The Ecstasy and the Agony
The Birth and Death of a 
Successful Database Marketing Program

by Arthur Middleton Hughes

 

In our business, you have to have a champion at the top, or there will be no database marketing program. In most industries, database marketing is not the main marketing vehicle. It is something new and additional to whatever is already in place. Often it is viewed with suspicion or fear by other units in the same company. These rival units often include sales, advertising, dealers, agents, or top management. If you look good, you might make them look bad. You might steal their customers, or commissions, bonuses, or budgets. It is dog eat dog in the corporate world.

This is the story of a couple of guys who developed a highly successful database marketing program, only to have it killed in its fourth year by a new executive who had other ideas. It is a fable of modern corporate life.

David Christensen is Vice President for Consumer Marketing at ACCO Brands, a leader in office products. Back in 1992, David was Director of Marketing of the Outboard Marine Corporation, manufacturer of the Johnson and Evinrude outboard motors. OMC had a 50% brand penetration in a very stable industry that has about 4,000 independent dealers nationwide. There are only two big domestic manufacturers, OTC and Mercury. Yamaha lead the growing foreign competition.

In 1992, David realized that database marketing was ideal for his industry. There was a finite, identifiable market with about ten million US households owning an outboard powered boat. OMC had a database of two million customers who had filled out warranty cards. In 1992 OMC decided to launch a new series of products to meet the Yamaha intrusion into the US market. David called on Stanton Lewin to help him. Stanton is Director of Client Services at LKHS, a direct response advertising agency in Chicago specializing in database marketing. Together, they were to make database marketing history.

They decided to build a database of boat owners, and use that database to drive customers to dealers – those customers most likely to buy a new outboard in the near future. They decided to focus on saltwater boaters, because salt water is very corrosive to outboard motors. It destroys most of them in three or four years. The new motor that OMC was launching was highly superior to any other motor in the market at that time. It was built with many stainless steel parts, which were impervious to the eating away of salt water.

The Florida Test

They decided to conduct a major test in Florida, which has a very large number of saltwater outboarders, with 750,000 boats registered in the state. Their goal was to create a Florida Boater’s Database that would identify exactly those boaters who needed a new motor in the near future. Secondly, they wanted to do research to determine the right message and the right offer.

The database was built by combining the 750,000 registered boats in Florida with the 2 million name OTC customer database. The data included the size, type, age, and propulsion system of the boat. From this data, they were able to pinpoint 250,000 Florida households that owned a boat that was at least three years old, was used in salt water, and was the right size for the type of outboards that they were selling. They divided the group in to customers and prospects.

Next step: to create an offer. David and Stanton tested seven different messages each in seven creative executions. The message positions were:

  • Reliability
  • Durability
  • Technology
  • Warranty
  • Corrosion Resistance
  • Made in America
  • Price

They tested the messages in focus groups in three cities in Florida. The winning message was Technology. The new engine had more stainless steel, and hence would last longer in salt water. "Their warranty is written on paper. Ours is written on stainless steel." After several tests, their stroke of genius was a free gallon of oil for anyone who would bring the coupon to a dealer to check out the new motor. Outboarders use a lot of oil.

To get the program launched, they had to get the support of dealers throughout the state. If the field sales force is not on line, such a program will not happen. They visited dealers from one end of Florida to the other to sell the idea. The dealers had to understand the program and stock plenty of oil, which was paid for by OMC. The dealer message was reinforced with trade advertising to communicate the battle cry and rally the members. Before the campaign began, they launched a dealer communications package reminding them of their commitment to stock up on oil, and to reiterate their role in the program.

The direct mail pieces, and the fulfillment to TV and print respondents contained local dealer names. If someone called in, they were asked five questions, including when they planned to purchase. Hot leads were sent daily to the dealers, many of whom followed up by phone. The media was highly integrated. Even though they used consumer ads, direct mail, television, in store materials and fulfillment, all media had the same look and feel.

As a part of the 250,000 selected for the mailing, 20,000 were set aside as a control group. This group received no mailing, but were tracked in their purchases. It was this group that permitted OMC to learn the effectiveness of their entire program.

The results were dramatic. Over a 16 week period:

  • they stunned the competition with OMC’s most dynamic product launch ever
  • their efforts directly increased OMC’s market share for this segment by 17 points
  • for every dollar spent on the program, they increased gross incremental profits by $1.21.

The National Rollout

Throughout the Florida test, David and Stanton kept the CFO of OMC fully informed of their efforts. It was the accountants who confirmed the fact that every $1 produced $1.21. With this type of initial success, they had no trouble in getting the budget necessary for a national rollout. In the second year, their marketing budget was increased by 400% to multi-million dollar size. They used this to create a mega-database.

Their new database was the largest database of registered boaters in the United States. It combined 46 different sources of legacy data:

  • 39 state registrations
  • 2 million customers
  • subscribers to publications
  • show attendees
  • demographic data from Polk.

The database included 30 key element fields in all 7 million records, including:

  • Type of water craft and year
  • Type of propulsion and year
  • Recency and Frequency responder data
  • Type of boating application
  • Age, income, education
  • Spending indexes

The database became a shared corporate resource. They did 32 mailings a year, setting aside 32 control groups to validate their results. They used it not only to sell the new motors, but also parts and accessories. The result: parts sold 24% more to the test groups than to the controls. They sent videos to dealers to educate them on the program.

In all 800 dealers nationwide, comprising the largest boat dealers in the US, participated in the lead generation program. They mailed two million pieces a year for the next three years. Some dealer experienced an 8% response to the mailings. The average response rate was 2.83%. In subsequent years, the salt water program was broadened to bass boats, fresh water fishing and performance outboards. It was a highly successful program, well researched and tested. They knew what they were doing, and really made database marketing history. Then it all came to an end.

They lost their champion. When the original VP for Marketing left, his replacement supported their efforts, once he understood what they were doing. After a couple of years, he was replaced with a new man who was totally hostile to database marketing. One of his first questions was, "What idiot came up with the oil thing?" The database project was abandoned. OMC went back to traditional marketing such as advertising in the swimsuit edition of Sports Illustrated, plus ads in enthusiast publications and sponsoring fishing tournaments. David and Stanton went on to other projects in other companies, but are still working together.

This is the story of corporate America. You lose your champion, you lose your program. David and Stanton’s program at OMC may have ended, but time does not erase the contribution that they have made to database marketing history. Their boater’s database reminds me of the tremendously successful database built for Caterpillar engines by Alan Weber, and the pioneering efforts at MCI for Friends and Family. Database marketing works.

 


Arthur Middleton Hughes is Vice President of The Database Marketing Institute. Ltd. (Arthur.hughes@dbmarketing.com) which provides strategic advice on relationship marketing. Arthur is also Senior Strategist at e-Dialog.com (ahughes@e-Dialog.com) which provides precision e-mail marketing services for major corporations worldwide. Arthur is the author of Strategic Database Marketing 3rd ed. (McGraw Hill 2006). You may reach Arthur at (954) 767-4558 .


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