Two Paths for Database Marketers (November 19, 2001)

By Richard N. Tooker
Senior Vice President Database/Interactive Marketing, DMW

As we approach 2002, the business world seems to be at a crossroads. One road takes us to a future in which companies are reengineering to put the customer at the center of the enterprise, the other to a path of contraction in which companies focus on the bottom line and make minimal investments in relationship building.

I believe there is no right or wrong path. Either can help weather an economic storm, depending on the nature of the individual enterprise.

For businesses that sell commodity-type products (low margin, high-volume, largely undifferentiated services) retrenchment and conservation probably make sense when times get tough.

But for businesses with a unique value proposition and a product or service that can be cross-sold, sold up or sold again, an economic slowdown sometimes presents a great opportunity to build customer loyalty and market share if marketing resources are available.

When the going gets tough… For some organizations, business can actually improve in an economic slump. At one point in my career I worked with some large, sub-prime lenders during both good times and bad. As you might expect, the demand for credit among lower-income consumers increases dramatically when jobs are scarce. As long as the lender can judiciously mitigate risk, there are great pockets of opportunity in an economic slowdown.

Of course, that’s not true for the vast majority of businesses. But in my experience, heavy scrutiny on the bottom line can benefit smart direct and database marketers greatly because it drives organizations away from mass marketing and toward a more focused approach to the marketplace. Though many businesses using direct media will forego investments such as technology upgrades in the next year, just as many organizations that traditionally use broad-based media will opt to spend more of their advertising dollars in a more targeted manner.

CRM: Is It Dead Yet? Customer Relationship Management is not dead, but it seems to be morphing into something that strongly resembles traditional database marketing.

Aside from cultural and expense issues, the core problem with CRM is that most of the technologies presuppose that the majority of one-to-one interactions will be initiated by the customer. But I know of no business that can afford to wait for the customer to ask to buy something. Marketing is a proactive exercise. Something has to generate customer interest, and that’s what database marketing is all about.

I have no doubt that at the same time CEOs are putting the brakes on the massive technology and infrastructure investments required to implement enterprise-wide CRM, there will be a renewed interest in targeted customer communications that create sales. This is extraordinarily good news for database marketers.

The Jaded Consumer. My favorite newspaper columnist is Dave Barry, whose humor column in the Miami Herald is syndicated nationally. In his August 12 column, Barry said that "marketing experts know that if you call something by a different name, people will believe it's a different thing. That's how ‘undertakers’ became ‘funeral directors.’ That's how ‘trailers’ became ‘manufactured housing.’ That's how ‘We're putting you on hold for the next decade’ became ‘Your call is important to us.’"

The point is humorous, but it’s also on target. I think that consumers have our number. They know that marketers sometimes try to build value out of thin air, and they’re no longer buying it.

My advice to any company worried about the near-term economy would be to take a long, hard look at how it handles customer communications. A concentration on providing real value to its customers and effectively communicating that value should pay big dividends.

Technology vs. Strategy. Finally, the prevailing language of marketing at business conferences seems to have taken a positive turn away from technology back to a focus on strategy.

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