The devil, as they say, is in the detail, and for direct marketers, it is devilishly tricky to ensure that the data on which their success depends is of sufficient quality. Inaccurate information can cause wastage and a poor return on investment. Worse still is the potential antagonisation of existing customers.
With a multitude of data being generated from myriad sources, keeping on top of it all is demanding. It is estimated that 10% to 20% of mailing lists are out of date. And if lists are not regularly cleaned and updated, effectiveness plummets.
'Some lists will have a higher percentage of old data than others,' says Scott Logie, managing director of data strategy firm Occam, and deputy chairman of the DMA Data Council. 'It depends on where and when the list is sourced, how often it is cleaned, and if it is regularly suppressed and updated.' It is vital not to assume a list is perfect. 'People move house every day; no list will ever be spot-on,' Logie adds. 'And people change their habits, opinions and purchasing decisions regularly.'
Occam encounters many lists that are assumed to be clean but which actually contain poor-quality data. However, he claims it is rare that such lists cannot be cleaned in order for them to be used without fear of inflicting brand damage.
Data collected via the internet has many advantages. It allows clients to take control of their own databases, helping to reduce their reliance on lists. If mined more deeply, it offers rich data to marketers. 'People have changed their buying behaviour. More and more people are going to the internet to compare costs, sizes and styles,' says John Wallinger, database director at Craik Jones Watson Mitchell Voelkel. 'Using the web as a hand-raising tool is important. We use lists, but less so. Budgets are moving online, and the audience is warmer there.'
Appealing to this 'warmer' audience is the approach preferred by Honda in the UK. In the past, it has used cold lists based on surveys, but it now prefers not to use lists for cold prospecting wherever possible. Even with surveys that ask 'When do you intend to change your car?', Honda has found responses at odds with reality.
Neil Fretwell, data director at relationship marketing agency Hicklin Slade & Partners, manages Honda's prospects and customer database, which includes everyone who has made contact with the company via a list or an enquiry. '(We write to prospects) regularly to check and recheck that the information we hold is accurate,' Fretwell explains. 'We will know if they are driving the same car as six months ago, and whether they still intend to change their car in the next six months.'
Like many brands, Honda uses digital channels to update its information, finding it cost-effective and efficient, with email the preferred contact method. Mick Doyle, Honda's manager of customer understanding, says there is a focus on obtaining as many email addresses as possible through its dealership network. Information is kept on a central database and all communication is coded.
The car maker prioritises two questions: when are you going to change your car, and what model are you currently driving? Fretwell says this simple approach is useful in a data-heavy world where 'far too many brands waste time chasing the more irrelevant bits'.
Yet for all the advantages of online data collection, there is also a downside. Logie argues that consumers' use of 'spoof names' is on the rise, in part a backlash against excessive online form-filling. This should be taken into account when formulating data-capture plans. Logie adds that many in the data industry need to be 'more intelligent' at formulating means of identifying web users. For example, the capture of date-of-birth information could be prioritised via a pop-up window. However, he warns that it is important not to overburden consumers with too many questions, which could prompt them to decline forms or falsify their entries.
Failure to get consumers' details correct can do more damage than just annoying the erroneous recipient. In the era of the proactive customer, with rapid feedback via blogs and product-review sites, brand perception is being driven more than ever by word-of mouth advocacy. 'If data is not comprehensively updated and cleaned, then the negative impact on a company's brand - through contacting the wrong consumers - can erase the financial effect of an otherwise high-performing campaign,' says Mark Challinor, head of data planning at Archibald Ingall Stretton.
Pooled data - the buying-in of a number of lists to bolster the volume of information used - has proved popular in recent years, but some industry watchers are concerned that there is no obligation to disclose the original source of the data. As a result, companies may face the risk of buying something they already get from another supplier.
'Pools require greater transparency, and it is something I have been urging the DMA Data Council to act upon,' says Lorna Keane, list broking account director at Prospect Swetenhams. 'The industry's reputation has been hit hard recently, and it's far too risky to be sending out mailings or emails using data that is potentially of poor quality, and which may not even have been (measured) against industry standards.'
