In essence, data-driven marketing (DDM) is marketing that is based on enterprise customer data. It is a marketing process in which enterprises collect, settle and analyze customer data, make continuous marketing, repeat it in endless cycles, and keep optimizing it.
Personal information protection law, promulgated sooner or later, will be a watershed
In developed countries and even some developing countries, the legal system protecting personal information has been fairly complete. Relevant industrial organizations and associations would even establish their own rules in their business scopes according to the legislative purposes. For example, European Society for Opinion and Marketing Research (ESOMAR) regulates that market surveys and database marketing business should be separated in operations.
Why is it so hard to establish a personal information protection law in China? On the one hand, China’s social structure and legal system construction lag far behind the surging market economy. On the other hand, China is short of a relevant body of law, i.e., relevant government body of law enforcement. Other factors baffling the establishment of the personal information protection law include judicial evidence collection and inter-departmental interests. Even if the personal information protection law is established, there will be a long period to make related judicial interpretations, concrete detailed rules for implementation, and relevant legal system construction. Anyhow, the personal information protection law has been put in the legislation program. Once it is promulgated, the law will become a watershed and surely bring about profound changes in relevant industries, particularly the giant but relatively loose data marketing industry.
Changes in industrial environments
Since it is obtained at exceptionally low costs, personal information is bought and sold in mass again and again. Enterprises may also gain personal information with very low costs and market the database. On the basis of existing data acquisition costs, enterprises may enjoy double or more investment return rates from database marketing (telephone, direct mail and e-mail marketing modes have relatively fixed costs) than from the regular marketing mode (such as radio, TV and newspaper advertising). The database marketing has become too popular and favored, not because of its so called precision to a great extent, but due to the low costs of illegally obtaining personal information.
As the legal system has been continually improved to protect personal information in the country, the legal costs for illegally obtaining and transacting personal information will keep climbing. The days will go for ever that enterprises could acquire personal information with low costs. Likewise, so many great and small marketing agencies depending on database marketing will be exposed to live-or-die choice sooner or later: how to obtain permissible data at low costs? In other words, how to absorb customers to register and get approval from the customers to use their modes of contact for marketing.
As shown in experiences in developed European countries and the United States, only large-scale personal permissible information suppliers will survive in the end, because of incessant elevation of boundary conditions, including market, technology, management and law. These institutions are gathering personal information through lawful means and under the permission of customers. They supply personal data service to institutional customers through the mode of “data lease”. Meanwhile, the industries will be enriched in environments, featuring more explicit divisions of labor. Data suppliers, data managers, data analysts, marketing planning institutions and executive institutions will attend their own duties to jointly cultivate a sound, lawful and orderly market environment.
Real data-driven marketing
In the present market patterns, industries and enterprises are developing rapidly. Homogeneous competition is growing more and more fiercely. The market has not yet been saturated. All these make it a priority to win new customers in business marketing. In contrast, marketing with existing customers is placed second most important. The situation will be improved, along with continuous elevation in the costs of obtaining new customers, and incessant accumulation of customer resources by customers. When enterprises pay nearly same, same or higher costs to obtain new customers than maintaining existing customers, it will become a priority to go along with information maintenance, information management, information analysis, and loyalty planning of old customers in the marketing of enterprises.
Under the DDM system, enterprises also need to improve the following marketing performances: First, they need to improve the customer information gathering and management system, i.e., the customer information management system. The unified customer view subsequently built upon the database will not only serve the operation-oriented service system, but also serve the analysis-oriented management and decision-making support system. Second, they need to improve the customer data management system, including the management, integration, clean-out and quality improvement of the multi-channel hetero-structure data resources. Third, they need to improve the analysis and mining of customer information to guide marketing decisions of enterprises. In the end, they need to improve the data-based marketing planning, execution and monitoring system, and implement the data-based marketing in real earnest. Through repeated cycles, continuous improvement and elevation, these elements will constitute the DDM system of enterprises.
In the perspective of industries, the banking and telecom industries are the most mature sectors to adopt the DDM. The two industrial sectors are known for high concentration of businesses, sufficient competition, and highest industrial information levels. As a result, they are most advanced and improved in marketing concepts. We are in the opinion that along with continuous improvement of enterprises, the auto industry and IT industry will also become the sectors with mature application of DDM in the near future. The retail industry, tourism industry, aviation industry, and e-commerce industry, which are highly information-based sectors, will eventually turn into models of DDM application.
Author: Tiger Li, Director of Marketing & Product development, Business Decision Solution, Sinotrust Automotive Marketing Solutions
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