Database: Data Prep

While 94 percent of surveyed marketers agree that personalized marketing would result in better performance, only 16 percent of best-in-class companies actually execute one-to-one direct marketing campaigns, according to Aberdeen Group. A fundamental reason for the low rate of implementation is the lack of data quality disciplines and the limited personal attributes on file to support personalized marketing communications.

Is your marketing database ready for customized marketing messaging? Can you transform your customer database to support personalized marketing? The following will provide some answers to these questions as well as helpful tips for getting the execution right.

Personalization, 2010-Style
Advanced personalization has gone far beyond greetings and salutations. Targeted marketing includes personalized copy, creative, channel and timing decisions based on each individual's situation. The 84 percent of the best-in-class companies not executing personalized marketing campaigns carry the ball down to the 90-yard line but don't cross the relevancy goal line. They model and screen to a highly targeted base of prospects, and then they develop copy, creative, offers, etc., with little to no knowledge of the personal situation of each prospect. Hence, the incremental lift in performance is never realized.

Data quality drives attribute append rates. Append rates drive model performance. And model performance drives ROI. Personalization delivers incremental ROI, beyond model performance. If you are optimizing these disciplines, you are ready to achieve an incremental performance of up to 200 percent by implementing personalization.

Completeness, Accuracy and Currency
A number of fundamentals, when optimized, increase the likelihood of success with personalization:

• Refreshing your marketing database, at least monthly, for all records, attributes and campaign history.
• Separating your targeting practices for customers, contacts and prospects to fully exploit the transactional data across contacts and customers.
• Reaching the correct person within each household.
• Constructing response and conversion models with the most current channel-specific campaign history.
• Omitting "no hopes" or outliers from the modeled base.
• Reaching prospects via their preferred channels.
• Synthesizing modeled bases with response lists.
• Ensuring you approach customers, contacts and prospects differently.

In addition, implementing database quality management disciplines paves the way for more relevant communications. For example, be sure to consolidate customer and prospect information from all channels and establish a unique ID per customer regardless of the purchase location or method. A typical customer database contains up to 15 percent duplicate records. Cleaning and consolidating your database should take place at the individual and household levels. Key components of a successful matching process and unique ID 
assignment include:

• Key token classification
• Referential identification
• Phonetic similarities
• A final stage of verification and scoring based on pre-defined confidence levels.

Address verification and standardization also must be a constant routing, for every database update and every solicitation base. Depending on the data collection methods, up to 20 percent of a standard list includes incorrect and undeliverable addresses and phone numbers. The process of address verification, cleaning and application of National Change of Address should take place at least quarterly—and certainly before deployment of any major direct marketing campaign.

Finally, optimize attribute append rates; those for screening and model scoring should be more than 85 percent. The accuracy of appended variables should be at 90 percent and more. This varies for categorical (e.g., marital status) or series (e.g., age, income) variables. It also is important to establish more stringent and mandatory data collection rules as part of your CRM system. E-commerce purchases have forced a more complete record entry, although limited to name and address, while other profile attributes are for the most part left blank.

The Strength of the Data
The power of relevancy is undeniable. The million-dollar question is how to develop relevant offers and personalized content to meet your prospects' preferences on a customized level. Amazon has pioneered the recommendation system that is driven by past transactions. It is a standard feature in today's online world to present products that "you most likely would be interested in" based on matching characteristics and similar categories of previous products that you have purchased in the past. The challenge is how to take the product offerings to the next level and strike the right note with each consumer, resulting in higher buy/donate rates.

This is far more of a challenge across prospects where there is no transaction history. Travel companies, for example, would not be satisfied with presenting a prospect a similar trip to the one purchased previously, but need to offer a package that is tailored to the person's needs and likings, with the right attractions and features that meet the person's family situation, hobbies and preferred activities.

To accomplish that bigger goal, marketers must obtain additional attitudinal and behavioral data and then create accurate profiles for each individual. The most precise data is the self-reported information obtained from the customer. In past years, companies have offered different incentives to customers, as well as prospects, willing to fill out surveys and tell more about themselves. This approach is very costly, especially at the prospect level. The level of granular consumer data has eclipsed itself in the last five years, and it will continue to do so in the years ahead. The most prevalent examples are: age, income, assets, home values and Internet transaction behavior.

This deeper level of insight on individuals, integrated with less granular lifestyle/stage and attitudinal data plus the interactions of these variables, enables the expert database marketer to get very close to highly relevant, personalized marketing. One of the first steps in developing such customized campaigns is to determine the segmentation level you need for your campaign. The spectrum of options varies from a basic gender- and location-based segmentation all the way to full profile-based personalization. For example, cell phone companies may be satisfied with the customer's age and marital status to determine which plan to offer, while a cruise ship company would like to learn more about the individual's wine preferences, preferred sports and previous travel destinations in order to optimize the package offered.

To accomplish the best results for your campaign, you need to start with the product definition and characteristics. Recognizing the selling features of your product, or set of products, and to whom they may best appeal helps you select the type of information you would look for in your customer profile. In the example of the cruise company, certain travel packages offer more on-shore time including shopping and golfing, while other packages offer mostly on-deck activities including gambling, shows and other entertainment. Learning the individual's preferences is a key factor in creating a personalized campaign for the cruise company. Based on the individual's hobbies and known touchpoint attributes, the right package with the right creative approach will be presented to the right person with higher probability of generating interest and converting to a sale.

Personalization's Double Bottom Line
The steps outlined above aren't the full spectrum of personalization possible, but they are a good start.

Personalization has additional benefits besides increasing campaign response rates. With consistent and well-crafted personalized campaigns, your customers gain the sense that your company is tailor-made to their needs, that your company as a whole "fits them and gets them." This good will helps you retain your customers over the long haul, encouraging loyalty and word-of-mouth among their friends and families. In today's market, every edge must be used to stay competitive. A complete, accurate and updated customer database is the real competitive advantage a company has.

Renan Levy is president and COO of Intellidyn, a database marketing services agency with headquarters in Hingham, Mass. He can be reached at (781) 741-5503 x105.