Are You Equipped?
Think twice before attempting to build your marketing database in-house
March 2008 By Arthur Middleton Hughes
|
Most successful data-driven companies outsource the construction of their marketing databases. Why? Because it is cheaper and faster, and the product is better. To use a ridiculous example: It would be possible to go to auto parts suppliers and assemble a company truck from spare parts. Since it's more than likely that no one in the company has ever done this before, it would take a year or more, be quite expensive and would certainly not perform as well as a production model bought from GM, Ford or Chrysler. But as an advantage, your staff would now know how to build a truck from spare parts. The problem with this approach is that most companies are not in the truck-manufacturing business. They are in some other lines of work. Building a truck would be a costly diversion from their core businesses. And, during that year, these companies could not use their trucks to make deliveries.
The same principle applies to building a marketing database from spare parts. No one in most companies (including the IT department) has done this before. Since there is a learning curve associated with each process, it takes a long time. It takes time to study the available software packages (there are scores of them), as well as to install and learn to use the ones chosen. When the database is finished, it's not likely to work as well as one built by some experienced service bureau that already has built dozens of marketing databases and has a trained technical staff whose only work is building and maintaining these structures. Finally, you cannot get any benefit from the home-grown database during the year or more needed to build it. You get the benefit only after it is up and running.
Once your database is up and running, it can be migrated to in-house maintenance at any time. However, if the database is built correctly, your marketers could be so happy with the results of using it that they will forget about wanting to maintain it. When you are driving a new BMW down the interstate at 75 mph, who wants to stop and become a garage mechanic?
What Some Companies Have Done
Many companies believe they have to build their marketing databases in-house on their own mainframes. And some have been successful. Kraft General Foods, for example, built its huge customer base on its internal mainframe. The majority of large corporations, however, have outsourced their customer databases, and even Kraft finally realized its mistake and turned to outsourcing. Why is that?
The same principle applies to building a marketing database from spare parts. No one in most companies (including the IT department) has done this before. Since there is a learning curve associated with each process, it takes a long time. It takes time to study the available software packages (there are scores of them), as well as to install and learn to use the ones chosen. When the database is finished, it's not likely to work as well as one built by some experienced service bureau that already has built dozens of marketing databases and has a trained technical staff whose only work is building and maintaining these structures. Finally, you cannot get any benefit from the home-grown database during the year or more needed to build it. You get the benefit only after it is up and running.
Once your database is up and running, it can be migrated to in-house maintenance at any time. However, if the database is built correctly, your marketers could be so happy with the results of using it that they will forget about wanting to maintain it. When you are driving a new BMW down the interstate at 75 mph, who wants to stop and become a garage mechanic?
What Some Companies Have Done
Many companies believe they have to build their marketing databases in-house on their own mainframes. And some have been successful. Kraft General Foods, for example, built its huge customer base on its internal mainframe. The majority of large corporations, however, have outsourced their customer databases, and even Kraft finally realized its mistake and turned to outsourcing. Why is that?
Companies Mentioned:
 |
|
The Business of Database Marketing