DATABASE SCREAMS!
The DMSI e-NEWSLETTER... Rants and raves from the database pros at DMSI.

In This Issue:

Dear Friends,

The next big thing! Marketers want to find it, organizations want to exploit it. This month we present an idea whose time has come: measuring web browsing behavior. See if you agree that the concept presented below has potential for membership organizations.

We also highlight new features in our increasingly popular WiseGuys Marketing Software program - including integration with the Ecometry catalog software application. Finally, we include a guest article that discusses how to choose from alternative data modeling technologies. As always, please let us know how we can fit into your organizations Database Marketing plans!

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

Adjunct Professor, Marketing Information Systems
Johns Hopkins University Graduate School

"Browsing Behavior" - A New Application of RFM Analysis
RFM (Recency, Frequency, and Monetary Value) is typically used to measure buyer behavior. But can it be adapted to measure "browsing behavior" as well? Here is an anecdote that will let you decide for yourself.

In 2003, a membership association in Alexandria asked DMSI how they could measure the use of their web site by members. Their theory was that active use by members of the association's web site would indicate good targets for membership renewal. By requesting a member log-in with each visit, individual web behavior can be easily tracked.

After a brainstorming session, the concept of using RFM was introduced. If Recency and Frequency are good measures of "ready to respond" in the physical world, why not in the virtual world?

I presented this concept to my Johns Hopkins graduate students this spring as a potential research project. One student - Fran Atkinson - took up the challenge, and studied the membership retention at the organization where she is employed (a large multi-disciplinary health association). Here is the approach she developed:

1. Ms. Atkinson created a "RVH" model (Recency, Visits, Hits) as a substitute for RFM.
2. A sample of web site visitors over a 6 month period were scored using RVH, and the top 80 were selected for analysis.
3. Demographic info (gender, years as a member, etc) was appended to the 80 records.

The results of this study were interesting, although not completely conclusive due to the limited sample size:

1. High RVH scores did not correlate with a member's actual registration for the association's annual meeting.
2. High RVH scores did correlate with length of membership: Both new members and very veteran members (over 15 years) scored high in RVH. From this information, the Membership Dept. agreed that the web site content would need to be changed to attract more traffic from individuals between 3-15 years.

Learn More: DMSI would like to hear from other associations who have a similar interest (or success) in measuring web browsing behavior. Or perhaps those who have used an alternative approach. What are the privacy issues? We will pass along our findings in a future issue of this e-newsletter. You can contact us at Info@DesktopMarketingInc.com.
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WiseGuys Software to Link with Ecometry
Since a flattering review appeared in the April issue of Catalog Age - Click here, our WiseGuys has program has grown in both popularity and functionality. DMSI is proud to announce that by Sept, 2004, our WiseGuys Marketing Software package will be integrated with Ecometry, a popular catalog software application. This integration is part of a new contract to provide Database Marketing capabilities for a large midwestern catalog organization.

The functionality that WiseGuys provides is unique and powerful:

• The ability to score customers based on RFM analysis
• Customer Lifetime Value analysis
• Campaign Response reporting
• For B-B marketing, organization level householding.

Ecometry joins Mail Order Manager as the 2nd major catalog software application that is compatible with WiseGuys. Look for more progress reports in upcoming issues of our e-newsletter.

Learn More: Contact Bruce Gregoire at (703) 941-8109 for more details on how WiseGuys integrates with Ecometry. Click here WiseGuys FAQ (PDF)
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Data Modeling Options - Breathe New Life Into Your Marketing!
This month we welcome a guest contribution from Dave Taylor of DataLab in Gaithersburg, VA. David shares his thoughts on how to choose from alternative data modeling technologies.

Those of us in direct and database marketing know that nothing can breathe new life into an organization's marketing efforts like a robust predictive marketing model. And now that modeling technologies have dropped in price and deployment speed has increased, predictive modeling is no longer reserved exclusively for large-scale direct marketers -- organizations of all sizes can afford to implement and deploy predictive models. The impediment now lies in choosing which technology or modeling methodology is the right one to employ.

The many different modeling options available these days (RFM, Linear and Logistical Regression, Neural Networks, CHAID, CART, Genetic algorithms, etc.) have led to confusion about which methodology or technology is the best option available. The answer, quite frankly, is -- all of them. Any one of these technologies can outperform one another under different data environments and marketing scenarios.

So how do you determine which modeling technology and methodology is best for your organization? The only real way to discover which model is most appropriate for your marketing efforts is to simply try a couple out - take a few for a "test-drive."

What I am suggesting is that you should conduct an annual or bi-annual modeling competition. Test the latest modeling methodologies head-to-head to see which one truly works best for your organization -- it will certainly prove to be beneficial to your marketing program.

In very general terms, here's how it works: Take both the mailing and response data from your past direct marketing campaigns; you'll need about 12 months of completed results. Use the data from all but one campaign as the data set upon which each model will train. The holdout mailing (generally the most recent completed campaign) is used as the validation data set. Whichever model predicted the outcome of the holdout mailing with the highest level of accuracy will, most likely, be the best option moving forward. If it's not feasible to perform the competition in house, contact a few database marketing firms and have them participate in the modeling competition. Most will do this for a nominal fee.

The key point here is that every organization has a different marketing situation and unique data characteristics - so the only way to determine which methodology/technology will work for your organization is to test it for yourself.

The upside of this exercise is that the lift in response brought about by a new modeling methodology will pay huge dividends. As a direct result of these types of competitions, we've upgraded our modeling technology five times over the past 25 years; with each iteration substantially outperforming the previous modeling methodology. In fact, our most recent shift in modeling technology (in 2002) has proven to be at least of 33% more accurate than its predecessor (based on the K-S Statistic).

I believe that there really is no down side because, at a minimum, you'll discover that your current methodology is, in fact, the best option for you. And that will put the debate to rest - at least for a couple of years.

Of course, I have just briefly outlined what can be a fairly complex undertaking. If you are intrigued, but not sure where to take your next steps, give us a call at DataLab USA and we can guide you further.

Learn More: Contact David Taylor at DataLab USA, dtaylor@datalabusa.com
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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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