Customer Data Mining
For example, a major publisher with millions of subscribers across multiple titles decided to incorporate sophisticated data-driven marketing into its core business practices. As part if this initiative, it outsourced more than 40 custom-built predictive models over a one-year period. These models drove selections for the cost-effective micromarketing of dozens of products and services to the customer base.
The first model took the outside data mining company about eight weeks to build. However, several months into the relationship, the publisher asked if three models could be constructed in a single week. By then, the processes were so streamlined that this was feasible. As you can imagine, the data mining firm was able to charge a more favorable per-model price than it could have for a one-off project!
Where is Your Database Hosted?
It can make good sense for a direct marketer that hosts its own marketing database also to handle the data mining. When a company already has the data, it is relatively straightforward for it to do the mining.
Conversely, a direct marketer that has outsourced the housing of its database often will rely on the hosting company to do the data mining. This can be an efficient and beneficial relationship, provided data mining is a core competency of the data management firm.
Cost and Availability
Outsourcing will be of little value if your vendor provides project quotes that are well above your budget, or if its data mining department is so swamped that it’s difficult to schedule any of its time.
One way to ensure cost-effective availability is to negotiate a retainer relationship in exchange for an agreed-upon level of support. Often, such arrangements specify the identity of an individual who acts as a de facto employee of the client. Another advantage is that the dedicated data miner becomes totally steeped in your business.