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
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
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
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
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
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.