Rebuild Your Database Marketing Department: Wrap-Up

Lather, Rinse, Repeat

Once you're knee-deep into year two, you'll realize that not everything went the way you thought it would go.

Your web analytics expert quit, leaving you in a bind.

Your e-mail vendor was bought out by another company, causing a temporary reduction in service and a new account manager to be assigned to your team.

Paper and postage costs required you to reduce catalog circulation by thirty percent.

You over-invested in e-mail marketing frequency, actually causing a loss, not the profit increase you promised.

You listened to the pundits and started a blog, only to be told you are behind the times and that you should be on Facebook, only to be told you are behind the times and should be on Twitter, only to be told you are behind the times and must be on Plurk ... all in a six month period of time!

Keyword inflation caused you to have to increase your paid search budget, and that increase caused you to not invest in your customer information systems.

A sour economy caused you to have to downsize your team by fifteen percent.

By the end of year two, nothing looks the way you thought it would. The world changed. It is your responsibility to change with it.

This means you have to start the rebuilding process all over again.

Given what you and your team learned the first time around, you'll be much better at the process this time.

This time, delegate the majority of the process to the leaders who work for you. They'll be tired of your antics if they have to implement your ideas all over again, just two years after starting the process. Put them in charge of the process, and where possible, embrace their ideas.

Life has a way of repeating itself every two or three years in the direct marketing world. There are natural business cycles. People have unique career interests. Systems need to be refreshed. Technology causes us to re-work our processes. The rebuilding process begins anew.

Hopefully, this series provided you with a framework for thinking about how to navigate challenging times.

Lather, rinse, repeat!

Rebuild Your Database Marketing Department: Org Structure

The third most asked question is "how should I structure my database marketing department?"

Too often, we're served an endless array of pap about abandoning "silos". You know all about silos. Silos are the org structure where functional areas work together and sit together, working sometimes without knowledge of what somebody else is doing. The e-mail marketer doesn't know what the catalog marketer is doing, the web analytics expert doesn't know when an important telemarketing campaign is happening, yadda yadda yadda.

You don't solve these problems by putting all of these departments under one individual. I've observed horrible problems created by a centralized and powerful team that "make the rules". I've also observed horrible problems created by silos.

So what's the answer?

Try hiring somebody (and give this person the authority to make decisions) who collaborates between silos. Think about States. Here in Washington, we have different laws than the folks in Oregon have. Yet as a loose federation, States have rights to do things their way, but theoretically benefit from a centralized government in Washington, DC, where they receive proportional representation (house) and equal representation (senate).

We can debate about how government is mucked-up. But the concept of having somebody coordinate activities between "silos" works. The individual must have the right personality --- an extrovert who gets folks to do things without direct reporting relationships is hard to find.

In instances where I've seen different marketing disciplines get along, there is always somebody who "makes this happen". This person is seldom the actual leader of any given team --- it is usually somebody who simply takes responsibility. She might be a circulation manager who gets the e-mail folks to talk to the web analytics team (I see this all the time). He might be the business intelligence Director who needs to get the retail marketing folks to talk to the paid search team (I see this one too).

If you're looking for a career niche, this is one that will need highly qualified individuals over the next five years.

I'd focus on finding a person who fills this role more than trying to identify the perfect org structure.

Executive Comments From Leading Brands

Williams Sonoma:

• "We froze our merit increases for the year for our associates, while at the same time we reviewed every associate's compensation with the market and if they were not in line with the market, we did correct that." KH: Try being an employee with no salary increase and fuel costs rocketing skyward. Long-term, employees nationwide will have to find a way to organize or to gain leverage.
  

• "What we are always doing is looking at the productivity of the last catalog mailed versus the next dollar that we can spend on paid search, and over the past couple of years, we have been able to intensify the efforts in search and reduce some of the marginal catalog mailings."

• "We have eighteen million customers who have opted-in and given us their e-mail address". KH: To the e-mail community --- how do you craft an e-mail program, individualized for eighteen million customers? Any ideas?
  

Costco

• "We and Sams continue to be fiercely competitive ... and we are both in each other's warehouses more than once a week shopping key items."

Ann Taylor

• "Internet is a very profitable business segment for us. Within the Ann Taylor division it represents about 10% of the total division’s sales and something less than that for Loft."

