Jump-Starting Your Database

Leonard Weed

The prospect of building a database can be daunting for the uninitiated (or even the initiated). Here’s some practical advice for putting your best foot forward as you define your needs and begin the process of finding the right system and vendor partner.

AS EACH YEAR GOES BY, more and more magazine publishers of all descripitons are building marketing databases. While this major investment might not be viable for publishers with small files or limited markets (see sidebar on coops as a possible alternative, page 59), a marketing database has become an imperative for many publishers seeking to grow aggressively and maintain a competitive edge.

But whether your database is housed externally or in-house, ensuring that it’s designed and built to meet all of your marketing objectives and capabilities requirements can be a daunting challenge, particularly for those new to the process.

Here’s a guide to the basic steps involved, including some insights into the vendor courtship and selection process, gleaned from years of experience in developing database applications for a variety of direct marketing and media companies.

Step 1: Educate yourself. I’m among those who strongly believe that the circulation department is the logical group to spearhead the marketing database effort. Because of your expertise in direct marketing and deep knowledge of the customer–the two major applications that a database is meant to enhance–you’re in a uniquely qualified position to be the corporate champion for the database. Although the vendor’s team is primarily responsible for the technical side, you can be the key internal contact the person who explicates your company’s marketing objectives and applications needs.

If your eyes glaze over when someone starts talking about hypercubes or neural net models, and you doze off during seminars on lifetime value formulas, your attitude will need major adjustment. The simple truth is that the more educated you are about the basics of database marketing, the more likely it is that you will be able to communicate your needs to potential partners (and perhaps even persuade them to adjust the standard cost structure to accommodate you). Efficient communication in the early stages of a database build also means less chance of misunderstandings and errors, which in turn means that you’ll see your desired results sooner.

I recommend that you start by attending in-depth database marketing seminars, such as those offered by the Direct Marketing Association. In addition, you should study some of the leading publications in the field (my favorite authors are Arthur Hughes, Don Peppers and Martha Rogers).

When you’ve built a solid base of knowledge, I recommend attending the National Center for Database Marketing (sponsored by CM parent Intertec Publishing, Direct and the DMA). Remember your undergraduate skills. Get up and attend early classes, and spend as much time as possible networking with the best database marketers.

To enable you to work with the vendor on the more esoteric processes of developing query and reporting tools to help you mine your data, you also need to have a thorough understanding of all of your data sources. You’ve heard it a million times: Databases are only as good as the data that goes into them. Become expert in every step of the source process, from forms design through order entry through file transport. This can be very nasty duty, and you’ll be tempted to delegate it. Don’t. Again, you need to understand these things in order to effectively communicate your needs to a vendor.

Step 2: Strategically align your database project with your company’s needs. This step has two main components:

* Determine your company’s strategic objectives. Take the time to meet with each member of the executive management team to ensure that your assumptions are dead on.

* Review your current information technology and management processes.

Step 3: Organize an internal project team. As the project’s champion, you will probably want to personally put together the project team that will define the business requirements of the project. The team should include a representative from each operational area. Make sure that you cover every area that will use, interface with or be impacted by the database. If you’ve taken on the leadership role, you should also be willing to take responsibility for keeping the project on target.

Step 4: Focus in on your objectives and stick single-mindedly to these. Start by performing the most extensive needs analysis possible, given your time and budget Work closely with your team members, but don’t just assume that other departments will uniformly cooperate in devoting time and energy to determining what impact the database will have on their operations and marketing. Where necessary, take charge of making sure any gaps are filled.

Once you’ve zeroed in on your objectives, repeat them continually to yourself, the project team and others in the company. You’ll make believers of everyone around you, and cut many wrong turns out of the building and implementation process.

Step 5: Get your arms around the full scope of services that you want. Use the following list of database service features as a starting point, then prioritize all of the items on your applications/capabilities list. Decide which items are mandatory, and which items are desirable but expendable.

* Broadcast email

* Customer/prospect mall programs

* Database creation/management

* Database enhancements and overlays

* Database marketing strategy/consulting

* Database research, including modeling and mining

* E-commerce

* Foreign addressing capability

* File transfer protocols

* Fulfillment services

* Inbound telemarketing

* Internet services

* Lettershop services

* Merge/purge

* Outbound telemarketing

* Promotion history and contact management

* Response management/tracking

Step 6: Create and send an RFP to a short list of marketing database vendors. In developing your short list, use vendor information gathered through your contacts at conferences, supplemented by phone calls and networking with vendors and colleagues at other companies who have built similar types of databases.

