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

In This Issue:

Dear Friends,

Michael Jordan fails on 50% of his shots. Ted Williams actually failed 60% of the time the year he hit .400! But if you failed to succeed with your projects 50% of the time, would that be satisfactory? Absolutely not - and yet, 50% is the failure rate commonly cited for implementation of CRM (Customer Relationship Management) applications.

Why such a disastrous track record? This month we include a CRM checklist that may help to explain why.

We also provide insights into the new Microsoft CRM package, from a Database Marketing perspective. As always, we invite your feedback, and ask that you let us know how DMSI can help with your Database Marketing challenges.

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

Adjunct Professor, Marketing Information Systems
Johns Hopkins University Graduate School

CRM Checklist: Are you ready for a successful start? 10 questions.
One of the reasons for the high failure rate in CRM implementation is the difficulty of implementing new technology. But a more important reason is that true CRM requires a corporate re-focus on the customer.

One of my graduate marketing students at Johns Hopkins discovered a great text that covers CRM extremely well: Performance Driven CRM ¹, by Brown & Gulycz. This book provides a checklist to evaluate whether your organization has the customer focus need to begin a CRM implementation. The following is an abstract from the original 20-question check-list. (Learn more below.) Rate your own organization on a score from 1-5 (1: "to a very limited extent", and 5: "to a very great extent") to see if you have what it takes to succeed with CRM:

1. Customer segments are well defined.
2. The company uses customer satisfaction surveys for understanding customer needs and what satisfies and dissatisfies customers.
3. Human resources management practices empower all employees to participate in improvement initiatives.
4. Employees at all levels receive the education and training they need to participate effectively.
5. Senior executives are personally and visibly involved in demonstrating that improved customer satisfaction is a high priority strategic goal.
6. Customer service performance measures exist at the organizational, departmental and individual job levels and are widely publicized and acted upon.
7. Communication is frequent and informative.
8. All employees are aware of their internal customers and suppliers.
9. The working environment is conducive to the well-being and morale of all employees.
10. The organizational hierarchy does not inhibit effective and constructive two-way communication over process improvement issues.

Learn More: Read Performance-Driven CRM: How to Make Your Customer Relationship Management Vision a Reality ¹ by Stanley A. Brown (Author), Moosha Gulycz
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Lifetime Value Analysis (LTV) discussion - for serious marketers only…

Lifetime Value Analysis (LTV) is one of those marketing topics that nearly all marketers talk about but only a few measure. Instead, marketers spend extraordinary advertising dollars on acquisition (e.g. Super Bowl ads) rather than retaining existing customers. The question always arises: Why? Let me take a shot at explaining the why - and provide a tool for you to measure your own LTV.

First a definition: Arthur Hughes ("Strategic Database Marketing") defines it 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).

By far the most controllable variable for a marketer is your retention rate. It turns out it is also the most influential on LTV. Then why hasn't this become a mainstream tool? Perhaps marketers don't want the headache of measuring the variables for their own organization. Perhaps marketers are generally creative types and not quantitative by nature. More likely, perhaps marketers don't have a database that can yield the data for the 4 variables that they need.

Learn More: Contact DMSI at (703) 941-8109 for a complimentary copy of our Lifetime Value Analysis spreadsheet (in Excel). You can then perform "what if" analysis on the variables from your own organization, and calculate your own customer lifetime value!
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Microsoft CRM and Database Marketing
In January, 2003, Microsoft released its long awaited CRM (Customer Relationship Management) application. This release is significant for database marketers, from both a technical and marketing user standpoint. A recent demonstration I attended revealed some of the nuts and bolts functionality. The following provides a brief summary of what this release really means.

On the technical side, the major feature of the CRM application that it is the first Microsoft ".Net" application (pronounced "Dot Net"). Dot Net is a way to provide integration between databases using the web. Secondly, the package is really an integration of 3 separate Microsoft packages:

1. Great Plains Accounting
2. MS Outlook
3. a Customer Service package.

Finally, the database application is SQL server based.

