June 16, 2008

Rebuild Your Database Marketing Department: KPIs And People

Two questions come up all the time. Let's talk a bit about them.


Question #1: What are the two or three key metrics, KPI's (key performance indicators), that I should track in order to make sure that my business is being managed successfully?

Answer: Two or three? Try two or three hundred! I'm frequently asked about the half-dozen metrics that should be included in a management dashboard. Our businesses have become complicated, folks. In fact, they were always complicated, we just didn't have the proliferation of channels to help us understand how complicated they were.

Sr. Management seems to like monitoring two or three metrics, so make life easy for them. I personally monitor rolling twelve month buyers (new and existing), orders/buyer, items/order, price/item, repurchase rate. These metrics seldom steer you wrong. I also like creating a "comp customer" segment --- a definition of customers that does not change over time (though the customers in the segment change all the time). I monitor comp customer segment performance each month, reporting it like one reports comp store sales changes. This is the indicator I look to, to understand the health of my merchandise assortment.

But honestly, there are two hundred or three hundred metrics all of us should be tracking, across all advertising micro-channel, all physical micro-channels, and across all functions in the company (inventory management, creative, human resources, you name the department, there are metrics that should be tracked).

I'd have a notebook of hundreds of metrics, only sharing the ones that "tell a story" about why the business succeeded or failed that month.


Question #2: Can you tell me if my analytics person, e-mail marketing manager, web analytics leader, or circulation manager is talented enough to do the job?

Answer: This is the request I receive most often. And in almost every case, the answer to the question is "yes". Management, however, is asking the wrong question.

There are two questions that underlie the asked question:
  • Can my analytics person translate technical facts into actionable tidbits that Sr. Management can use to run the business?
  • Is my analytics person creative enough to find actionable tidbits not requested by Sr. Management?
In many cases, the answer to each question is "no".

Regardless of the field (e-mail marketing, catalog circulation, web analytics, paid search, business intelligence), technicians speak a "code" language unique to the profession (example: "I used the mean function within the aggregate procedure in SPSS to calculate the annual repurchase rate, so I know the metric is correct").

The code language does not translate to Sr. Management, folks who are looking for clear, concise language that reveals actionable steps to success. Without a mentor, folks struggle with this level of translation. Heck, I met a former EVP of Marketing colleague at the ACCM conference who told me, and I quote, "Your consulting business probably stinks because nobody can understand a word you say, everything you say is so complicated."

So unless we figure out how to talk to business leaders, using their language, we're sunk.

The question about creativity, however, is far more important. There are three types of database marketers.
  • Those who do what management tells them to do.
  • Those who creatively focus on topics not asked for by management, topics that are not going to be actionable within the current corporate climate.
  • Those who creatively focus on topics not asked for by management, topics that are going to be highly actionable to management.
You might surmise that the middle database marketer is the one you don't want to have on your team, or want to mentor toward success.

Management frequently believes that the best database marketer is one who does exactly what they are told to do. Unfortunately, this person is simply the easiest person to work with.

The best database marketer is the one who finds solutions to problems that management will ask about in the future, but does not have the context to ask about yet.


People are the number one problem I run across in my profession. Management thinks they don't have the right database marketing staff. Staff don't think management are asking the right questions. In general, there isn't an easy answer for resolving this disconnect without both sides giving way a little bit.

If you're tasked with rebuilding a database marketing team, spend a lot of time working on fixing this disconnect.