Although list brokers and data owners have to comply with legislation such as the Data Protection Act, and the suppression of the Mailing Preference Service, they are effectively self-regulated when it comes to data performance, quality and accuracy. Challinor is among those who feel this system has worked relatively well for the industry, as those companies that invest in database maintenance, updating and quality improvement are the ones that perform well for their clients, meaning they are retained as suppliers. Those companies that fail to invest in such measures will, he argues, invariably be dropped.
Nevertheless, marketers do not want to learn the hard way that their list is flawed, and there are calls from within the industry for an audited quality standard for consumer lists. This has already happened in the B2B sector, where after a tentative start the DMA Business List Audit scheme is gaining an aura of authority. The audit comprises an online accreditation process, plus a site visit from a member of the DMA compliance team and random data checks. Annual renewal involves a fresh audit, which includes a customer-satisfaction survey.
'These are big steps forward to audit data properly so that it does what it says on the tin in relation to timeliness and accuracy,' says Michael Howe, head of 100 Percent Direct Marketing. 'The audit is a level of baseline quality that can be trusted. There are lists out there that are particularly bad and will never get a certificate.'
The DMA Data Council has discussed the introduction of a similar system for the consumer sector, but no concrete proposals have yet been made, perhaps because the scale of the task is daunting.
Yet for brands themselves, reaching out to potential and existing customers through data capture can also be intimidating - the amount of information being created is vast, and the methods of capture various. So how can brands ensure, for instance, that they have a holistic view of their consumers?
It is a challenge that Matthew Button, Lexus GB's CRM and database marketing manager, is all too aware of. Using its own 'segmentation and propensity' model, while working with agency Partners Andrew Aldridge, Lexus assesses the likelihood that a potential customer will buy one of its cars, and applies an 'emotional index'. Combining its own data with the geodemographic methods employed by Mosaic and TGI, Lexus segments customers into those likely to be swayed by emotional brand factors such as value and aspiration, and those more motivated by rational considerations such as finance deals and running costs. The company's campaigns are then tailored to these groups accordingly.
'The way we cut up the data varies from campaign to campaign,' explains Button. 'The job is about continually refining whatever insight you might have. If you have some kind of theory about your customers' behaviour, it's your duty to validate it.'
In March, data heavyweight Experian announced it is to merge its ClarityBlue, Prospect Targeting, Bureau and Intact businesses to create a single entity known as Experian Integrated Marketing. Providing technology, data, consultation and analytics, the new brand highlights how demand for data insight and services is growing and evolving. The move is also an illustration of how tired old lists and superficial segmentation will no longer do.
CASE STUDY - NECTAR
Loyalty Management UK's (LMUK) Nectar programme, launched in 2002, generates a mountain of data. Roughly half of all UK households have the card, which can be used in about 6000 retail outlets.
In March, Sainsbury's announced that it had renewed its contract with the loyalty group and will benefit from LMUK's new data analytics business, established to provide greater insight into customer shopping trends, gained from analysis of till and Nectar information.
LMUK segments its active customer base into seven levels of commitment, ranging from 'engaged collectors' to those who are 'passively swiping'. Personal information supplied by members when registering for the scheme is regularly overlaid with Experian Mosaic data to provide insight into life stages and help highlight targeting opportunities. 'It's relatively easy for organisations to collect a lot of data,' says Nectar marketing director John Sheekey. 'It can be hard to extract meaningful information out of that data, although it becomes easier as you get to know your database better.'
Sheekey adds that Nectar is moving toward more 'trigger-based' communications, with consumer behaviour identified from data changes sparking action. An example is the 'home mover' pack sent out to Nectar cardholders when they change address. This includes a map with the cardholder's new home featured, indicating where Nectar points can be collected locally. Coupons are included to help track impact.
Data is also scrutinised to identify members with an interest in green or sustainable products. Such products are targeted at segments likely to be receptive using tailored campaigns.