The RFP itself is based on information gleaned from your strategic alignment and scope of service documentation. (See page 44 for a guide to creating the REP.) Analyze RFP responses carefully, get answers to any remaining gray areas, and prepare to meet with the two or three vendors that seem to best match your needs.

Step 7: “Market” yourself to potential vendor partners, and also internally. You should prepare a concise marketing presentation that will allow your potential partners to gain an appreciation of your focus and objectives. Just as you need to assess their capabilities, they are looking to assess how well you’ve defined the project, how realistic your goals are, and the general viability of your project.

Be aware that the largest database suppliers are in a position to pick and choose their projects, and that even suppliers who are eager to take on your project may be more likely to be negotiable on some points if you demonstrate that you’ve done your homework and are ready to be a productive partner. Remember: Even smaller database builds represent substantial investments, not just in hardware and software, but in terms of the vendor’s skilled staff time and resources. You should understand the market factors that drive your solution provider’s business.

While you want to demonstrate that you have a handle on your objectives and needs, you must also be willing to ask lots of questions during and after the vendor selection process. When the subject at hand becomes too thick, pursue it until you really grasp the issue. When it comes to marketing databases, no one knows it all. A good database build relies on a good relationship between the provider’s and customer’s teams. You need to work hard to establish this early on, before common errors and issues resolution get in the way. Your interest and curiosity should be the foundation of mutual respect.

You’ll also need to market your project internally. Begin by practicing your marketing presentation on colleagues in various departments. Then, once you’ve selected a vendor and the database build is under way, use your project team to “sell” the database’s functionality to your entire organization.

Although calculating ROI for your database will become easier as you are able to integrate the database cost/benefit model into your corporate accounting system, some people within your company (and even within senior management) will not truly grasp the potential benefits of your project, or the potential loss if it fails. Be ready to pull out your laptop and proselytize about the innovations and successes that the database will make possible.

If you run into questions you can’t answer during your internal “sales calls,” you should revisit your strategic alignment and scope of service statements while there’s still time to make midcourse adjustments.

Step 8: Be prepared to devote much of your time and energy to the build for its duration. Once you’ve selected a vendor partner, they will take you through all of the steps and functions for which your team is responsible, and supply a timetable for each. As the person responsible for keeping things on track at your end, you’ll need to be on call throughout the build process and ready to jump in to discipline any laggards or help resolve snags. (The build process can take anywhere from four months to a year or more, depending on the project’s complexity.)

Keep the faith. A database build is always intense, time-consuming and challenging. But I can promise you that if you manage to find and partner with the right system provider, and build a database that contributes to your company’s revenue base, profitability and growth, your success will be the envy of your peers and a sure boost to your career.

Leonard Weed is founder and president of DirectTrix a database consultancy serving a variety of direct marketers, including magazine publishers. Prior to founding DirectTrix in 1999, he was associate circulation director for EMAP Petersen, where he successfully led the creation of the company’s first marketing database.

CREATING THE REP

For the client, the creation of the RFP, or request for proposal, is easily one of the most critical steps in a marketing database build. This document should serve as the guiding force for determining the interest levels, qualifications and pricing structures of various prospective database vendor partners, as they relate to your project

The more detailed and complete this document, the better the chances that the whole project will be successfully completed. It should come as no surprise that preparing a thorough RFP requires extensive research and lots of time and meetings. Before you put an RFP on paper, you need to have a crystal clear understanding of your objectives and capabilities/service requirements.

To get you started, here’s an outline of the major components of a marketing database RFP.

Introduction And Background This section introduces your company to candidate vendors. It provides a brief background of the company’s organization, customers and products, and central missions, as well as a clear description of the core objectives driving your decision to build a marketing database. From a high-level perspective, what is it you want to do to improve your business?

Database Requirements Overview This part of the RFP gets into more of an explanation of the marketing requirements for the database, and will spell out for prospective vendors specifically what you expect of the completed tool. It should contain:

* Functional objectives, such as expectations for name selection capabilities, query tools and analytical capabilities;

* An explanation of the contents of the database, including an outline of all of the broad categories of data;

* The interactive requirements of the publishing staff (what hardware and software will be needed?);

* Timing of updates;

* Explanations of the quality controls in place at your various vendor sites.

Vendor Response Requirements Here, the document details the timetable for the RFP and vendor selection process. This section should also explain how the vendor responses should be formatted, and to whom the completed proposal should be sent. (By the way, it’s smart to obtain a confidentiality agreement from each vendor participating in the RFP process.)

