Vendors, take note: Marketers will spend an average of nearly $250,000 for database upgrades this year. And they are confident these expenditures will pay out.
What’s more, they now have the skills to determine if they do. Most look at the number of customers generated, and the revenue and profit they bring with them, according to Direct’s 2006 database practices survey.
What do they plan to spend the money on? Seventy percent plan to install or enhance data mining capabilities, while 40% want to expand storage capacity. Nearly 20% hope to add a data mart or outsource the whole shebang. Expect to see requests for proposals.
But there’s bad news, too: Only a third of our readers calculate lifetime value, and 40% have no idea if their personalization is working. On the other hand, nearly two-thirds personalize.
For example, nearly two-thirds use their databases to personalize products, services or marketing communications. And it seems to be paying off.
The resulting lift covers the expense in individual campaigns for 50% of those who personalize. And it pays for itself over the lifetime of a customer for 40%.
That’s why firms are spending more on it. Eighty-six percent said their budgets would either increase or stay at the same level this year, while only one percent indicated they would be scaled back.
Companies that market to business (or to both consumers and businesses) are most likely to personalize. But consumer firms are better at amortizing their expenses during their relationship with their customers. Nearly half said they have done so, compared to 30% for B-to-B firms.
But it takes people to get all this done. That’s why 31% of all database departments have increased their staff levels, up from 25% last year, with the biggest gains coming among consumer firms.
Workers aren’t the only investment: Nearly 40% of those surveyed expect to spend more on developing or maintaining their systems in 2007, and more than 50% foresee an increase in their general direct marketing budgets.
See the July issue of Direct for the full survey results.
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