DMNews Data Survey
DMNews Data management survey
data management survey Focus results An in-depth look at how company marketers handle the many challenges of data management Surprising responses about everything from technology investment and data cleansing to personalized marketing mail Top marketers share their thoughts about the survey results and their own data management efforts The biggest deterrents to making sure data is as accurate as possible are cost and time Experts say good database management is an incredibly valuable tool for marketers who do it well, particularly during a struggling economy where every dollar counts 2009 Advanced technology around data quality certainly produces higher lift without impacting cost. Rod Ford, CEO, CognitiveDATA marketers Cost Future 2 | DMNEWS | Data Management Survey | www.dmnews.com DMNEWS | www.dmnews.com Mining for (data) gold Marketers no longer see data collection, quality, accuracy and storage as background functions, due to the need to squeeze value from every campaign. However, there are plenty of obstacles to overcome, as we found in the first DMNews/ CognitiveDATA Data Management Survey F By Pamela Oldham or years, many C-suite executives, including some marketers, have grudgingly looked upon database management as a necessary but boring and decidedly un-sexy function; an activity viewed with about as much excitement as cleaning and organizing the family garage. But in this extraordinary era of bailouts and budget cuts -- and given the need to squeeze value from every company asset -- more companies are looking to database management as an in-house financial stimulus tool. As the 2009 DMNews/CognitiveDATA Data Management Survey points out, marketers across the country are focusing more closely on data collection, quality, accuracy and storage, especially when such efforts can bring direct mail costs down and offer better targeting opportunities across channels. One top marketer says companies have finally begun to realize customer data is like "liquid gold." Could it be that in this time of economic challenge, respect for and value of data management will, rise to all-time highs? Before they can begin to mine these potential riches, however, companies will need to overcome some obstacles -- including some old-fashioned thinking uncovered in this year's study. Conducted in early April 2009, a total of 253 respondents took part in the survey, including top company and marketing executives, directors and managers from across the US. A full spectrum of industries was represented, from financial services, technology, retail and catalog to business services, healthcare and pharmaceutical, as well as industrial and manufacturing sectors. All maintained either an in-house client database, a prospect marketing database or both. Annual revenue for the surveyed companies was fairly evenly split: 48% reported annual revenue of $100 million and less; 52% said their companies generated more than $100 million annually. About 55% reported their in-house database held fewer than 1 million names, while 45% said they maintained databases in excess of that figure. For the analysts and marketers who were interviewed for this article, perhaps the most surprising issue uncovered by the research centered around data quality. Rod Ford, CEO of Little Rock, AR-based CognitiveDATA -- whose firm's clients include AT&T, DirectTV, Geico, and Crate & Barrel -- says the market has been based on commodity processes in place for 20 years. "There's been no innovative, strong investment in data accuracy and quality as a service for some time." Ford says. "When you look at the benefits of data accuracy, number one is to ensure you're reaching the target. All the modeling in this country is done on an individual, statistical regression model; to find the individual who will respond. Yet many marketers, including those in this survey, say delivering to the address is more important." Ford says companies and marketers need to place a higher premium on clean data. "Advanced technology around data quality certainly produces higher lift without impacting cost," he explains. "If you could replace undeliverables with 4% more www.dmnews.com | DMNEWS Data Management Survey | 3 How much of your day-to-day role is spent dealing with marketing data management? How accurate do you think your marketing data is when it enters the mailstream? < 10% 11%30% 31%60% 61%90% 91%+ 26% 31% 30% 11% 2% Base: 253 99% accurate or better 12% 38% 37% 13% Base: 253 96%-98% accurate 90%-95% accurate < 90% accurate In 2009, do you anticipate your volume of personalized marketing mail to increase or decrease? accuracy and have it cost you the same amount of money, wouldn't you choose to mail from accurate data?" Despite data management's often ho-hum organizational status, a remarkably high number of respondents -- 61% -- say they spend between 11% and 60% of their time managing data. "Two years ago, marketers were nowhere near that [60%] figure," says Rob Weisberg, VP of multimedia marketing for Ann Arbor, MI-based Domino's Pizza, which has about 8,700 stores worldwide. "Marketers are