DIRECT MARKETING: Understanding dataculture

The use of database marketing may be on the up, but the Henley Centre discovers that poor implementation is hindering progress.

The use of database marketing may be on the up, but the Henley Centre

discovers that poor implementation is hindering progress.



While database marketing is seen as the future heart of marketing, there

is a long way to go before the new ‘dataculture’ that it heralds can be

fully exploited by businesses, and accepted by consumers.



So says research group, the Henley Centre, in its recent report,

Dataculture. The study attempts to understand consumer attitudes towards

database marketing and to highlight opportunities for development, while

also giving an innovative view of the industry’s future.



The very term ‘dataculture’ is at the core of what marketers do to win

over customers and retain their business. It’s about customer loyalty,

it’s about the Tesco Clubcard, and it’s about finding out more about

customers so that you can serve them better.



But it is still early days. Database marketing is a young industry - one

that has grown up and progressed with the development of information

technology. It’s an industry that has come a long way from what the

Henley Centre describes as the ‘wilderness years’ of the 70s, when it

was used by ‘large, Northern-based, downmarket mail-order companies and

a small number of US companies such as American Express’. These players

have played the numbers game, essentially contacting large numbers of

consumers and hoping for a response - hence ‘junk mail’.



Things have changed. It is fast becoming a prerequisite for companies to

have a database, particularly financial services, information technology

and telecommunications groups. You only have to look at a newspaper or a

TV break to realise how far things have come. Every ad that carries a

telephone number represents an opportunity to collect data and build a

database.



The very idea of a dataculture conjures up images of ‘big brother’

society. It’s Orwellian in tone and suggests large rooms filled with

fearsome looking computers, serviced by an army of people who spend

their days collecting and inputting data.



But this is not the case. Big brother, although armed with futuristic-

sounding devices such as massively parallel processing computers and

super computers, has failed to get his act together. While the

technology is there, clients hardly know what to do with it.



The Henley Centre believes there is a way to counter such ignorance and

it has drawn up a manifesto to inform the business community that it

needs to act now, or else it will put the future of the dataculture in

jeopardy.



This manifesto addresses the key areas that companies need to tackle the

before potential power of database marketing can be exploited.



Technology lies at the heart of compiling databases. The Henley Centre

study found that, while 67 per cent of the companies surveyed had one

database, 33 per cent had more than one and the average number was a

staggering ten. Of those, only 13 per cent claimed that there was any

kind of integration; there are lots of databases but little crossover

between them.



Individual departments held separate and unintegrated databases and

there was little connection or co-operation between them, with different

details about the same customer held on different databases, the report

found.



To a degree, the Henley Centre claims that the lack of integration is no

surprise. But it’s a major problem.



The Henley Centre argues that it is possible for businesses to have an

integrated telecoms database and servicing system to offer customers a

single point of contact, but it found that no more than 9 per cent of

the companies it interviewed came near to achieving an integrated model.

The reason being that ‘it implies an integration of the traditionally

separate function of sales, marketing and customer service’.



Competitive advantage is being lost because integrated models are only

being adopted by companies such as Direct Line and First Direct, and a

small number of new direct businesses.



Neil Woodcock, a director of QCI, who contributed to the research,

comments: ‘Sales directors do not want to release data to the marketing

department. Many companies have a Chinese wall between sales and

marketing and the data is not flowing because it is not in the interests

of empire builders within the company to do so.’



The problem is made worse by the fact that only 7 per cent of those

companies questioned had a database manager.



The report says this is ‘probably the best indication that truly

professional database marketing is still very much in its infancy in the

UK. The fact that non-specialist marketing and IT staff are more likely

to have day-to-day responsibility suggests that, for many, database

management is an extra responsibility rather than their core role.’



The Henley Centre warns that companies are wasting money if they do not

invest in the skills required to derive the benefits of database

marketing.



Melanie Howard, an independent marketing consultant who has worked with

the Henley Centre, says that if companies can sort out their internal

organisations, they will reap the benefits because they will find that

consumers are usually willing to ‘play ball’.



She explains: ‘We found that, essentially, customers are prepared to

hand over data if they see the need for it. But with two provisos: that

is, they ask themselves if they want a relationship with the company

that is asking for the information, and, two, do they think the

information requested is appropriate?’



The study found that, although consumers are prepared to give

information, they still fear exclusion, inaccuracies and that their

comments may be passed on.



Fiona Stuart, administration manager at the Henley Centre, says this

means companies need to communicate their intentions more effectively;

they need to be transparent and open.



A key point of the manifesto states that companies ‘should emphasise and

make clear their adherence to data protection legislation’ and, in doing

so, gain competitive advantage.



The future, however, is bright. Well, brightish. While the most likely

scenario is what the Henley Centre terms ‘swamped - nice technology

shame about the practice’, it doesn’t have to be that way if companies

act now and closely examine what the dataculture involves.



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