November 1998

Marketing Solutions Begin With Disparate Threads Of Customer Data

BY RICHARD BIRT, BOB GILLEN AND LAURA MIDDLEKAUFF,
ACXIOM CORPORATION

Business-to-business database marketers face special challenges when compared with traditional consumer-based marketing activities.

• Smaller universe of available prospects. There are approximately 20 million U.S. businesses versus 200 million consumers.
• Fewer defining demographic attributes. Whereas data compilers can provide detailed profiles on consumers concerning their age, family composition, income, lifestyle, etc., business-to-business data is less revealing. Identifiable data elements such as SIC codes, workforce size, sales volume, etc., provide critical marketing information, yet targeted analysis of actual decision makers and purchasing authority is often limited due to insufficient information.
• Cost and complexity. Most business-to-business marketers employ a multiphase approach to advertising, promotion and distribution. The number of mailings, product pricing and type of offer can be varied based on customer characteristics. Additional forms of contact, such as direct sales calls and outbound telemarketing, may also be used. However, with outside sales calls often costing $250 to $750 each, and telemarketing contacts $10 to $40 apiece, the need to target scarce prospects accurately is crucial to reducing expenses, unnecessary follow-up and wasted contacts.

Special Challenges - Special Needs
Business-to-business database marketing strategies must also accommodate factors particular to the corporate selling process. While embodying some concepts of consumer-oriented marketing, added layers of complexity are created when facing customers that are organizationally diverse and potentially segmented by product usage. A review of business-to-business customers indicates there are five defining needs/applications common to database marketing requirements:

• Sell targeted industries through vertical or horizontal integration, thereby allowing penetration into all organizational levels,
• Renew existing customer base through upsell, cross-sell and retention,
• Build strong understanding of customers through their purchases, product usage, and firmographics,
• Increase sales cycle efficiency (close to call ratios),
• Identify "like" prospects.

Data integration is the one process that impacts all five applications. It is a critical component in developing a state-of-the-art database marketing platform. As the "front end" to successful database building and warehouse development, marginal improvements to the cleansing, matching and consolidation process can lead to significant gains in the efficiency and effectiveness of marketing efforts.

Data Integration Process Overview
Extract And Prepare:

• Conversion,
• Standardization,
• Consolidation,
• Enhancement,
• Reporting.

An essential factor underlying the efficacy of all database marketing applications is that of data integrity. Good data, as opposed to "dirty data," delivers benefits impacting all phases of the marketing process since current, accurate and accessible data is the key to producing actionable information from which to implement future marketing campaigns. While recognizing that "perfect" data will always be more of a goal than a reality, the employment of disciplined data integration techniques enhances data accuracy to allow more targeted, informed and cost-efficient business-to-business marketing initiatives. This has tremendous impact on the "back end," leading to reduced costs for sales force deployment, higher response to telemarketing and direct mail efforts, and raising the overall attractiveness of these campaigns.

A step-by step look at the data integration process helps pinpoint these advantages.

Conversion
Since marketers typically use multisourced data files at prospects and customer sets, the first requirement will be to edit and reformat this information in a uniform manner. Parsing algorithms can achieve standardization by identifying the location, length and relative completeness of information in each data field. More sophisticated techniques using approximate string matching, parsing tables and word reference files can further enhance matching accuracy and flexibility. Also during this process, it is possible to add key codes to each record. Indicators of professional titles, recent purchases or unique response identification numbers provide valuable marketing intelligence when scoring important records for "back-end" tracking and response analysis.

Address Standardization
Mailing accuracy, deliverability and distribution efficiency are all positive byproducts from this next step in the data integration process. Identifying and correcting bad addresses can produce measurable economic benefits in terms of cost savings (avoiding undeliverables) and productivity (efficient use of time and resources).

The most basic and widely available database, the U.S. Postal Service's Coding Accuracy Support System (CASS), identifies and corrects bad records to the carrier route and ZIP+4 level. When appropriately benchmarked and updated, CASS can produce a 90 to 95 percent coding accuracy. However, since CASS is range-based, i.e., to the block level, there is the risk of missing undeliverable addresses or misflagging deliverable addresses that are coded by actual delivery points (mailbox level).

