David Raab Article Archive

Tasks that seem simple to computer experts can still be difficult for the uninitiated. As a result, a substantial market exists for products that automate chores you could do in a spreadsheet or word processor if you just had the time and energy. Here are a few of particular interest to direct marketers.

Dr. D.R. (Mercury Direct Tech, Inc. 510-551-5396) simplifies the onerous task of calculating the flow of orders expected from multiple direct response promotions. The system replaces the complicated and error-prone web of spreadsheets used by most direct marketers with a database of offers, versions, response curves, and predefined summary reports. Users enter their basic promotion plan, with assumptions about dates, quantities, response rates, promotion cost, revenues, margins and overhead. The system then calculates the expected flow of orders and cash by promotion by week and offers summary reports that show totals by offer and by time period. In addition, users can enter one or two prior years of summary data to get comparative reports. The reporting module can also produce line charts comparing any two variables.

Since the calculations performed by this program are themselves quite simple, the value of the system lies solely in its ability to save time and reduce errors. Dr. D.R. does this through a number of labor-saving devices. These include a calendar that figures out the start and end of each accounting month, whether the company uses calendar months or 13-week quarters, a promotion planner that copies the prior year into the current year as a base, and the option to increase or decrease response rates on future promotions by a fixed percentage. The system can apply either a bell-shaped “normal” distribution or a front-loaded “skewed” distribution to orders or use a distribution entered manually by a user. Any of these curves can be spread over whatever number of weeks the user specifies. A single promotion can include separate forecasts for house list and prospect segments and new promotions can be copied from old promotions.

Dr. D.R. actually attempts to move beyond data entry efficiency by incorporating some basic direct marketing intelligence aimed at preventing dubious assumptions from creeping into a promotion plan. The system will flag radical changes in response rates from one year to the next and requires that user document the assumptions that justify the change. In addition, it makes a rough attempt to adjust response rates for house list attrition by looking at the year-to-year trend in sales to house list names. The system’s developers, who are experienced catalog marketers, consider this particular feature to be simplistic and are developing a new product that will make a more accurate prediction of file size based on new entrants and repurchase rates by segment.

The system is not perfect. Entry of actuals is manual and is achieved only by changing the response rate: you cannot enter actual orders by week and see a comparison against budget or an adjusted estimate for the total promotion. The vendor expects to add an “import actual” function by August, however. There is a also minor Year 2000 bug in the calendar, although it is easily avoided by entering a four-digit year value.

Dr. D.R. runs on a Windows PC and is priced at $1,495. It was introduced in April, 1996.

RFM for Windows (The Database Marketing Institute, Ltd., 703-644-4830) offers another simple function: splitting a file into Recency-Frequency-Monetary Value segments. According to Database Marketing Institute co-founder Arthur Hughes, who lectures frequently on RFM and other database marketing issues, members of his audiences frequently could get a file with the necessary actual data values but were unable to do the database manipulations needed to code the records into RFM cells and select or analyze by those codes. The system was built to help them.

The boundaries of RFM for Windows are sharply drawn. The system will import a comma-delimited ASCII file which must already have a date and two numeric values, representing recency, frequency and monetary value respectively. The system can read several date formats but requires that all records in the same file use the same format. It will also reject any records with alphabetic characters or blanks in the frequency and monetary value fields. It does produce a reject file to allow users to examine the troublesome records.

Once the data is imported, the system will automatically scan the values in the three fields, determine the breakpoints necessary to create up to 999 user-specified number of equal-sized cells, and place codes indicating cell membership on each record. There is a handy screen to help determine the number of names to test and number of cells to use, based on the break-even response rate, minimum desired number of responses per cell, and total test budget. The manual gives a particularly clear explanation of the relationships among these variables.

The system comes in two versions, one that handles up to 200,000 records and the other that can support one million. Actual coding of a large file might take as long as an hour. Once the records are coded, users can extract an Nth sample for a test mailing. The Nth extraction can also place a one-byte code on the selected records, in case the user wishes to exclude them from a future mailing or analyze them separately. Output can be sorted by RFM cell or the original input order and is also in a comma-delimited ASCII format. The system can also provide a list of all cells with their quantities or of selected cells only, to be loaded into the Windows clipboard for transfer into a spreadsheet program. There is no response analysis capability within the system, however.

RFM for Windows is priced at $3,495 for the 200,000 record version and $4,995 for the one million record version.

Easy Site (IMV Internet, 800-682-1530 or 408-574-0255; http://maxsite.com) may be the ultimate high-tech product for low-tech users: World Wide Web pages for people without computers. For $39.95, buyers get a workbook with forms they can fill out by hand or by pasting on copies of an existing brochure. The vendor transforms these into a Web site of up to three pages, which can include order forms, surveys, or other information-gathering content. The cost of the pages, an e-mail link and one link to an external site is $19.95 per month. More pages and site linkages, activity reports, fax-back-services, and submission of the site to Web search engines are available for extra charges. What more is there to say?

David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.