starting to wise up," he explains. "If you're not managing and focusing on customer data, then you're leaving real value on the table." When he joined Domino's four and a half years ago, Weisberg says the company had already begun an evolution in how its data was collected, maintained, and used. "Our CEO understood the value of a unified sales system and above-the-store database," explains Weisberg. "When I came in, I had this gold mine waiting. We built true customer segmentation and response models. Now we have more than 50 models to predict everything up to and including lifetime value." Like Domino's, survey respondents collect data through multiple sources: 72% cull data via direct mail, while 57% say they collect data via their company's e-commerce site. Inserts and postcards are collection points for 51% of the respondents, while just 45% collect data via call centers. Along with affiliate Web sites, in-store point of sale collateral and catalogs, these were rated as the most successful in collecting new leads. Increase 27% Expect no change 28% Decrease 44% Due to rounding, figures may not add up to 100%. Base: 253 Which (if any) of the following factors deter you from cleaning your data as thoroughly as possible for each mailing? 60% 60% 30% 17% 2% cost time technology low limitations priority other Base: 253 Respondents were allowed to choose more than one answer. With so many data collection channels in use and deemed important, some experts said it was surprising to learn that the level of integration between the channels is still relatively low � just 55% of respondents reported that all of their companies' data are housed together in one, central data repository that is accessible to all channels, while only 31% said that their companies integrate data collection channels. However, Joe Rhodes, VP of optimization and guest intelligence at Beverly Hills, CAbased Hilton Hotels Corporation, points out that housing data in one central data repository is not always best. "I was surprised because [for us] it's optimal to have multiple data storage [locations]," he says. "It allows us to specialize and personalize the data more, such as having one smaller database around personalization and customer preference." For Hilton's HHonors program, for example, the company captures more specific, specialized data that don't need to be filtered through a large central database and can speed to market faster. "We do have the databases connected and synchronized, but we don't synchronize all aspects," Rhodes explains. If there are silos keeping data needlessly separate, says Dave Frankland, principal analyst at Cambridge, MA-based Forrester Research, it doesn't always mean there's a technology component standing in the way of progress. "There's a business silo component to consider in all this," he explains. "[Silos] can be structured by product line or marketing function � each has its own group and they don't reach out to one another. That's a problem. A direct mail piece goes out "The problem is direct mailers are putting too many inaccurateas-addressed mail records into the mailstream" Rod Ford, CEO, CognitiveDATA Only 31% of respondents said that their companies integrate data collection channels 4 | DMNEWS | Data Management Survey | www.dmnews.com DMNEWS | www.dmnews.com What percentage of your yearly marketing budget is allocated to data management? How often are data processed for data integrity and accuracy? < 5% 6%-10% 11%-20% 21%-30% 31%-50% 51%+ 13% 15% 29% 21% 16% 6% Base: 253 every new lead capture daily 11% 26% 27% 27% 9% Base: 253 weekly monthly other Which of the following best describes integration between your data collection channels? How much wasteful mail do you perceive there is within your direct mail campaigns? < 1% wasteful 6% 23% 33% 23% 15% Base: 253 minimal or no integration between channels 14% 31% 55% housed together in one storage, accessible to each channel 1%-3% wasteful 4%-5% wasteful 6%-10% wasteful 10%+ wasteful Base: 253 integration between select collection channels and others [in the organization] don't know about it. They may be sending competing offers or even the same message to the same customer lists. So technology and organization are the big challenges." Kelly Ronayne, AARP's VP of membership data strategy and management, agrees with Frankland's assessment. The Washington, DC-based nonprofit, nonpartisan membership organization's mission is to help people age 50 and older improve the quality of their lives as they age, says Ronayne, and integrating information from all sources into his decision making is key to serving its members. "For us, it's not a profitability issue -- it's advocacy and service, growing the social impact, understanding our members and their needs as they age and delivering what they need," he explains. Survey respondents suggested that while data management is important to their enterprises, their perceptions of the time and cost necessary to improve data quality may impede action. To Ronayne, quality data management is just plain common sense. "We're trying to solve a business problem, not a technology problem," he