Databases Aren’t Just for Direct Mail Anymore

The days when marketers used customer databases solely as resources to keep consumers’ mailboxes filled with fliers and catalogs continue to fade, according to a new Forrester Research study of 124 companies. But while marketers are getting increasingly sophisticated about using their databases to influence overall company strategies, they could stand to better target their e-mail marketing campaigns.

“The customer database is playing an increasingly strategic role in the organization,” says Elena Anderson, a senior analyst at Forrester and coauthor of the study. “Not only is it being used to blast lots of paper mail and telemarketing phone calls, but it is also being used to find-tune internal marketing” such as search engine marketing.

Anderson says the study confirms that marketers are treating their business more as a science than an art. “Marketing is starting to migrate from what traditionally has been very right-brained creative business plans to more of a left-brained quantitative analytical discipline,” she notes. “With that trend being a key driver, we see firms turning into looking into customer databases to drive insight and strategy.”

But here’s what Forrester considers the bad news: Most companies still have a lot of heavy lifting to do in sifting out their e-mail databases. They are still sending out too much stuff to too many people who are not realistic prospective customers. And Forrester found no correlation between e-mail volume and investment in research on its effectiveness and how well it ties into the rest of a company’s marketing strategy.

“All the e-mails landing in inboxes are driving consumers crazy,” Anderson says. “We need to do a better job driving targeted strategies to monitor customer engagement.”

Among the other findings:
• Direct mail volume is likely to grow 15%-25% in 2005, and companies have set hefty budget increases for e-mail and telemarketing. The average company will send out 112 million pieces this year.
• Databases drove an average of 4.6 marketing activities. Seventy-six percent of respondents said databases influenced their e-mail campaigns, and a small but growing number reported that they helped shape strategies on mass media advertising, search engines, and Web banner ads.
• Marketers are ultrabullish on the Internet and increasingly leery of traditional outlets. Asked to predict which will be the most effective marketing tools five years from now, 81% said the Internet, 77% search engines, and 69% e-mails. But only 17% mentioned print, and 21% apiece said TV and radio.
• More than 40% of respondents said their databases influence corporate strategy. Those in the travel and leisure industries (60%) were most likely to use their databases that way. Those who relied heavily on databases were twice as likely to use what they considered “aggressive” marketing strategy and tactics.
• More than three-quarters of the respondents are using the same databases to power direct mail and two-thirds of them are storing e-mail contacts in the same database.

Of the firms Forrester polled, more than half had 10 million names in their databases, and in aggregate they sent out 10.6 million pieces of direct mail, which represents 9% of the 116 billion pieces sent through the U.S. Postal Service.

Retail and financial services companies each accounted for 32% of the respondents, with the manufacturing and travel/leisure sectors accounting for 11% each, and the remaining 14% scattered in other industries.