The bottom line for data budgets

THE ISSUE

Just as everybody has learned to accept that we are in a recession, so they are learning to use another R-word – retention. Holding on to what you already have is a logical response to a market that offers little opportunity for growth.

So it must follow that any company adopting a retention strategy to survive the recession must also be investing in data management. Certainly, there appears to be a lot of activity in the form of invitations to tender and requests for proposals.

But how do you translate that interest into a solid business case that will persuade the board – and nervous financial directors – to commit the necessary budget? After all, to many senior managers, it might seem as if they have already spent a lot of money building their data assets.

The last decade saw a sustained period of investment into IT and the core infrastructure which generates customer data. Databases are everywhere and data flows have never been greater or faster.

Equally, the rise of direct marketing is undeniable – media have become ever more targetable and response channels more accessible. You no longer have to have spent decades working in a mail order company to understand how to address, manage and convert a prospect into a customer.

Even so, many of these investment have not necessarily paid back with the sort of data assets now being looked for. Data-rich applications are not the same as having a single view of the customer. And you will never find out everything you want to know directly from customers, no matter how many touchpoints you have with them.

Direct marketing is also having to admit to a slightly guilty secret – it didn’t always do as much targeting as it should have. In a rising market with expanding demand, the main objective is just to try and be the first choice. When it is raining, the person with the biggest bucket catches the most water.

So is the starting point for winning investment now partly about admitting to past mistakes? If data has not been as accessible, integrated, complete and accurate as it should have been, is now the best time to argue in favour of putting those errors right and building a better platform for the future?

THE SUPPLIER’S VIEW

Mark Roy

Chief Executive, The REaD Group

Marketers are wedded to a very fickle significant other – customer data. Like any long-term relationship, they can perhaps be forgiven for alternately loving/loathing their rather unforgiving partner on whom they lavish endless hours of personalisation, customisation, innovation and creativity. All they want to do, after all, is talk, engage and interact in order to build lasting relationships. That’s what old school, Nineties-style CRM promised – an IT-led solution which would increase ROI, right?

Given the number of CRM disasters that ended in D-I-V-O-R-C-E, handing the driving response wheel over to IT departments was mostly an unmitigated disaster. How pleasing it is, then, to see CRM making a welcome come-back – this time as a bona fide business ethos and not merely as a bolt-on tech application.

That it took a recession for many companies to (re)place customers at the heart of their business planning is a tad disappointing. But thankfully action is being taken, with increasing customer retention overtaking acquisition as a priority for many recently. Whether via single customer view or other data-rich applications, optimising datasets so that marketers can more cost-effectively identify and target their most valued customers is the new name of the game, in my opinion.

Now is definitely the time to correct past data wrongs

DM’s old volume-led approach likewise needs to go the way of the Dodo and be replaced with marcoms which are far more specific and multi-channel. Gone are the days when one could simply carpet bomb entire regions with direct mail pieces and blithely say, “marketing’s job is done”. Why damage your brand image, the environment and earn the public’s ire when a more targeted combination of DM and digital can increase response rates and ROI several fold, for example? Alongside r-words like recession and retention, we’d do well to add relevance and responsiveness.

Now is definitely the time to correct past data wrongs and build a better platform for the future. Adopting a more lateral, linked-up approach to data management – inclusive of standardisation, suppression, relocation, segmentation, hygiene, acquisition and defined prospecting strategies – can and will leverage more insight, increase response rates and ROI.

This is going to be music to the ears of even the most recession-hardened CEO – believe me, I’m one of them!. But be prepared. Given that the average B2B and B2C database degrades at upwards of 35 per cent and 14 per cent respectively each year, better data management definitely needs to be an ongoing project and not just a one-night stand.

THE CLIENT’S VIEW

James Morgan

Head of data and programme management, O2 (UK)

Over the years, O2 has invested significantly into its business intelligence infrastructure and technology. So one of the first challenges we faced was people saying that this had been tried before and had failed.

Directors in the company saw it as another customer relationship management project asking for support and claiming to cure all marketing’s problems. So what exactly is different this time around?

The approach we took was to go around the key stakeholders in the company and talk to them about their thoughts and issues if we were to introduce an enterprise data warehouse.

The cultural shift was the biggest challenge we faced

That identified a lot of what their problems were and gained us support for solving them.

When we started to ask those same people for funding, the response was that they’d be happy to get involved – once it was up and running. Trying to get to that stage in our programme was really difficult.

The problem with previous initiatives was that they had also gathered responses from the whole business and gone down the waterfall path of trying to write all of them into one system, then delivering it a few years down the line. But in the intervening period, business units had not seen anything and had developed their own systems and had changed their requirements.

So as O2 is a marketing-led organisation, we agreed that would be the initial area of focus for the programme with a long term vision to create an enterprise-wide solution.

Buy-in for budget allocation was gained from marketing senior management, the marketing director, chief financial officer and managing director. The challenge was to convince the marketing team that the benefits of this investment were worth capital expenditure at the expense of other marketing activities. To achieve this we signed up to delivering measurable benefits to the business from the programme at regular three-monthly intervals.

The way we were able to convince them was by identifying the cost-savings from consolidating systems, for example, and from better data quality.

We then got the marketing directorate to sign up to a hard measure, like churn, increasing revenue and top-ups on prepaid, or increasing acquisition, and persuaded them that these would improve if we gave them better data and analytics. They were signing up to spend several milion pounds out of their marketing budgets – they will be held accountable for that and any success will be attributed back to the data management programme.

We also convinced the marketing teams that the move from the old productcentric systems to a customer-centric model was critical, putting our customers at the heart of everything we do at O2. As with all major transformations in this area, the cultural shift was the biggest challenge we faced, but with an increasingly competitive mobile market, this was the right move to make.

THE SOLUTION

Like a thirsty man with water in the desert, many companies believe they see customer data everywhere. The last decade of investment into IT and e-commerce has opened up a flood of data streams. Surely those server farms must hold the businesscritical information needed to steer a path through the current recession?

They might, or they might just be a mirage. Discovering that what looked like the solution to a problem has turned out just to be a problem in its own right is the painful experience which many companies are going through right now. Hence the flood of investment into single customer view, master data management and data governance.

If the business need for better data management is clear, that does not make the business case easy to set out. For one thing, data practitioners are going to have to do something they have not previously been good at – explaining themselves to other business functions.

Data professionals are good listeners, but poor talkers. They are adept at hearing what colleagues or clients want and turning it into a technical specificiation. Seldom do they have to do the reverse and detail why they want something from the business.

Yet this is the basis on which they will gain the support and money necessary to drive through the changes outlined here. As the experience of O2 demonstrates, the data function needs to act like a product marketer – developing a proposition based on a defined need, packaging it and winning engagement from the audience.

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