NCDM in Las Vegas: Devyani Sadh, Ph.D., Shows Attendees the Database Ropes

December 11, 2007 — It’s Monday morning in Las Vegas. While thousands of rodeo fans crowded the strip in anticipation of local cowboy events, Devyani Sadh, Ph.D. showed NCDM attendees that she could lasso with the best of them. Sadh, CEO and founder of consulting company Data Square, and chair of DMA’s Analytics Council, corralled a packed session of marketing professionals for an intensive entitled “Primer on Database Marketing and Digital Channel Integration for Senior Marketers.”

The presentation was part of the National Center for Database Marketing (NCDM) Conference 2007, which is taking place through December 12 at the Mandalay Bay Resort and Casino in Las Vegas.

According to Sadh, the single most important benefit of database marketing is its ability to target a company’s marketing efforts, which means specific groups in a marketing database get specific messages that are important to them. To do so, she explained, “it is necessary to identify your target customers; differentiate your customers by their needs and their value to your company; interact with them to form a learning relationship; and customize your products, services, and messages.”

With the increasing influence of Web 2.0, marketers now have the ability to communicate one-on-one with customers, Sadh pointed out. “We respond to the customer’s individual behavior.” Through relationship marketing, marketers follow customers through the entire “life cycle,” and respond on a one-to-one basis.

But relationship marketing is not for everyone, Sadh advised, describing the case of a spice manufacture that practiced what could be deemed outstanding customer relationship marketing (CRM). Their CRM program was rated number-one. “But the flaw was, no matter how much loyalty you build with customers, they can only consume so much spice in a year!” Sadh said. “So, you have to ask, is this relationship going to deliver?”

Sadh explained that database and marketing strategies will differ from businesses to business. “It doesn’t matter what someone else has done,” she said. “The answer is very specific to your industry, brand, and your product, and can differ even within the same company.”

Sadh advised NCDM attendees that, ideally, customer relationships should be built from the point when customers first come on board. But, she added, that does not mean spending resources equally on an entire customer base. “Nobody can really afford to do relationship marketing to an entire customer base, especially those with larger databases,” she pointed out. “You don’t want to spend all of your money on nonperformers.”

Marketers instead need to figure out what percentage of the budget should go to specific marketing methods, such as mass marketing, relationship marketing, individualized marketing, and relationship marketing. Organizations, Sadh emphasized, need to conduct a marketing mix assessment, because the mix will be different from company to company.

Sadh defined database marketing (DBM) as a subset of CRM, pointing out that it’s important not to mistake them for the same thing. CRM, she explained, “is an overarching process that goes beyond marketing. It’s difficult to have true expertise of CRM, because it encompasses so much.”

According to Sadh, one of the biggest contributing factors to failed CRM is neglecting the so-called 80-20 rule, which suggests that about 80 percent of results are driven by 20 percent of a customer base. “If we can find that 20 percent, that is what brings the ROI,” she said.

But simply going by the database book, as it were, does not always yield the expected results. Sadh cited a recent, and widely-publicized, case in which Sprint engaged in “topnotch database marketing.” The company identified a set of customers who were taking up the resources of its call centers with questions and complaints. Once these customers were identified, they were then “fired.” On its face, this could be considered a great database decision, Sadh noted, but in reality, the public outcry that ensued made it a publicity and CRM disaster for Sprint.

The Importance of Data Hygiene

Sadh quoted a recent article on consumer data quality, which stated “The half-life of consumer address data is around two years.”

She enumerated key processes necessary to prevent degrading data quality and financial risks, such as: de-duplication (eliminating duplicate records), changing contact information, standardizing addresses, flagging names based on customer request, flagging old consumer records, merge/purge processing, utilizing seeding files and decoy records, identifying credit risks and frauds, and utilizing database maintenance schedules.

Sadh said she was shocked at a conference she attended recently, when the presenter, a US Postal Service representative, said that 30 percent of non-First-Class advertising mail was found to be undeliverable. “That means an alarming number of mail pieces are not being delivered,” Sadh exclaimed. “It’s scary!”

Never underestimate the role of data hygiene, Sadh advised. “I urge you to look at your nondeliverable rates. Best practice is to do a test to know your true nondeliverable rate.”

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