The cost of a campaign or piece is one consideration for entering into the world of database marketing. The other factor one should consider is tracking the effectiveness of your communications program. A properly set-up database marketing system will let you monitor the effects of your tactics. This information will help you identify strategies and tactics that work better than others, so you become more effective in future endeavors.

Let’s perform another math example to demonstrate this point and look at one measurement that some database marketers will monitor. I will use the mailings described above. On the broad, 30,000 name mailing, you get a response of 3% (900 returns), fairly typical for a business-business direct mail piece. The cost per lead (CPL) then is $33.33 (30,000/900). In the more targeted mailing to 20,000 (a subset of the 30,000), you receive 850 returns or a response rate of 4.25%. More importantly, the CPL drops considerably to $23.53; in other words, the latter mailing was more efficient.

There are numerous measurements one can use to track effectiveness, and generally, people monitor 3 or 4 of these. After deciding on the measurements, determine a baseline to measure future activities against. Without an initial baseline (where you are at now), how can you tell where you are going? Sure total revenues are going up, but did you need to do all the activities to get those sales? If you did more, would sales increase even further? Database marketing can help you answer these types of questions.

Why not database marketing?

Now you may be thinking, "We already do that. Database marketing is nothing new to me." This is true, but where the true power of database marketing lies is in further expanding the ways you look at this customer information and how you use it to move customers to purchase. Computers make this information more accessible and easier to use than ever before. The only limitations are the types of information accessible to you and the number of queries you can place on your database. The critical key is carefully outlining the information that you will capture, so that is serves you well in your future campaigns.

Being practitioners of direct marketing we like customer response, lots of response, because that response indicates some level of interest in our products. We also like to see increasing response to our efforts because that generally correlates with increased sales. While many factors affect customer response to our marketing tactics, most hard-core direct marketers will tell you that 50% of the success is in the list, the target audience. What is the last thing most of us think about when we prepare a marketing communication piece for a given objective? Unfortunately, it’s usually the list. With a bit of effort and restructuring, our customer database can become our most valuable marketing asset for efficiently winning new sales. §

Carolyn Stock is President of KarmaComm, a communications firm specializing in promotional/technical writing, direct marketing and marketing communications. If you have comments regarding this article or related topics, she can be contacted at castock@execpc.com or by phone at (608)231-2825.