Limited Brands

• "Although the Direct business is $1.5 billion, it is the fastest growing channel. We will continue to see growth out of that channel. What you are going to see is within the catalog business. We will not mail as many catalogs or pages. It will still be a heavily integrated web-based business. The community piece is continuing to build and how do you play within the community, which is a new marketing target for us. I think also how do you think about step size, like VS - you know we have VSPink.com and how we are linking that back to the mother ship, and there is some exciting things there. We started to test mobile commerce, and it is just beginning touching in the water so, it may not be a great experience but you get on your mobile phone and you can place orders and through Catalog Quick Orders. It is amazing how many people have already responded to that test. You are starting to see a lot of that in Japan. As our technology and zones continue to upgrade in the United States, I still think that there is some interesting opportunities there."

Urban Outfitters

• "Direct to consumer sales surged by 34% with just 3% additional catalog circulation, with all three brands contributing meaningfully to the result."

• "All three brands continue to innovate in direct to consumer business. For example, Anthropologie began shipping internationally last quarter, Free People introduced product reviews and Urban Outfitters expanded its use of video, generating more than 17,000 YouTube views on its most successful clip."

Macy's

• "The key there is that Bloomingdales.com has a huge potential and we think that that is where we should be investing our resources as opposed to the catalog, and it will have a minor impact on sales and no impact on profit as we discontinue that in 2009. ... We are expecting to do $1 billion this year in volume in our direct businesses and we expect it to continue to grow significantly from there."

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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.

Rebuild Your Database Marketing Department: Part 7 (Salary Information Included)

Create A Career Path

Near the end of your first year, you know your people, you know them really well. Some have "it", that special intangible skill that enables them to become Executives. Some have "that", that special technical skill that allows them to be a subject matter expert at what they do. And then you have all the valuable employees who are needed to make sure the company keeps running.

You'll need to have multiple career paths for folks.

Folks will need to know what it takes to have your job.

Folks will need to know what it takes to have another leadership position in another department.

Folks will need to know what it takes to become the imperial wizard, the subject matter expert revered by all.

All three paths require "the juice", a combination of compensation, recognition, autonomy, authority, and accountability. "The juice" must be clearly stated, must be good enough for folks to stretch themselves to strive toward. And you must follow-through on "the juice" --- it isn't a carrot you dangle in front of folks forever.

You'll partner with Human Resources to develop the career paths. And if your Human Resources team (or Executive Leadership) fail to provide you with the authority to compensate folks, promote folks, or given them what they need, you need to communicate this fact to your staff --- allowing them to make decisions that are in their best interests.

Too often, the Human Resources / Compensation department carry out the wishes of Sr. Management --- by suppressing expense. How is a 3% cost-of-living increase going to pay for the gas required to get you to work? They aren't on the side of your employees --- YOU have to be on the side of your employees, defending their interests.

Part of the career path includes compensation. Entry level analysts will probably fetch $40,000 to $60,000 per year. Sr. Analysts and Managers might fetch between $60,000 and $100,000. Directors could earn $100,000 to $150,000 per year, and might command a 20% bonus. A well-qualified Vice President probably earns between $150,000 and $225,000 per year, with a 30% bonus.

The challenge is to create a career path for non-management folks, one that can get them into six-figure territory without having to manage staff. One might consider a significant incentive-based salary, one that depends upon the incremental profit the individual contributes to the organization.

So create some sort of career advancement plan that benefits them, be on their side!

Rebuild Your Database Marketing Department: Part 6

Hit The Road, Jack!

Now that you have a strategic plan in place for year two, you need to tell EVERYBODY about it!

If you work for a retailer, this means you visit stores if necessary, to communicate your catalog, e-mail, and paid search marketing strategy.

If you work for a cataloger, this means you visit the call center and distribution center. You tell every employee why you are doing what you are doing, you share with them how these strategies will benefit them. If you are an e-mail marketer, when is the last time you went outside your department, and clearly explained to all of your co-workers what you do or what your strategic direction is? How about those of you who are paid search marketers?

If you work for an online pure-play, you meet with every functional department in your company, explaining how customers behave, explaining why you have to make the changes you are making.

You meet with all the folks who you put a firewall between nearly a year ago, explaining why the information you learned shapes the direction you're taking your department in.

You visit your vendors. You communicate with them how their input in the "conferences" you held early in the year shaped this strategy. You remind them that they are an important part of your team.

And you LISTEN. Listen to what people have to say. Their input could influence changes in your strategic plan.

Hit the road, Jack!