says. "Data management provides ways we can reduce costs without impacting response." With so much buzz today about building one-to-one relationships with prospects and customers, Winterberry Group director Jonathan Margulies, who leads the New York-based company's team of analysts and manages primary and secondary research effort, says he was surprised by the 44% of respondents who said they expected personalized mail volume to go down in 2009. "That could be interpreted in a couple of ways, depending on how they defined `personalized' mail," he says. "Total mail volume is expected to go down in '09, and that slide will continue due to fallout from the financial services crisis, the effects of the recession. The mail channel is suffering from pulling budget away from mail to digital." Where we're not seeing declines is in data-driven, impactful, relevant communication. -- Jonathan Margulies, director, Winterberry Group According to Winterberry Group research, total spending for direct mail in 2008 declined 3% -- the first annual decline in the channel in more than 60 years of measurement. But Margulies says the decline represents marketers using databases to drive improved choices. "The decline has been in the saturation-style mailing," Margulies explains. "The batch, sprayand-pray, and junk mail � to use a dirty term � that marketers have traditionally used without much regard to consumer needs, wants, and values is what's being trimmed away. Where we're not seeing declines is in data-driven, impactful, relevant communication. The one mail channel that continues to drive and be positioned for growth is personal, digitally produced, variable content around creative offers -- the true one-to-one communications." But "dirty data" continues to impact the industry, according to recent research cited by Christopher Petix, US president of ClashMedia, which found "dirty data" costs US businesses $600 billion per year. Preventable expenses include hiring unnecessary contact center staff, printing unnecessary promotional material, and postage. But the negative impact and high costs felt by businesses across the country by inaccurate data are also shared with the US Postal Service. Undeliverable mail and its disposal costs the agency about $2 billion annually to process, says Jim Wilson, manager of address technology for the USPS. The USPS sees an estimated 9.7 billion pieces of undeliverableas-addressed mail every year, he adds. But there are several tools mailers can use to improve address quality, he explains, recommending mailers begin with Coding Accuracy Support System (CASS) address-matching software, which incorporates the Delivery Point Validation product, a table of all the valid addresses to which the USPS delivers on a daily basis. "Once addresses are complete and correct, we recommend mailers use NCOALink to validate www.dmnews.com | DMNEWS Data Management Survey | 5 "Data management provides ways we can reduce costs without impacting response" Kelly Ronayne, VP of membership data, strategy and management, AARP the currency of the information and determine if the customer has moved," he says. Finally, Wilson says, the USPS recommends mailers incorporate ACS or OneCode ACS into their mailing to learn of any other reason or issue that may have prevented their mail from being delivered so they can take corrective action. There also are "many excellent" third-party tools also available to mailers, he points out. "There are other commercially available data resources from third-party providers that mailers can leverage that can go beyond the information available from the USPS," he says. "For example, third-party service providers have access to proprietary information, such as commercial sources of change-ofaddress data, which can be used to improve address accuracy." He also says there is "clear indication" of positive improvements in address quality occurring over the last two years. "One example is a clear trend to more accurate delivery addresses existing in mailer address lists as determined from the processing statistics captured by NCOALink and DSF2 service providers," he says. The USPS has also seen an increased usage of NCOALink services supplied by full- and limited-service providers to mailers, he adds, suggesting mailers are more focused on keeping their address lists up to date. But Ronayne sees a creative challenge when it comes to the USPS NCOALink, for which survey respondents expressed high confidence in accuracy. He says marketers need to get beyond NCOA as merely a way to find an address but should be used in conjunction with other data, as a part of an individual move and name change tool. "We have an older constituency," he explains. "We have members die -- but when that takes place, what does that say about the needs of the survivor? We need to analyze that. If there's a death [of a member], now I have to think, has the survivor moved on to a new living situation?" In addition, Ford continues, one of the takeaways from the survey is the fact that marketers appear to believe the USPS NCOALink process is much more effective than is accurate. "NCOA finds the new address for approximately 50% of movers. Survey respondents indicate they believe NCOA provides a new address for 85% to 95% of all movers," he says. As far as technology investment, which is a strong cost issue On average, from the time your direct mail pieces reach the postal carrier, how long has it been since data hygiene was applied to the records? 