Building A Data Warehouse (1,009 words)
by Eric Cohen
To understand how to develop a database marketing solution, it's important to first understand what a database marketing system is and how it can positively impact your business. A database marketing system starts first with the data you have in your customer database.
Take Inventory: What Do You Have?
Similar to taking an inventory of products, you should inventory your data. Your data may be centrally stored and managed in one place, or it may be distributed throughout your business, as well as potentially stored in the databases of your business partners. Identifying the sources of data, and understanding how that data will be used over time are critical for collecting a comprehensive view of your customers. From the data you collect, you can determine the answers to the following questions:
• Where do your customers live?
• What have they purchased? What have they returned?
• How often have they purchased?
• How did they come to you initially?
• How do they order? Phone, mail, Web?
• What do you know about their families? Occupations? Payment histories?
If you're marketing in a business-to-business environment, are multiple people from the same company ordering your products? What about headquarters vs. branch offices? The answers to these questions—and more—are the gas that will run your database marketing engine. Additional fuel to your engine is knowing how your organization intends to use the data. Most likely, everyone in your organization will not require to see all of your customer data, but will be required to see everything in the data you have collected about a particular customer or industry-type of customer. And, like a car, the more gas you have, the further you can go.
Shop Around: What Do You Need?
In addition to the data you collect internally, consider external data that could be appended to your customer database, such as demographics (income ranges, ages, race, marital status, household type, etc.), neighborhood lifestyle clusters, purchasing behavior, media preferences, credit history and more. Think of every available database, evaluate its usefulness, and then obtain it to add to your file.
The gathering of data—and the organizing of it—is the first step in building a powerful database marketing system. The power of your system will come when you combine your data with the database systems and tools to maximize the information presented in the data you've gathered. Decision support tools can be utilized to identify customer trends and will provide the summary data about your customers to develop marketing strategies. These tools will produce valuable reports that can be included in your marketing material, as well as what is presented to your company's management. In addition, today's database tools can be set up to automatically send out electronic notifications across the Internet. These promotions or product announcements are triggered by indicators within your customer data.
In addition to knowing that Mary Smith purchases Christmas cards every year, you now know that she also purchases gifts for her children's birthdays (you also know the dates so you can send reminders 30 days prior to their birthdays). You know the sex of her children, so you can recommend gifts. You know that she initially responded to a catalog but seems to ignore all of the other mailings you send, which means you can now reduce your postage costs. However, she's very responsive when you send a special offer that provides her with cost savings. You also know that your savings coupons in the local paper draws Mary to your retail outlet because she uses her preferred shopper card when she checks out. Once she is in the store, one of your trained salespeople can upsell Mary with additional merchandise, providing even greater richness of purchase history data. Wow!
Combined, all of this information allows you to do more customized and targeted marketing—particularly important in this era of increased competition. You can now measure the results of your efforts so you can continually increase your response rates, reduce costs, target current, as well as potential customers, and improve your customer service. You also get a leg up on the competition in terms of which new products—and outlets—will succeed.
Get Organized: Build a Data Warehouse
Now that you have this information, what do you do with it?
The objective is to centralize your customer data into a single repository, known as a data warehouse, where the appropriate decision support tools can be utilized for data analysis and trending. Initially, you will need to identify the data elements from the source databases that include their data definition. Then, you create a common set of metadata to relate the data to ensure consistency and integrity. Lastly, rules are developed using the metadata to perform extraction and transformation. These rules allow the data in the warehouse to be updated according to your business needs.
The structure of your data warehouse is primarily dependent on how you plan to use the data. If all the customer data in your warehouse should be available to all of your users, a Relational On-Line Analytical Processing (ROLAP) structure is recommended. If only subsets of the data need to be available to various departments in your company, then a Multi-Dimensional On-Line Analytical Processing (MOLAP) structure is preferred.
You will find that a data warehouse solution will facilitate sophisticated analyses across large volumes of data and enable you to visually drill up, drill down and drill through to your source data. You'll be able to play "what if" scenarios and automatically extract hidden predictive information from your databases. Most importantly, you will be able to visualize your data by finding a clever way to make sense of, and display, huge amounts of data stored in your corporate databases.
Eric Cohen is vice president of CACI Marketing Systems and Mark Bloom is vice president of CACI Enterprise Systems. CACI is a provider of demographic, consumer and business information systems and solutions. CACI has offices in Arlington, VA, (800) 292-2224, and La Jolla, CA, (800) 394-3690.