David Raab Article Archive

Integrated marketing has at least two meanings. Sometimes it refers to coordination of mail, telephone and field sales contacts made with an individual customer or prospect, with the aim of maximizing the return on promotional investments. In other cases, it includes non-direct contacts such as print and broadcast advertising and is more concerned with presenting a consistent brand image than with managing individual customer relationships.

From a software viewpoint, these are very different problems. Managing a brand image requires systems to coordinate advertising and promotion schedules, but the real work of coming up with integrated marketing concepts happens in people’s heads, not their computers. By contrast, coordinating contacts with individuals relies heavily on a centralized marketing database.

The mechanics of this coordination can be accomplished by either conventional sales automation software or the cross-departmental “customer asset management” systems described in a previous column. The critical requirement is being able to define and execute a sequence of marketing events–for example, a direct mail piece followed by a phone call followed by a field visit. Often the sequence can be set up as a branching tree, so the contents of later contacts with an individual can depend on the responses to earlier contacts.

But the concept of integrated marketing sometimes extends beyond multi-step campaigns. There is often an additional sense of optimizing an organization’s contacts with an individual, across multiple campaigns and even including non-marketing contacts. This is the province of yet another type of software.

Products in this class include Exchange Applications’ ValEX (617-737-2244), Dialogos’ Visual Workbench (617-357-4722), and Paradigm Communications’ Ovation (800-749-0228). These systems start with the premise that the customer base should be segmented into different groups and that appropriate strategies should be developed for each group. The over-all objective of each strategy is to maximize the profitability of each segment; profitability is the combined result of promotion expenses, products purchased, prices paid, services required, and other factors, and takes into account potential as well as actual behaviors. Indeed, the first major step in installing these systems is to come up with a detailed, specific business model and to identify the associated “metrics” which determine profitability in that model. These metrics provide a common point of reference to evaluate any marketing activity, both during planning and after promotoin execution.

The second major component of these systems is the file segmentation itself. This is usually based on some combination of internal transaction history, demographics, and external information. The external data, which might for example include purchase information provided by a credit card company, is especially important to assess potential. The definition of file segments typically relies on third-party statistical software to identify distinct groups within a customer or prospect base. The systems are designed to work with different statistical packages, so that the user’s preferred product can be integrated during implementation.

The third major component is planning the promotions themselves. These products allow users to work in a top-down fashion, defining objectives and strategies and then creating individual promotions to execute them. Users can estimate the outcomes expected for a promotion, expressed in terms of the standard business metrics defined when the system was established. These estimates can be used to assess the value of a proposed promotion and later can be compared against its actual results.

Once a promotion is accepted, it can be assigned an execution date or, if it will execute continuously, a start and end date. Because the systems assume that multiple promotions may be active at the same time, they often provide some sort of mechanism to limit the number of promotions sent to an individual customer or prospect. This may be handled by linking multiple promotions in a single selection scheme, by excluding individuals in an active promotion from new promotions, or by rules regarding the maximum number of contacts allowed in a specified time period.

All these systems can execute complex queries and set up test/control splits, Nth selects, keycodes, and similar standard marketing requirements. But, perhaps ironically, only Paradigm Ovation allows users to define a promotion with a sequence of contacts and responses and to execute promotions automatically over time. Exchange Applications and Dialogos are currently limited in these abilities. These limits in campaign complexity reflect a vision of these systems as more strategic than tactical–that is, the systems are aimed at determining which customers should receive which treatments, rather than at executing the treatments themselves.

Thus, the primary outputs of these systems are lists of customers to feed direct mail, telemarketing, sales automation or other tactical systems which will actually execute the promotions. In some cases, the tactical systems might themselves run complex, multi-step marketing campaigns. Ovation is again something of an exception, since it provides an integrated telemarketing function and can directly drive fax or e-mail servers.

Because these systems are intended to provide the major organizing force in a corporate marketing operation, they also provide scheduling abilities to help with internal operations. Ovation and Dialogos both include their own functions to assign specific workers and schedules to program development, while Exchange Applications is built instead to link to third-party workflow software or a company’s existing scheduling system.

The final component of these systems is promotion evaluation. Since common metrics have been established from the start, they are already available for evaluation reporting. Exchange Applications and Dialogos both integrate third-party multidimensional analysis tools to allow easy comparison of results by promotion, segment, time-period, strategy, and any number of other attributes. Ovation makes the data for each promotion available in a spreadsheet format, which users can extract and further manipulate in their tool of choice.

These products are all designed to work with standard relational databases. While their vendors can provide assistance in building the underlying marketing database, the functions for data cleaning, householding, file updates and other maintenance procedures are not part of the systems. This reflects the assumption that in many cases today, a suitable marketing database or data warehouse will already exist.

Pricing on these products usually begins at several hundred thousand dollars for the software alone, plus a similar amount for services. Actual cost will depend on database size, project complexity, and the degree of integration required with other systems.

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.