37% 30% 19% 15% seven days two weeks three weeks four weeks or longer Base: 253 Due to rounding, figures may not add up to 100%. If data quality processes had a lower cost, would you use them more frequently? answered NO 18% answered YES 82% Only 24% of survey respondents said they were confident that they possessed the latest tools for data cleansing Base: 253 What percentage of direct marketing activities are direct to personalized consumer vs. mass marketing? say 70%-90% 9% say 90%+ 8% 35% say 30%-50% say 50%-70% 23% say < 30% 24% Due to rounding, figures may not add up to 100%. Base: 253 for survey respondents, Ford insists that price points for new technology that improves data quality and the advanced systems -- sorely needed by most companies -- have fallen dramatically "It's become far more affordable in recent years," he says. In addition, new technology catches variables that didn't exist in the past. "Vintage systems were designed before all the plethora of maiden names and the Monster job board and before we were so mobile," he explains. All of the seemingly disconnected statistics frustrated marketers, consumers and service providers cite when complaining about direct mail, Ford adds, are actually one in the same. Troubles arise, he explains, from a single problem from a single source that technologically advanced database management practices can solve. "The problem is direct marketers are putting too many inaccurate-as-addressed mail records into the mail stream. We can fix that today. We have the technology," he says. Given long-standing issues with data quality across the industry -- as well as a seemingly immovable 4% waste figure -- it's not surprising that respondents were generally less confident that they had the most up-to-date data quality technology. In the area of data management software, just 34% of respondents were confident that they possessed the latest tools. In addition, only 28% expressed confidence in their data segmentation tools. Forty-eight percent of respondents said they were confident about their data security technology. But only 24% said they were confident that they possessed the latest tools for data cleansing. Many respondents reported that they had evaluated new technology and software, and said it wasn't worth the investment to upgrade at this time. Only 11% of survey respondents said they processed data for integrity and accuracy with every new lead capture. Most -- 54% -- performed data cleansing no more frequently than once a week. Some said time and costs deterred them from more frequent data cleansing, and 82% of respondents said they would use data quality processing more frequently if the cost of doing so was lower. On average, respondents said the time between when they had cleansed their data and when direct mail pieces reached the postal carrier was at least seven days; 15% said the records were four weeks or older. "I looked at how many folks said they'd evaluated new tech- FINDING 6 | DMNEWS | Data Management Survey | www.dmnews.com DMNEWS | www.dmnews.com "Domino's spends millions on marketing, and our data costs are pretty small. But the cost of not doing that work is very large" Rob Weisberg, VP of multimedia marketing, Domino's nology and software and immediately thought: `Oh. My. God.' And, they're sending First-Class Mail � 44% of them," says Weisberg. "If they have a sales force that's reaching out, they're just adding to their costs and [further] reducing ROI. Domino's spends millions on marketing, and our data costs are pretty small. But the cost of not doing that work is very large." Ford notes that operating in an advanced data environment costs no more than commodity systems. "This isn't about a cost increase; it's self-funded. The technology will more than pay for itself," he says. "We need to break down the old p e rc e p t i o n t h a t a ny t h i n g advanced is ultra-expensive and only the `big boys' can afford it," he continues. "Some of the free-form comments [from survey respondents] alluded to `big companies' being able to afford more advanced data quality technology. This is a historical view. Today, new data quality technologies cost no more than commercial commodity processes. You might be increasing budget, but you're going to get three- and four-fold increases across the entire enterprise." Hilton's Rhodes, however, disagrees, saying the size of the company can impact the level of investment in data technology tools it is willing to make. Nearly half of the survey respondents have revenue of less than $100 million. "When we're looking to purchase a tool, we can scale it because we're a multibilliondollar company," he points out. "For a smaller company, it's not as scalable -- so it's harder to justify purchasing the latest