Monday, February 18, 2008

Case Study Monday: B2B Database Marketing

We wanted to share today's case study because it illustrates how vital the company database can be. Sure, most direct marketers understand the importance of database marketing when we're talking about companies with hundreds of thousands of customers (think financial services or telecommunications firms). We liked this case study because it is all about maximizing customer data in an industry where the database is not typically considered a huge asset.

Industrial products firm, Lawson Products, realized success when they turned their focus on the customer, all enabled by their new focus on database marketing.

By the way, this article, in its entirety can be found in BtoB Online.

Company Background
Lawson Products sells and distributes a huge number of products—including screws, rivets and related fasteners—to the aerospace, agricultural, automotive, construction and transportation industries.

The company's 2007 sales of about $520 million was virtually unchanged from 2006. Revenue growth excluding acquisitions has been fairly slight since 2002. Further, because of its reliance on a huge but independent sales chain, the company found it had little ability to analyze customer data or track the results of its marketing efforts.

The Problem
"This is a family-owned business, and has been doing business successfully for a long time," said Lisa Kaplan, VP-corporate marketing at Lawson. "But it needed to change to keep up with the competitive set. So people like myself were brought on board to begin touching customers in a way we hadn't before."

The company, which relies on a channel of 1,600 independent reps, had no "actionable information," Kaplan said. Prior to her arrival five years ago, Lawson had no marketing department at all.

The Solution
Lawson turned to marketing firm Extraprise, whose main product, called i2i, is a conglomeration of commercially available software tools packaged under a common user interface. For Lawson, Extraprise put together a platform that at its core consisted of Microsoft's SQL Server database. In addition, Extraprise used a database cleansing tool from Firstlogic to make sure the flow of contact information into SQL Server was as accurate as possible.

To examine the newly cleaned data and formulate campaigns, Extraprise then added a database analytics system by Alterian. Another tool, already used in-house by Lawson, is a reporting and dashboard package by WebFocus. The whole process is supported by Extraprise's ongoing consulting services.

"Lawson didn't have many systems and processes defined around marketing," said Chris Baribeau, an Extraprise marketing strategist. "Our first challenge was collecting the data, putting it in a form to support Lawson's marketing needs." Baribeau said that Lawson had about 15 different databases companywide, such as Excel spreadsheets, Access files and mailing lists. All were dumped into SQL Server, cleansed by Firstlogic and examined by the Alterian application.

Kaplan said the initial task for the Alterian analytics tool was life cycle marketing, focusing on customer retention. "We had a lot of churn," she said. "We're attacking pockets of the business, and we'll see more this year. But already we're doing a better job of acquisition, penetration and retaining [at-risk] customers."

One big initial surprise from the effort, Baribeau said, was recognizing that customers tend to become inactive much more quickly than originally estimated. "After testing, we found you don't have a lot of time before a customer is inactive and must be treated as a win-back situation," he said.

Because the program is only a little over a year old, the effort's ROI is still a bit vague, Kaplan said.

"The process has given us good direction on where to point, to make refinements," she said. "For the future, we're trying to drive more volume through the tool with greater impact."

However, the process has enabled Lawson to better identify its best potential customers; best products and specific pricing; and ideal industries and customers. Analytics, in turn, is helping predict attrition, as well as life cycle, segment and product marketing, as well as lay the groundwork for improvement in each area.

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