Data Sources And Elements This is a detailed presentation of all of the data sources that will be flowing into the marketing database, including how often they are updated and their estimated volumes. In some cases, vendors will need to see file layouts in order to understand how complex your data sources are. For magazine publishers, the largest data source is usually the subscription fulfillment file, of course, but you also need to detail sources such as product sales and advertiser response vehicles. Be sure to provide detailed explanations of any Internet-based sources.

Reporting, Counts And Query Requirements This section gives prospective vendors an idea of how you’ll want to see data reported off of the database. You’ll need to see reports on routine updates and maintenance, as well as various marketing reports to help you run the business.

This is also the place to discuss the level of querying that you will need to perform on a regular basis. The quality of a vendor’s query tool is often an important consideration when choosing a solution provider. Most publishers want to do routine queries themselves, and some have the staff expertise to handle more complex queries–if the tool allows for that.

Modeling And Selection Requirements Assuming that selection modeling is one key application objective for your database, the RFP must spell out each type of modeling (regression, neural networks, tabular, etc.) that the marketing staff intends to employ. This section should also provide an estimate of how many and what kinds of selections are likely to be made over the course of a year.

Update Requirements The vendor needs a clear picture of how the publisher wants updates to be handled. This section should detail promotion code and account number requirements, lay out your guidelines for purging or cleaning up outdated files and data, and explain how you expect data to flow. (In most cases, you’ll want updates to be able to flow in both directions, since it’s likely that some information will need to be passed from the database to the fulfillment file or other systems.)

Marketing Analysis Requirements List any special or unusually complex analyses that you wish to perform on an ongoing basis, such as lifetime value analysis. The vendor will need to plan for these as part of the database’s design.

Patrick E. Kenny

CO-OP DATABASES: ANOTHER OPTION

Today, even large magazine publishers are participating in cooperative databases, for purposes ranging from data enhancement for list rental sales to prospecting. And co-ops can also provide at least a partial solution for smaller publishers who’ve decided that attempting to build a dedicated marketing database is, at least for the present, just too much of a drain in relation to the potential upside in their particular markets.

In the magazine publishing arena, there are two such co-ops: Experian’s CircBase (exclusively for publishers, but linked to Experian’s Z-24 catalog database) and Abacus Direct’s Publishing Alliance (a publishing segment within the larger, catalog-driven Abacus Alliance cooperative).

Participation in these databases has been growing rapidly, particularly in the past few years, as a result of the stampsheet crisis, declining direct mail response rates, drooping single-copy sales and all of the other problems associated with meeting rate base for less than the cost of the annual national trade deficit.

CircBase now has 226 magazine title participants totaling 81 million subscribers, and the Abacus Publishing Alliance has 150 magazines representing 38 million magazine and newsletter subscribers (as well as 1,400 catalogs, all of which total to about 88 million household files).

Both of these databases contain marketing functionality that is particularly exciting to smaller, niche publishers who are struggling to find targeted new names and looking to apply the database edge to their promotion and information activities. Essentially, the co-ops allow an individual publisher to tap into the power made possible by combining subscriber data and real, live transactional data from catalogs (purchasing recency, frequency and monetary, as well as type of products purchased).

In addition to the potential prospecting benefits, and potential for helping to enhance list rental revenue, co-op participation may help a publisher gain valuable insights about its subscribers, increase the effectiveness of expire reactivation efforts (Has a former subscriber suddenly reactivated his or her interest in a sport or hobby, as indicated by catalog purchases?), and even draw in new advertisers or gain incremental pages from existing ones through value-added applications (by, for example, allowing a title to identify subscribers who are actual purchasers of a given type of product, to help retailers target promotions).

There are those who argue that the types of transactional data that’s so critical for catalogers won’t prove as useful for magazines. Only testing will show you whether co-ops are cost-efficient for you. (Neither of the co-ops mentioned above charges for membership or for the models created to serve your needs. Both charge $60 per thousand for subscriber prospecting and between $35 and $40 for expire reactivation.) You should also understand going in that the access to your data will not be as quick or personalized as with your own application.

However, you’re sure to benefit from having access to the data mining experts in these co-ops, who will happily introduce you to the world of database marketing. For my money, this is a good way for the faint-of-heart to get their feet wet.

One more thought: You may also want to investigate the possibility of creating a proprietary cooperative with a group of like-minded, like-sized publishers.

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