From a marketing user perspective, MS CRM functionality is focused in two areas: Sales Force Automation and Customer Service. The Sales module is targeted at mid-level organizations, with a remote sales force, that needs a standardized and consistent way to handle prospects. The Customer Service module contains a "knowledge base" and tracking for cases, accounts, contracts and products. Here are some details:

1. Prospect data entry: this is done through Outlook, either on-line or off-line. Prospect lists can be imported, but it is significant to note that no merge/purge function currently exists. The presenter at the demonstration I attended mentioned that this would likely be available in future versions.
2. Customer Order entry: MS CRM facilitates the order taking process but in fact does not actually store product/service data. This data (including pricing, quantity available, etc) resides in the back office accounting application (e.g. Great Plains).
3. Management Reports: Crystal Reports functionality is "embedded" into MS CRM, with more than 100 canned reports available.

The value for database marketers is particularly apparent in prospecting. To dramatize this, Microsoft staff quoted from Gartner Group and Meta studies that "7-10 touches are needed to convert a lead into a customer." Presumably many of these touches can be email broadcasts, as part of a coordinated Interactive Marketing campaign.

It is easy to see how database marketers can launch targeted e-mail campaigns to selective audiences with varying frequency and message. In terms of advancing prospects through the sales cycle, the initial version of MS CRM seems to support this quite nicely.

However, most database marketers still rely on traditional direct mail campaigns and sophisticated analysis of customer transactions to target their audience. They will want to look forward to a future release, when the necessary merge/purge capability is incorporated.

Learn More: www.Microsoft.com/crm
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MOM's kitchen - the place for users of Mail Order Manager

Attention MOM users: The Wise Guys™ are coming!
No, we don't mean gangsters! The Wise Guys™ from DMSI are a suite of smart & powerful marketing analysis tools running on Microsoft Access. These tools analyze your customer and transaction database to produce key marketing metrics like RFM and Lifetime Value.

1. Wise Guys can link to most commonly used order entry systems, including Mail Order Manager. Benefits to you: no need to import or re-key your data - just link and begin!
2. Wise Guys performs "householding" of customer records. This allows B-B marketers to see the aggregate purchase activity of multiple individuals in an organization.
3. Wise Guys can answer very important questions for marketers:
         a. Who are your best customers?
         b. What is the net Lifetime Value of your customer base, by customer type?
         c. How can RFM (Recency, Frequency, and Monetary Value) scoring of your customer
         base help you target your customer mailings (and save you printing and postage)?
   
4. Wise Guys provides Customer Data Mining: This works very similar to Amazon.com's "recommendations". If your customer buys product X, what is the most likely companion product they will also purchase? The Wise Guys will tell you! This feature allows you to add recommendations to your MOM database and your web site, which will expand your cross-selling revenues!

Learn More: Wise Guys will be released in June, 2003. Complete details on Wise Guys will be available at that time at www.DesktopMarketingInc.com/products.htm
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Close to home: for DC-area Database Marketing organizations
Astonishing News for Associations and Non-Profits!


In our 5 year history, DMSI has assisted numerous associations and non-profit organizations in the Washington DC area. From this experience (and previous experience locally), we have seen first-hand how difficult it is for these organizations to coordinate truly integrated campaigns with their local affiliates in the field. Typical issues include distributing promotional materials, maintaining consistent graphics standards, timeliness of distribution, etc. We were recently introduced to a solution that is, well, quite astonishing: "AstonishingMail."

Using web based software, AstonishingMail is the easy way to produce top-quality brochures, direct mail letters, posters, statement stuffers, postcards, and whole integrated campaigns. For Associations and non-profits, you can customize an individual version of your marketing collateral to fit the individual needs of your affiliates, and still maintain the professional look required by the parent organization. Best of all, the entire process of printing, folding stuffing, sealing, addressing, sorting and delivering can be done in days rather than weeks.

Learn More: Read how AstonishingMail can help your Association or non-profit organization at www.DesktopMarketingInc.com/astonishing.htm
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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.
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Web site: DesktopMarketingInc.com
E-mail: Info@DesktopMarketingInc.com
Telephone: (703) 941-8109
3814 Bent Branch Road
Falls Church, VA 22041