Database Marketing Survey

As seen in the DMA 2001 Statistical Fact Book

Background Drake Direct, a database marketing consulting firm, in an effort to gauge satisfaction of direct marketing industry members on the usage of customer information, conducted a survey during the Summer of 1999. The survey was mailed to 2,000 DM News subscribers who fell into one of five business categories: Catalogue (Consumer/Retail Outlet); Financial Direct Marketer, Non-Financial Direct Marketer; Package Goods Direct Marketer; and Publisher/Subscription Marketer. Before mailing the surveys, companies were closely examined to ensure they were in fact properly classified. Consulting firms and vendors were eliminated from consideration. The survey was comprised of 15 questions, some with multiple parts. To solicit response, a small credit card sized calculator was enclosed in the mailer along with an opportunity to receive one of four prizes – a Monte Blanc pen and three Rolodex electronic organizers. Of the 150 people who responded, 144 qualified for analysis. Six respondents were eliminated based on responses to questions which indicated they had no involvement at all with their company’s database or they were consultants or vendors who serviced direct marketers. Profile of Respondents Respondents were asked for the number of years they have been employed in the direct marketing industry during their career lifetime. Based on the 144 qualified responses, the average time in the industry among respondents was calculated as 11.43 years. Respondents were also asked to list the department they work in, their main responsibility and job title. A summarization of the results for all 144 qualified responses can be found in the table below. Profile of Respondent’s Companies 136 of the 144 qualified respondents revealed the number of employees working for their company, including consultants and contractors. The result is shown in the following table. 135 of the 144 qualified respondents revealed the size of their companies database (number of customer records). The result is shown in the following table. All qualified respondents categorized their company by industry as shown in the following table. All qualified respondents revealed the various forms of media used for promotions of their company’s products and services. They were allowed to select all media forms that were applicable. The result is shown in the following table. Database Utilization Highlights

• Only one-half of the companies surveyed agreed that they utilize the customer database for purposes of lifetime value analysis, customer tracking and trending.
• One reason why only one-half of the companies surveyed conduct strategic research such as lifetime values analyses may be that only 44% agreed that they have the necessary software/tools for conducting such strategic analyses.
• Only one-third of the companies surveyed agreed that it is easy to access the customer information on their customer database for purposes of analysis.
• Surprisingly, over 70% of the companies surveyed indicated they do not have the necessary resources needed for performing analysis techniques such as response modeling.
• Given that testing is the foundation upon which a direct marketer grows their business, it was alarming that only one-half of the companies surveyed agreed that they always test promotional changes prior to roll-out.
• Only one-third of companies surveyed agreed that they create frozen files — a sample representing the customer’s characteristics at time of promotion — for analysis purposes. It is believed that this is mostly due to a lack of understanding of the importance of such samples in conducting proper response or segmentation analyses.
• Only about 65% of the companies surveyed agreed that they perform post analyses — an in-depth analysis of a marketing campaign — after each and every promotion. This means that approximately one-third of direct marketers do not dissect a campaign to determine what worked and did not work.
• One reason why one-third of the companies surveyed do not perform post analyses after each and every promotion may be that less than 50% reported that they have the proper tools required to perform such analyses.

Database Type and Maintenance Highlights

• 42% of the companies surveyed have their customer file/database maintained by an outside vendor.
• Approximately 52% of the companies surveyed purchase demographic data from outside vendors and approximately 35% collect their own demographic data.
• Approximately 60% of the companies surveyed said that their company maintains a relational database as opposed to a flat file format.
• Only 75% of the companies surveyed verifies the addresses on their customer file/database (e.g., NCOA processing) more than once per year.
• Approximately 21% of the companies surveyed have no disaster recovery plan for their customer database.

Industry and Company View Highlights

• Only 44% of respondents feel their company is aligned with the direct marketing industry through it’s affiliation with the Direct Marketing Association and other direct marketing associations.
• When respondents were asked to rate their satisfaction with the direct marketing industry regarding their career and career opportunities on a scale of 1 to 10, 1 being extremely unhappy and 10 being extremely happy, the average calculated was 6.4.
• When asked to select the three descriptive phrases from a list of 18 that best describes how they view the direct marketing industry in general, among the top ranking responses were: constantly evolving and improving; marketing decisions are driven by testing results; intensely competitive; and, maximizes the use of customer information.
• When asked to select the three descriptive phrases from a list of 14 that best describes how they view their company in relation to the direct marketing industry, among the top ranking responses were: does not leverage customer information to it’s fullest; constantly evolving and improving; and, inadequate methods to target customer acquisitions.

Summary of Findings The results of this survey reveal that many direct marketers have a long way to go regarding the implementation of proper database marketing applications. Without proper file maintenance, ease to gather and manipulate customer data, analysis tools and techniques a direct marketer cannot maximize the power of their database for marketing purposes. Selected results of this survey were published in the DMA 2001 Statistical Fact Book, under the company name Drake Business Services.