Database marketing has an Achilles heel - because it requires the brightest minds to make it work, the challenge is the internal communication needed to gain buy-in from those who understand it less well. Brand marketing, by contrast, has a greater ease of internal engagement by those who are non-specialists.
Brand marketing by its nature is very visual - photo and TV shoots are exciting. By contrast, a visit to the direct marketing department will probably reveal a row of computer screens and a server centre. In short, it is often the difference between pictures and numbers and, for most people, the former are easier to comprehend than the latter.
The strength of database marketing and a key point of leverage in winning over receptive senior management is that, as a methodology, it can be used to target and measure results, on a marginal cost basis, in a way that brand marketing cannot. At RSPB, for example, up to the 1960s membership had remained stubbornly below 20,000. The organisation realised that to gain influence for its cause, it needed to modernise, become more egalitarian and grow membership.
Its then marketing director introduced one of the first direct marketing databases in the UK. Spend on acquiring new members at a cost greater than one year’s subscription was justified, based on retention beyond the break-even point. This was very new thinking back then. This investment was gained from the board after submitting a succinct, single-page memo, outlining the concept which went on to completely change the course of the RSPB.
By the year 2000, its membership exceeded 1 million and in-life retention exceeded 12 years, allowing huge investment in the unit cost of acquisition without loss of income. In terms of gaining influence, 90% of New Labour’s environmental policy in 1997 was derived from the RSPB’s 1996 environmental policy document.
The principle of retention income exceeding acquisition costs might seem obvious. But in 2004, a broadband ISP which had no systems to measure its customer retention rate holistically was spending in excess of £625 to acquire each customer through brand advertising when their lifetime value was less than £400. That meant £20 million per year in brand advertising was being spent just replacing lost customers.
Board directors are busy people with constantly changing priorities. The best way to gain buy-in is to give them the “killer piece of information” - in effect, boiling down all the detail to justify your business case into one fact.
Even when you do have that single killer fact, it’s necessary to realise that surprisingly few business decisions are made on unassailable logic. As any good marketer will tell you, understanding what your customer wants is critical. Your CEO and your financial controller are every bit as much your internal customer, just as subscribers, members or online purchasers are your external customers.
Most business decisions are made entirely on an emotional level and often in the absence of - or ignoring - any analysis of the fundamental workings and drivers of the business. Many businesses initiate change only when change is forced upon them.
I have been constantly surprised by blue-chip companies appearing very calm and slick above the surface but below, the organisation is a maelstrom of conflicting views on what is best for the business with very little clarity for their long-term direction. Into this chaos you can step with your simple, killer business case.