospects for new customer acquisitions; Prepares and maintains spreadsheets and reports to support the circulation planning effort. Contact twilliams@si.edu

How Desktop Marketing Solutions, Inc. can help you!
DMSI is a full-service resource for database marketing software, programming, installation and applications. Whether you're considering a new software system or just need help assessing your current one, DMSI can help. The staff at DMSI offer the rare combination of database know-how and direct marketing expertise. Our niche is small to mid-size organizations who need the power of advanced database techniques to grow their business. We provide software product installation and customization for "best of breed" marketing database and CRM packages.

And now, pick up the phone! One call gets you 15 minutes of Free Database Advice
Step 1: Call DMSI offices anytime at (703) 941-8109
Step 2: "Ask the Experts" at DMSI - give us your toughest database question.
Step 3: No charge - no obligation. 15 minutes may be all the help you need to start solving your marketing database problem.
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