Over my career, I have frequently been asked to demonstrate how marketers can achieve the ROI from their marketing database. While there are many ways to generate incremental revenue and cost savings, the ability to realize the desired rate of return always comes down to the price of the database and its related services. With marketer’s spending anywhere from nothing to over one million dollars annually, the products available and individual company needs can vary greatly. As you take a closer look at line items in your budget, don’t forget to review your marketing database spend and make sure it is “right sized” to match your must have needs.
Top 10 factors driving marketing database pricing:
- Volume: The number of households/customers/sites/contacts and associated transactional activity are all contributing factors to cost. The greater the volume, typically the higher the cost. There is a benefit to storing records beyond your current segmentation requirements as you can determine attributes associated with re-activation as well as suppress existing buyers from rented lists for net name arrangements. Understand if archiving can lower your monthly fees.
- Update Frequency: Database updates can range from daily to weekly, monthly or even quarterly depending upon the need for information and your marketing schedule. However, while most marketers would say they want real-time updates, especially for on-line targeting, very few actually can justify the associated cost. In addition, there are often other means at getting the needed data more frequently while timing the database update with reporting and direct mail needs. For example, triggered emails can access more recent data with an API connection from the order processing system directly into the email deployment tool. In addition, email opt-outs are captured real-time by most email engines. The marketing database provides a holistic customer view and an overall evaluation of your marketing spend which should be reviewed regularly on a schedule that is timed with your ability to re-act.
- Functionality: What do you need the database to do? Campaign creation, business intelligence, list rental fulfillment, built in modeling? The greater the bells and whistles, the greater the price may be. Buy what you need and will use.
- Access: Do you need hands on access? Or do you want a full service model where the service bureau delivers reports and you never touch a button? Some combination of both? How many users will be accessing the system or making requests? Are there licensing fees that your vendor has to remit or is their software proprietary? The answers to these questions can impact price. Reductions in staff may limit your internal resources available to run queries and set up campaigns. It might be time to revisit the service model currently in place to maintain the level of information you were previously receiving.
- Reporting: Some databases put all of the work for reporting on the user. Other databases have report libraries and dashboards that are delivered with each update. Data can be addictive and leave you asking for more. The level of querying, data elements accessed and the desired report format will all play a role in the ultimate price of the tool purchased. Do you need to know who buys red sweaters on Tuesdays or do you just need to know how many 1x vs. repeat buyers you have and how much they spend? The types of questions you need answered will drive the tool required.
- Complexity of Segmentation: What elements do you use for selection? Segmentation can vary from RFM to complex model scores. The answer to this question will drive the type of data that is carried, the frequency of database updates, data source complexity and the associated cost needed to accommodate each.
- Data: The greater the number of sources of data, the greater the complexity. Does your data need “repair”? Do you want new fields created from more granular level data? Are you storing promotional history and for what period of time? Are you able to link your online data (search, affiliate, display and social) to purchases? Do you carry demographics or firmographics? Do you carry international records? Who you are going to target and analyze will drive what data is nice to have vs. truly needed.
- Data Views: The level at which you need to query and select your buyers can play a factor in pricing. Typically a single view (i.e. contact vs. site level) is included in a base price, but you might pay more for aggregation at a different level. Companies with multiple brands may also want to see corporate level statistics in addition to traditional elements by title. If there is little overlap, a corporate level view will have less utility and may not be worth any additional fees.
- Automated Scoring: Scoring your database may not be included with base pricing. Factors that can impact complexity include: the number of records to be scored, the number of different models, the frequency of scoring and historical scores maintained. You need what you need but make sure to make the most of it.
- Integration: Do you require that your database integrates directly with either your own internal systems or other tools? Do you need API integration with a “lights out” two way relay of data back and forth into your internal systems? Depending upon the level of integration needed, some tools may include this at no extra fee while others may charge for custom programming. Ask yourself if this is a “nice to have” or a business requirement.
Let’s face it, targeting in today’s complex environment requires a marketing database and it’s best to put one in place sooner than later if you plan to grow. With a wide variety of products available, it is important to lock-in your “must haves” so that you can right size spending and optimize database returns.