tools." How confident are you that your company uses the most recent data technology? confident they have the latest tools have reviewed latest technology and say it's not worth the investment at this time Data management software 34% 15% 28% 21% 42% 12% 24% 19% Base: 253 Data segmentation Data security Data cleansing technology Respondents could also choose "I know there is better technology for this process" or "I'm not sure whether or not we have the most recent technology for this process" One trend that might help the cause of improving data management technology is getting CFOs and COOs involved in the database management conversation, says Ford. "The math is there," he insists, adding that C-suite management types typically don't understand direct marketing in an in-depth way. "Most C-level positions in big marketing organizations aren't filled by people who came from the direct marketing channel," he notes. "So, it's a challenge. When a campaign is fantastic, they see it as brilliant merchandising. When the results are poor, then somebody in direct marketing screwed up the list. We have to change that." As for the future, Forrester's Frankland sees a continued shift to online and digital media. But, he is quick to note that direct mail is not going away. "[Direct mail] is a massively effective channel -- new channels still struggle to work," he says. "As each of these channels come on, now we need to look at how things interplay with one another. It's an opportunity for the database manager to say how all this is affecting the business." He cautions marketers and top executives that direct marketing efforts are only as effective as the foundation upon which they were built, the precious data Weisberg calls "liquid gold." "Otherwise," says Frankland, "it's as though marketers are worrying about the weight of their cargo while ignoring the hole in their boat." SURVEY METHODOLOGY The DMNews /CognitiveDATA data management survey was conducted by CA Walker. E-mail notification and invitation to complete the survey was sent to approximately 50,000 marketing professionals of different titles and industries. A total of 253 respondents completed the survey. The results are not weighted and were statistically tested at a confidence level of 95%. At this sample size, the results are associated with a +/-6.0 margin of error. One database marketer's take As VP of database management at Rodale Direct, Todd Leiser definitely relates to many of the issues addressed in the DMNews/CognitiveDATA Data Management Survey. He chatted recently with DMNews executive editor Sharon Goldman about his thoughts as well as his experiences working with Rodale's immense databases (60 million strong) to target customers for the Emmaus, PA-based company's publishing brands, as well as products such as DVDs and books. Q What were the biggest issues you noticed in the survey? data we have. So, the level of complexity distracts our resources from being able to focus on what we know are fundamental improvement issues of data cleansing and data quality. The overall volume of direct mail has come down but the complexity has gone up � there are more keycodes, more projects and more analytics today, and we have less people and more channels. Q Were you surprised by the time respondents spend on data management? VP of database management, Rodale Direct Todd Leiser A: It struck me that there's perhaps less focus on data cleansing and accuracy. But speaking for myself at Rodale, I can see where we're kind of hung up in the same space right now. We're focusing so much on integrating newer channels such as e-mail and online, with massive amounts of data beyond what we were normally used to in a regular direct mail environment, so maybe we're losing sight of the traditional cleansing and accuracy issues. Q So you're on the same page as many of the survey respondents? A: No, I think that's what's required. There's always new tactics and techniques and a lot of vendors providing different values and propositions. I see our data changing everyday. Ten years ago, a marketing database was pretty static -- but in the past five years, we've really turbocharged all of our marketing channels. Channels have exploded, but we haven't eliminated any channels. Q What about investment in technology � tools to improve data gathering? A: I'm sure I'm not alone � we're stretching our resources across a lot of new territory these days as we all migrate to an online marketing environment. In e-mail, for instance, we're sending out more than we ever sent out in direct mail. As database marketers, we are a bit overwhelmed at times with the amount of A: We started investing 10 years ago to build out a very robust marketing platform. But now, we've hit a plateau in terms of functionality -- we have more data than we need. At Rodale, our focus is not on installing a new piece of technology, but figuring out how to use what we have. The focus is on expanding the channels, blowing out new tests and markets, not necessarily learning a new tool along the way. The tools have come so far that we have what we need � we just have to put them into play.