by Ron Kahan

If I had a nickel for every time this question has been posed to me…well, you know the ending to that overused dictum. My qualifications to address this issue includes leading both marketing database and data warehouse teams for just over ten years and the successful implementation within over fifteen industries.

The short answer is “yes” there is a difference. The longer answer must take into account the functional requirements or widely accepted definition of each system.

Traditionally, a data warehouse is constructed for analysis of a business or business unit within a business. This analysis has been generally referred to as the "Discovery" process. One question is asked, which leads to another, and another…etc., etc., etc. From the answers to these questions, or query results, management can make intelligent decisions based upon this data-based information. However, the data warehouse does not, typically, institute any of the management decisions that come from the analysis. After all, a data warehouse is not an operational system.

A good marketing database should perform the same functions as a data warehouse, providing query capability and facilitate the Discover process. However, it should not only be used as an analytical and reporting tool, including segmentation, profiling and data mining, but also be able to handle the operational and administrative functions to plan, execute and analyze marketing initiatives.

Some of the most requested functional requirements of a good marketing database system include:

• Match and overlay third-party (demographic/psychographic) data
• Analysis and file scoring or tagging, such as buying, attrition and bad debt propensities/sensitivities
• Data hygiene functions, such as merge/purge, householding, and postal preparation
• Linkage to customer service to create “smart” workstation information while in contact with customers
• File segmentation and mail/telemarketing file creation
• Campaign tracking & back-end analysis
• Loyalty program administrative functions
• Standard (scheduled) and ad-hoc reporting

So, in fact, a marketing database is different from a marketing data warehouse…unless the marketing data warehouse includes the requirements necessary to plan, execute and analyze database marketing functions. Based on my experiences alone, this is possible and has been successfully accomplished.

There are many critical factors that will impact the successful implementation of a marketing data warehouse, however, in the context of this column's topic, two specific factors come to mind.

The first is the flexibility of the system architects, both logical and physical. In most cases, a marketing data warehouse must be de-normalized to meet marketing requirements. As technicians, we must remember that the needs of the client are the paramount concern, not whether the system conforms to rigid architectural design specifications.

The second factor is that the development, from pre-planning to planning and implementation must be driven by a cross-functional team, with the marketing department as the leader. Lack of consideration to this factor has been, and will continue to be, one of the most prevalent reasons why marketing database or marketing data warehouse initiatives fail.

Before you read any further, I think it's important to clarify that my company is an independent database marketing consultancy with no ties, monetary or otherwise, to any marketing database technology (read impartial).

You are no doubt aware of the growing number of options for marketing database systems available to your company. Yet, in sifting through all these options you've probably discovered that, basically there are three "types" you can choose from.

A flat file format marked the beginning of marketing databases. It involves linking your customer database and related transactional information and summarizing them with highly indexed fields for faster queries and look-up time.

Although this process sounds simplistic it usually involves some custom programming to receive and convert the data into a usable format. The information was originally only accessible to you through your service bureau representative. Since that time, it has been made available through
on-line services from your service bureau's datacenter.

The more sophisticated service bureaus have developed desktop software applications so that you can view and manipulate the data in a static fashion using PC diskettes or even a CD-ROM.

Seeing an opportunity, many software companies began developing proprietary marketing database systems. With them, you were no longer at the mercy of a service bureau for your data.

These proprietary systems are installed at your site, sometimes right on your desktop. A data conversion process still occurs, but now the speed has been increased significantly. Some of these entrepreneurial software companies even offer fee-based consulting services to assist you in getting
up-and-running.

Today, many database marketing practitioners are using open system relational databases or data warehouses. Once considered the slower option, in implementation and processing speed, it is now, oftentimes, the fastest.

You can choose from a wide variety of database software or an extensive list of available query and OLAP (on-line analytical processing) software packages.

The main advantages with open-system relational databases are:

• Easy-to-use and cost-effective. The database itself can be created and maintained by your internal MIS/IT department. Any changes to the database structure occur quite easily without the expense of third party assistance.
• In-house confidentiality. Protection from your competition. They won't know what you're doing with your marketing database or how you're manipulating the data for analysis, reports and targeting.
• Self-sufficiency. You are no longer tied to third party vendors for service.
• Growth potential. Technology in general is moving toward an open system, client server standard. Fitting the direction for technical standards being developed by your organization, it provides long-term viability.

By now you've probably realized that I'm biased toward open-system relational marketing data warehouse systems for marketing database technology.

All three of these options are right, there is no wrong. As long as your company has a solid foundation of business drivers, strategies and tactics which are propelling you to invest in a marketing database, return on investment will come from any of these options. Without this foundation it doesn't matter which direction your company goes in, your resultant
destination will be failure.

Ariss Kahan Database Marketing Group, Inc. assists clients build customer relationships through proven and innovative database marketing techniques and marketing database technologies. They specialize in customer acquisition, retention, cross-sell and up-sell initiatives and can be reached at (303) 368-9800 or via e-mail at rkahan@dbmktg.com.