This article was re-printed from Direct Marketing News, June 1995.

It has been provided courtesy of Business Guidance Systems Inc.

 

Monday Morning Marketing

by Harold Snider

 

Imagine a time when all the computer power you need for high performance Direct Marketing is in place; a powerful database computer; three years' worth of high quality detailed customer and transaction data extracted from several operational systems - scrubbed, matched, and consistent; workstations configured with the latest software tools for customer behaviour analysis and visualization; networks established connecting your desktop directly to the data you need for spontaneous assessment and decision making.

It's Monday morning, the system is turned on - go.

What exactly would you do on Monday morning when the system is turned on for you? If your answer is simply "Direct Marketing" and/or "Database Marketing" it will be very difficult for you to justify the cost of the new system, or demonstrate an ROI within a reasonable time-frame.

Just as buying a new car requires you to decide where you drive it, and how you want to use it, the same is true for the acquisition of any Direct Marketing technologies. You must define how you will use them, and for what specific purposes.

Computer departments are expected to deliver the day's operational data processing  requirements and now they are faced with an ever growing problem of fitting in a long list of demands for time-intensive information processing.

Data processing  requirements can be clearly defined in advance because they are predictable, mirroring day-to-day business processes. Changes to data processing requirements are identified, planned, and implemented. Data processing operations are tightly scheduled and controlled.

Information processing  requirements on the other hand, are much more impromptu and spontaneous. They don't necessarily mirror the business operation and they are very difficult to predict in advance. Information processing is highly dependent on both the data, and the experience of the person who looks at it.

Information processing requirements are highly variable and are difficult to implement with conventional data processing techniques and technologies. To do so imposes severe limitations on the value of the data and the effectiveness of one's decision making process.

For example, it is very common when designing a new application system to include the design of several reports. In affect, the computer department asks you to define then what you want to see in the future. When you finally receive what you thought you wanted, the report is less than effective for most of the problems you want to solve. It is this problem most managers face now.

If instead, the computer department understood you how you will use  the data, they would better prepare and organize it to give you the flexibility to access it and visualize it in any way appropriate - on-demand.

For Direct Marketing, Database Marketing, or any analytical use of databases for decision support purposes, it is critically important to accurately define how the database will be used - so you can establish a specific decision support undertaking which has value and can be accomplished quickly.

Define and Assess Specific Initiatives

Many projects that identify the cost of a direct marketing system are unable to quantify its true value. Without a definition of specific needs, it is not possible to quantify a business case or outline the actual data requirements. Since the computer department doesn't really know exactly what data you need to solve specific problems, they try to give it all to you. As you can imagine, providing all the data in an easily accessible form requires something new - a data warehouse.

Without specific needs defined for how the system will be used that first Monday morning, the technology acquisition for a data warehouse environment may be excessive compared to the actual ROI; it may take longer than necessary to implement and benefit from, or it may not meet the end-users' expectations since too much data can be overwhelming to deal with.

Tandem Computers, a $2 billion computer firm focused on data warehousing and decision support systems and services, utilizes a process called Compass to identify and qualify business and user requirements for decision support applications like Direct and Database Marketing, Financial Analysis, and Fraud.

These requirements are related to information needs which can be supported by data which already exists within current computer systems. Compass will also confirm the value of an effective and focused decision support information warehouse.

The program is designed to assist groups in quickly and collectively assessing and identifying specific business initiatives.

Business Case Development

Tandem's Compass program for example, focuses on building a business case for the listed business initiatives; a business case based on reduced costs, and increased revenues enabled by eliminating time spent in data collection, improving the decision making process, or targeting the right customers or products for promotions.

Directional Workshop with Users

A focused one day workshop identifies a prioritized list of issues, assumptions, values, and initiatives affecting an area of responsibility. The information gathered in the session is solicited through group interactions and forms the basis for a directional paper which is produced to document the session and communicate recommendations and action items.

This first critical step, has not only proved to be the most effective way to evaluate program ideas and business initiatives, it has also been identified to be the most important factor used by organizations to accelerate the shift to a new way of doing business.

In the commercial and even the public sector environment a variety of initiatives could be undertaken immediately which would result in an near-term pay back, and these are identified and appraised during the Directional Workshop.

Data Requirements

Many projects focus on providing all the data to all the users without considering its use. It is imperative however, to associate specific data with the business initiatives to be undertaken. The data has to be available and may need to be transformed into a useful and flexible state. The value of the data has to be defined otherwise there is no need to store it. The value has to be measurable so benefit of its use can be accurately measured and determined so adjustments can be made.

Goal Oriented

It has been Tandem's experience that plans which are undertaken to implement a generalized  direct marketing database facility often do not deliver the expected value compared to the committed investment.

On the other hand, an evolutionary approach which implements only those portions of the database needed for specific planned initiatives can be accomplished very quickly and will consistently deliver measurable results to your business units that surpass the projected benefits. Companies often use a portion of the incremental revenues from their initial programs to fund the extensions to their systems.

Benefits

Examples of the benefits achieved by others using a program such as Tandem's Compass for example, are

Contributors and Time frame

The directional workshop is a focused session which is lead by an experienced facilitator. As well, industry consultants may supplement your group of business contributors. In order to maintain its focus on near-term, high valued solutions to current business issues and opportunities, representatives from your computer department should also participate. Their role is to comment on the availability of data required by the proposed solutions.

A session can be conducted within one day, followed by the review, approval, and publication of the group's findings, recommendations and action plans.

Success through 3 Stages

A directional workshop is the first of a three stage process for realizing an identified business initiative into production.

Stage 2, focuses on implementing a pilot project. The scope of the pilot involves processes for data collection, data management, system management and information deliver. The focus is on specific business initiatives, identified by the initial workshop, with measured rates of return. The pilot is utilized by a core group of end-users to test the effectiveness of the business initiatives and the application of the data warehouse. This develops a high degree of end-user confidence leading to self-sufficiency for data access. Effectively, the first implementation should be focused enough to be completed within 90 days.

Stage 3, focuses on implementing a full production solution. At this point there is collective business user and business management buy-in. The business initiative will have been fully tested, and most significantly, the organization will be fully aware of the benefits.

Stage 1
  • Directional Workshop
  • Business case for initiatives
  • Data identification
Stage 2 Pilot project
Stage 3 Implementation into production
 Table 1: Staged approach.

With this approach, when that first Monday morning finally does roll around and the system is turned on, you'll know exactly what it is you are going to do, how you will benefit, and how to measure the benefit. Most important is the self-confidence you will have to use the system in new and creative ways to improve the way you do business.

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Harold Snider is President of Business Guidance Systems Inc., a Toronto-based consulting firm which specializes in the design, development, and application of Data Mining, Database Marketing, Decision Support and Data Warehouse business initiatives.

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