Delivery Sequence File (DSF) is the most precise address database available and an effective tool for fixing bad addresses, delineating like addresses, and verifying actual deliverablility. The U.S. Postal Service restricts DSF to licensed vendors, and DSF does cost extra money. However, the benefits of fixing one to three percent of bad records (DSF average) on a million-name file is a strong inducement for added processing.

For business-to-business applications, DSF offers a benefit that is often overlooked - identification of true business addresses. DSF match codes contain information about each address which can be scored to indicate residence, business or small office/home office (SOHO) - a real aid to marketing decisions.

Consolidation
By this time in the integration process, improvements to your data integrity will facilitate the matching and consolidation of "like" data into a group of linked records for each company location. Sophisticated merge/purge software, which incorporates advanced string matching technology, is a powerful tool for identifying and combining information about a firm, individual names, past contacts, purchase history and a host of other data essential to your marketing efforts. Matching algorithms are easily customized to accommodate your marketing strategies for multiple mailings to the same company or individual, varying promotional offers, name suppression, or setting conditions based on the source of data or geographic characteristics.

Recent advances in the use of prospecting models for business-to-business mailings have sharpened the ability to score and identify prospects with certain response behaviors or firmographics. The consolidation process serves as an integral process for combining like records, propagating ancillary data and eliminating duplicates for reduced mailing costs.

Enhancement
Enriching data with content that improves your knowledge of the customer is of obvious importance to business acquisition, retention and relationship building. Customer-focused marketing decisions require the broadest possible profile of data to improve your ability to understand and effectively communicate with your best customers.

External sources of data from companies such as American Business Information, PRO CD, DataQuick, Dun & Bradstreet, et. al., allow you to capture and overlay elements concerning the size, industry, revenue, telephone numbers and contact person at most U.S. businesses and institutions. Private service companies offer multisourced file processing that combines data elements from many compilers to aid in the efficiency, accuracy and matching capabilities of the enhancement process.

The National Change of Address (NCOA) file, both hygiene and enhancement, contains information on all businesses that have filed a permanent change of address with the Postal Service. In addition to reducing undeliverables, NCOA matches can aid marketers whose products are especially suited to newly relocated business (e.g., telephone systems, furniture, business forms). Supplemental change of address programs available from service bureaus offer added refinement in resolving NIXIEs or near matches, by employing more flexible match logic and expanded cross-referencing with private data sources.

Another example of enhancement arises from Postal coding capabilities that provide for walk-sequence and other forms of sorting to obtain maximum delivery discounts under new Postal Service regulations.

Reporting
Comprehensive matching reports present a complete picture of the results for quality assurance and customer analysis. Reports provide samples of matches and consolidated files, track results from individual lists, compile geographic breakdowns and generate decile rankings of customer names based on scoring results.

Summary
Business-to-business marketers face an increasingly diverse and competitive marketplace in which to target, acquire and retain customers. The processing capabilities inherent in data integration offer fundamental value for achieving these goals. Even so, a continuing focus among data integration service providers is to develop methods of adding speed and capabilities to data conversion, standardization, consolidation and enhancement. Key elements of these include:

• Metadata controlled processing,
• Standard, callable name and address parsing,
• Server-based processing for maximum flexibility, speed and scalability,
• Parallel processing in a server environment,
• DSF as a callable function with codes applied during ZIP+4 standardization,
• Automatic data enhancement at time of processing.

The future of business-to-business database marketing will continue to be driven by the need to identify, cultivate and effectively communicate with customers most likely to buy your product. Data integration, and its role in building more effective database and data warehouse platforms, shall likewise remain a value-added partner for achieving these objectives with improved flexibility, accuracy and profitability.

Bob Gillen is an expert in the field of list management and Postal handling. As product manager for Postal Products with Acxiom Corporation, he often consults with companies to maximize the efficiency of their mailing operations.

Richard Birt develops and implements modeling requirements for Acxiom Corporation. His expertise lies in file engineering, customer segmentation and profiling, response and attrition modeling, and tactical direct response execution. He pioneered the use of marketing research, statistics and systems to deliver direct response programs that consistently yield double-digit response rates. He has worked in business-to-business for 15+ years.

Laura Middlekauff is currently product manager for Acxiom's Merge Purge Services. Her previous work at Acxiom includes product consultant for conversion, matching, profiling, and merge purge reporting applications. She also worked in several customer service positions with traditional direct marketing industry customers and began work at Acxiom in 1980.