The Land of Confusion
I visited the Land of Confusion, searched for the holy grail, opened ancient tombs — even talked to dinosaurs — and came back with some interesting observations.
- Why is true Database Marketing virtually unknown in South Africa?
- Is it just a more sophisticated form of Direct Mail?
- Does it mean everything’s direct?
- Will traditional Advertising disappear?
- Is a database all you need to make it work?
- Does the customer really benefit?
- And how will it affect you?
“We play the number game”, the managing director of a very well-known direct marketing company pointed out to me shortly after my arrival. This showed me again how far back in time I travelled that morning;
personalised yet mass-oriented and often hopelessly irrelevant Direct Mail was all that mattered in his world – nothing but numbers. I expected expert opinion and a stimulating information exchange, but whatever he said, it was outdated and in total disregard of the new marketing paradigm. In fact, he was void of anything relevant to the subject. Was that the shape of things to come?
Slightly shaken, I ventured into even farther territories – advertising agencies. If they spot trends accurately, surely some alarm bells must ring in their heads. Not that Advertising will disappear altogether, but rising media costs, increasing pressure from clients asking for more measurable results, and a fragmented market don’t make their lives that much easier either. But wherever I looked, read and listened, the majority seemed to be unaware of the danger lurking at every corner – strange times, indeed.
Despite the overwhelming advantages of this new approach, Marketing in South Africa is still Advertising and Sales Promotion, with the odd Direct Mail thrown in as a rather exotic ingredient, and hardly anyone seems to be practising what is quickly becoming the norm in competitive arenas.
Very few display interest in an honest dialogue with the customer, and have the facilities and procedures to cater for such an approach. Most of them don’t seem to see the link between long-term, database-driven customer satisfaction and profits, and how much true Database Marketing could complement, enhance, and improve their business operation. So does this mean that no real competitive threats exist for South African companies?
Traditional comunications have never been adequate to establish a foundation from which the company can establish a process of dialogue and feedback with individual customers. Even now that more companies are discovering the database, the majority is ill-informed and advised. They start off with something that is already outdated, and likely to be more costly than effective.
So, what is Database Marketing all about then, and what impact is it supposed to make if it hasn’t replaced traditional marketing methodologies yet? Firstly, Database Marketing is extricably linked to Relationship Management; if one fails to recognise this, all attempts will be half-hearted, and end in an expensive and frustrating Direct Mail cul-de-sac, instead of a coherent and highly beneficial system.
Database Marketing is simply using your own customer database system as the central tool and resource for marketing decision-making, aimed at achieving profitable and long-term customer satisfaction – so it’s
everything but just for mailing purposes. Relationship Management is creating the foundation for a mutually beneficial information exchange via a climate of trust and respect, which provides the company with the knowledge required for an intelligent and efficient marketing process – including all four traditional elements of the mix.
But who else shares this viewpoint? Stan Rapp, co-author of ‘Beyond MaxiMarketing’, emphasises that an holistic view needs to be taken: “Prospect or customer database-driven strategy drives the other marketing components. This strategy shapes the advertising message, sales promotion and direct marketing, leading to a goal that is both short-term and long-term maximised sales results.” What most marketers don’t realise, however, is that the database is also an ideal planning and forecasting facility – and not only for them. It can assist production, distribution, finance, in fact anyone in making quality and timeous decisions.
Nevertheless, the major goal for any organisation embarking on a true Database Marketing strategy is to determine the customer’s lifetime value. Don Peppers and Martha Rogers, in their book ‘The One-to-One Future’, once more stress its importance: “The central proposition, the defining goal, for any business in a One-to-One world, is share of customer.” And: “Today’s mass-marketing paradigm has no need for interactive media and computers that track individual customer transactions linked over time. Tracking customers and conversing with them individually are not tasks that fit into a market-share approach to competition.” How to get it right? Peppers and Rogers believe that “The most indispensable element of your relationship with each of your customers in the One-to-One future will be dialogue and feedback. What do customers really want? What does *this* customer really want?” Again, the emphasis is on the customer’s individuality and on long-term need satisfaction, which isn’t always sales-related.
But a database and some data gathering mechanisms alone won’t make it. According to John Fraser-Robinson, a leading UK direct marketing consultant and author of “Total Quality Marketing”, a new breed of managers is required to cater for the needs of individual customer communication. These ‘hybrids’, as he calls them, understand both the world of Marketing and Information Technology, as well as the implications the One-to-One paradigm has on the organisation’s communication and corporate strategy. It will be the hybrids who will ultimately shape the organisation, who fuse data processing and marketing departments into one profit-making entity, and who create the right environment for long-term Relationship Management. But most importantly, you need the support from everyone involved, otherwise you run the risk of getting sabotaged, which can seriously damage morale and corporate image. Last but not least, you need to adapt your organisational structure, but this will often happen on the side while “re-engineering” other areas or departments.
But how will the customer benefit? Doesn’t this methodology raise the cost of the products, too? Firstly, the customer knows and appreciates that the company has his best interests at heart. He knows that whatever communication he is exposed to, it will be relevant. Although it’s common knowledge that customers are prepared to pay extra for certain services, more accurate targetting and better timing allow the company to save extensively on their now measurable communications – which is also where the main threat for traditional advertising agencies lies. In the end the customer might also enjoy lower prices. In addition, the knowledge the Relationship Manager has of his customers, can also benefit both arties in areas other than the organisation’s traditional line of business.
So what it will mean for you, the marketer? It will mean a change of heart and attitude. It will mean a not-to-be-underestimated commitment into time and resources, but will pay off handsomely if done properly.
Initially, it may make your life more complex as you learn new ways of dealing with customers, and set up the infrastructure to cater for this approach. Later on it will make your business life and the environment you operate in far more predictable and profitable. Less stress and destuctive conflict are but a few spinoffs, and subsequently more time away from the office will also mean a more satisfying personal life.
Database Marketing and Relationship Management will ultimately bring back the personal touch to so many things that have experienced a lack of it for almost three decades. However, if you think this is esoteric nonsense, just wait until your competition discovers it – the results can be devastating. But that doesn’t mean that the winner takes it all; there is plenty, yet very little for those who remain ignorant. And in case you wondered, the Internet will speed up this process exponentially.
Stepping back in time for a last time, I recalled James Rosenfield’s words at the 1991 SADMA symposium: “Once technology rolls over you, you’re not part of the steamroller, you’re part of the road.” I hope you take note – or become part of the road.
