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

In This Issue:

Dear Friends,

The fall season is usually a busy one for Direct Marketers who need to schedule their campaigns in advance of the holidays. If your budget dollars are tight, this might be the right time to look at new ways to reduce your mailing expenses. In this issue we offer some suggestions. Choose from more precise targeting using Dun & Bradstreet data, scoring your customers using RFM analysis, and/or enhancing your customer lifetime value with lower online acquisition costs.

If that sounds like a mouthful, it is, but of course we have found ways to simplify these approaches for our clients. As always, we invite your feedback, and welcome the opportunity to assist with your Database Marketing challenges as well. (Don't forget our standing offer: 15 minutes of free database advice is yours for the asking - see details below).

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

Adjunct Professor, Marketing Information Systems
Johns Hopkins University Graduate School

Database Marketing Case Study: DMSI helps Cataloger target prospects, using Dun & Bradstreet Marketplace Gold
For more than 5 years, DMSI staff have provided Marketing Database services for a mid sized catalog client in Alexandria, VA. Our client (who wishes to remain anonymous) is a for-profit subsidiary of a large national fund raising organization, also in Virginia. The client specializes in promoting advertising specialty items (otherwise known as "chatchkes") to Fortune 500 corporations nationwide, primarily through their full color catalog.

The Challenge: In 2003, in a continuing difficult economy, our client was faced with the challenge of achieving more catalog sales with less dollars.

The Strategy: The client started by printing 50% fewer catalogs from the previous year. This represented a significant savings in printing and postage for their 80 page full color catalog. Secondly, they decided to emphasize mailing catalogs to highly targeted prospects that matched their "best customers" from their Marketing Database. DMSI staff had built the Marketing Database for the client early in 2003 to provide this very type of analysis.

The Hybrid Database Solution: Client marketing staff, together with DMSI staff, enlisted the help of Dun & Bradstreet and their Marketplace Gold database to create a hybrid solution. MarketPlace Gold maintains a universe of more than 13 million business locations nationwide, all on a desktop CD-Rom. This database stores significant information (e.g. employee size, SIC code) about each business location, and is easily queried.

Step 1 involved matching the client's best customer list against the D & B database, to find the highest penetration of customers by SIC code. The target prospect audience turned out to be Pharmaceuticals, Financials, and Utilities.

In Step 2, an iterative "what if" approach was used to insure the prospect business location had a minimum employee size acceptable for highest purchasing power.

In Step 3, the final counts of prospects were then purchased for mailing from D & B, via a metering system on MarketPlace Gold. Furthermore, on a selective basis, the title of a prospect was replaced with a title slug ("ATTN: Fundraising Campaign Coordinator) directing the mail recipient to pass along the catalog to the appropriate campaign decision maker.

While it is still too early to see the entire results from the campaign, early results appear to show that the predicted level of response has been achieved, despite a greatly reduced mailing quantity. What is clear is that combining DMSI Database Marketing approaches with resources like Marketplace Gold can significantly enhance your B-B prospecting capabilities.

Learn More: MarketPlace Gold
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Marketers -- march yourself into our RFM Boot Camp!
The DMAW (Direct Marketing Assoc. of Washington DC), with 1400+ members in the mid-Atlantic area, has announced that RFM Boot Camp will be held Oct. 29, 2003. This workshop, at the UVA Northern VA Center in Falls Church, is once again facilitated by Bruce Gregoire, President of DMSI.

This workshop will provide an introduction to RFM (Recency-Frequency-Monetary value) fundamentals and more importantly, a chance to apply them. Using MS Access software, each attendee, working hands-on with a PC, will do basic RFM calculations to see how this knowledge can be used to increase campaign response (plus sales and earnings). Registrants will master the basics of RFM -- and discover new revenue opportunities in their own database.

Learn More: about RFM Boot Camp Click here to register online.
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Lifetime Value Analysis Part 3: Acquisition cost - in the online world

Background: In previous issues we have shown that Lifetime Value can be defined as "the net present value of the profit that you will realize on the average new customer during a given number of years." The key variables in actually calculating LTV are as follows:

1. retention rate: if it goes up, LTV goes up.
2. variable costs: if it goes up, LTV goes down.
3. acquisition cost (to attract 1 new customer): if it goes up, LTV goes down.
4. discount rate: if it goes up, LTV goes down (only slightly).

Acquisition cost - in the online world: the advent of pay-per-click advertising has not only lowered the acquisition cost for many companies, but made it more measurable. Consider the following: a Client of DMSI in Williamsburg, VA sells food products almost exclusively online. With their online advertising, they pay .15 cents per click thru, and experience a prospect conversion rate of almost 2%. Thus, their acquisition cost for a new customer is around $7.50. If this looks very reasonable compared to what you might expect, it is!

Using WiseGuys software from DMSI, the client was able to report a net customer lifetime value of over $100. What this indicates is that Client is getting a terrific return on their investment. For only $7.50 in online charges, they are acquiring a customer that generates in excess of $100 in net revenues over their lifetime.

And that is indeed the most effective use of Lifetime Value analysis - to assess how much promotional spending is justified by downstream revenues. Many pay-per-click approaches - including Google Adwords - use a bidding process, for the advertiser to secure a preferred position on the screen. Lifetime Value analysis would seem to indicate that this Client could bid much higher for a preferred position, and perhaps boost response and Lifetime Value even further.

Learn More: See Google's Pay-per-click information and Customer Lifetime Value info at Database Marketing Institute
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Interactive Marketing versus Internet Marketing: the defining difference
In preparing for an upcoming class at Johns Hopkins Univ., I needed to clarify the distinction between Interactive Marketing and Internet Marketing. A discussion with Dr. Marjorie Kalter from New York University helped make this distinction. Here is her version:

"Interactive Marketing is what we used to call direct-response marketing or direct marketing: that is, 1:1 communications in all media, with the goal of selling directly or building a relationship with existing or prospective customers. Internet marketing is marketing that uses the Internet as a media channel. To paraphrase Michael Porter, in a Harvard Business Review article a few years back, the Internet is not a strategy; it's a channel of distribution. Specifically, Internet marketing consists of e-mail, banner and other ads on sites and search engines, and specific Websites that sell directly to consumers/businesses or serve to build relationships with them".

Source: Dr. Marjorie Kalter
Graduate Program Director
Master's Program in Direct and Interactive Marketing
New York University

Learn More: for a comprehensive discussion of this topic, see "Internet Marketing: Integrating Online and Offline Strategies" by Mary Lou Roberts (2003). New York: McGraw-Hill.
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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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Feedback from our readers:
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Carlie Adams, President, MAC Direct

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