State of the Industry-1999 (2,293 words)
Data Challenges and Benefits
Since 1992, database usage has increased 58 percent—85.4 percent of all respondents now use one. No wonder that data management registered on our survey as the top internal challenge for four out of 10 direct marketers.
Martha Rogers, influential author of "Marketing 1 to 1" and co-founder of Marketing 1 to 1 consulting and training group, explains, "In six years, database prices have halved four times. Now databases are affordable. In fact, you can't afford not to have one."
While direct marketers have jumped on the database bandwagon with alacrity, many of the databases are not working as hard as they should. Our survey revealed that the usage of database marketing techniques such as segmentation (35.3 percent), modeling (16.6 percent ) and cross-selling (26.2 percent) trails.
"It's easy to hire someone to set up the software, but it's hard to make money with it," explains Arthur Hughes, a well-known database expert who is executive vice president of Reston, VA-based ACS Inc. "Some people are realizing that they're not making any money with their databases. When people say they use their databases to segment, it may not mean much. I know a big company that segments its database every year, but then it mails everybody the same thing. What's the point? The problem is that when you create segments, then you have to manage each one separately."
Martha Rogers explains that most databases are too new to have been implemented correctly.
"When we've worked with our clients it seems that everyone is still bogged down in setting up better logistics and better methods," she says. "Direct marketers haven't gotten around to using their databases for modeling and cross-selling because they're still at the stage where they're using them to manage their back-end."
Hughes believes that many marketers put databases into place because they think they should, and only find out later that database marketing doesn't work for everyone—packaged goods manufacturers, for instance, or everyday-low-price retailers like Wal-Mart. For other direct marketers, effective use of databases is limited by the lack of those who know how to leverage them.