VDP: Database Marketing Delivers
THE ADVENT of digital technology—in addition to forever altering the manner in which information is accumulated, stored, employed and disseminated—permanently altered the printing industry. Those printers wishing to respond to the consequent market demand for marketing communications that take advantage of these digital channels must become adept, if not specialists, in database marketing. This service requirement is distinct, but related to changes in workflow and printing capabilities.
In fact, those companies currently participating/competing in this market have developed a new business model. They have evolved from what I call a “print manufacturer” into a “print marketer.” The difference is that the manufacturer focuses on its customer. The marketer focuses on its customer’s customer, and that is where database marketing comes in.
Database marketing is information-driven. The information residing in databases is used to communicate via direct mail, Internet and HTML e-mail with a specific individual (or group) promoting relevant products and services. The issues that perplex companies wishing to evolve their service configurations and profit from this market are not technological, digital output/printing or software related, but rather operational, as represented in the following questions:
• Where do we get the data?
• How and why do we manipulate it?
• What is its value?
• What do we charge?
These questions are the “value-added” operations for data acquisition/manipulation.
The data in database marketing is obtained from the client and/or a data vendor. The type, amount, format and quality of client data vary. Some companies capture detailed transactional information, purchasing histories, product preferences, etc. Others have relatively little information. In either case, the data can be in terrible condition, rife with errors, inconsistencies, etc.
This is not a problem, but an opportunity, to sell file preparation/conditioning services. The cost can be a per-hour charge or a flat fee. Data vendors provide conditioning cleansing, deduping, postal sorting, and verification services in addition to list acquisition.
Appending demographic information to a client’s database is initially an analytic operation, developing and enhancing customer profiles. The more information a company has about who their clients are and what motivates them, empowers the company to offer relevant products and services.
A question I often get from companies starting to offer these services: “Where do we get the expertise?” I routinely recommend that they find a vendor/partner, rather than try to develop the IT/programming infrastructure internally. The learning curve is too steep, and it’s time-consuming. They need to bring the services to the marketplace as soon as possible and develop these other revenue streams.
Bringing it inside can be accomplished piecemeal, as it makes sense when a company has the business to support it. What is required internally is that a company has someone who is familiar with the terminology, characteristics, formats and marketing applications of databases. Many data vendors provide extensive educational resources to assist in these areas.
Staffing is an issue. An answer for some companies is to create a salaried position (some also offer performance- or volume-based bonuses), and let this person become the “internal expert” in these areas. His or her knowledge is then leveraged across both the sales staff and the client base regarding presentations, product development and sales calls.
Companies that do not possess internal programming, IT or even digital presses are not necessarily excluded from participating in this market segment. If, for example, a company has provided some of the data acquisition and manipulation services discussed, direct mail segmentation can be achieved through versioning or a gang run, and the only data that is included is the name and address. That name and address represents all the value-added intelligence appended to it.
What is the value of marketing intelligence? Like the VISA ad says: “Priceless.” Today’s markets demand efficiency and productivity, as competitive and shareholder pressure mount and as costs rise. Businesses are quite willing to spend money with vendors that make real contributions to the ROI of their marketing. Database marketing answers the call. It is said that, for every dollar spent on printing, six to eight dollars are spent on all of the other processes and services associated with it.
In general, pricing for these services is often kept separate from printing costs. It is a futile strategy to try to explain to a customer all the value-added elements rolled into the unit cost of marketing collateral. All they see is a substantial unit cost. Perhaps the biggest problem is leaving money on the table; some printers do not have an appreciation for the real or perceived value of these services and would be surprised at how much the market will bear.
The bottom line: From mid 2006 to 2007 ink-on-paper sales increased 0.7 percent, digital/toner-based print sales increased 6.0 percent, and ancillary services increased 3.4 percent. There is not much debate anymore about the trend and that data-driven marketing resides firmly, but not exclusively, in the latter two.
Profit leaders in our industry are expanding their services in these latter two areas. What does that tell you? PI
About the Author
Brad Lena is technical consultant, digital/variable production/strategy at PIA/GATF. He can be reached by e-mailing blena@piagatf.org.