Introduction to the Model-to-MailTM System

This document will include a brief overview, a review of your data processing needs, a summary of key elements required to build your new marketing database, a complete hardware and software specification, pricing and an implementation schedule.

Overview

For more than the past decade we have been working on building the ultimate database. The idea is to take order processing transaction data and gather it together by decision making entities. These customer records can be enhanced with outside data to build a marketing database. The database is to be accessed by everyone: order processing, accounting, operations and marketing. Unfortunately, not everyone agrees about how the data should look. "Customer" can be everything from street address, bill-to address, phone number, transaction or decision maker. Your definition drastically changes how your data processing system is designed.

The single greatest problem with most marketing databases is that they are not easily changed or accessed. When you ask for a new field in the database, it may take two years for it to be operational. It then takes another year or two before enough data is collected to analyze.

Though Information Systems (IS) makes every attempt to be helpful, they feel that often, marketing asks for things before they have clearly thought them through. Mainframe programming is costly and time consuming. Even on relatively flexible systems, adding a new field to a heavily accessed file requires recompiling all the accessing programs. Should bugs develop, they have the potential of shutting down order processing for hours, days or longer! Though most large computers have a query language, using those systems to access the data degrades processing... effectively shutting all other programs down. The processing power that makes the mainframe efficient also makes it difficult to change. Further, it is important that operations not change too rapidly... or the very heart of a business can be damaged.

Marketing, for their part, feel that the environment they operate in is dynamic... and IS never catches up. Marketing has occasionally attempted to bypass IS, with simple spreadsheet tools. The problem is that PC databases and spreadsheets were never intended to crunch through hundreds of thousands of records much less millions of customers. Marketing could develop its own staff of programmers, but the operations people are reluctant to allow two IS departments (with good reason). It is also dangerous to allow marketing too much control of how processing is done (they tend to be very creative, but not systematic). After years of frustration, marketing has agreed to the "slow change approach." Often marketing personnel change before the enhancements are operational.

Database Alternatives

The fact is that few if any companies have solved the database problem.. There are simply too many differences between efficient order processing and flexible analysis. As functions like word processing leave the data processing department, the time has come to develop distinct computer solutions for marketing to build, modify and maintain their own systems.

Two problems face this move from mainframe IS to marketing database. First, the system must be both flexible and powerful enough to assist non-programmers through data access. If marketing people could program, that might solve half of the above problems... but the fact is that they cannot and perhaps should not! Windows 3.x provides the user-friendly platform for easy user access. However this doesn't mean that we can automatically build enough capacity to handle high volume files.

The mainframe is a very powerful processor and storage device accessed through "dumb" terminals. All file processing is done on the central computer, the terminal only acts as an interface. It is important to note that if you attempt to make a mainframe terminal act like a PC, you must throw so much data out to the terminal, that you lose the processing efficiency of the mainframe. Further, because mainframe disk drives and other peripherals are much more expensive, it is foolish to invest in mainframe capacity to achieve a user friendly environment.

Using XWindows, it is possible to build a more attractive interface to a mainframe, but we are still faced with the problem of system degradation. Unlike Windows , XWindows does not provide for data sharing, limiting analysis capabilities. Whenever we attempt to use the XWindows access, we must run the query on the mainframe itself... slowing everything else down. If we add excess capacity to allow the mainframe to handle these demands, we spend far more money than building the same system on less expensive platforms.

The PC can be thought of as a very smart terminal with its own processor and storage device. Because of the close link between the processor and the tube, instead of a few hundred characters, the PC can fill the screen with millions of colored pixels. When you network PC's they operate around a very dumb storage device (file server). Because the file server acts like a simple shared hard drive, all file processing is done on the individual PC's. This means that when attempting a query of the database (where all records are examined against a particular criterion) the entire file must make its way out to the PC. That would be a bit like UPS backing up their entire truck and asking you to look through it to see if there were any packages addressed to you.

Companies have turned to service bureaus. They take your files, analyze them and allow you to pull counts over a data line. Mailing list tapes can then be generated from the service bureau mainframe. If you are the largest client, your custom requests will be heeded. Otherwise, you will have to explain how your enhancement will apply to other clients. While this option provides an alternative to the transaction computer, it still does not offer the enhancement potential of the on-site marketing database. To generate counts, you will either access a pre-built count file, or you will have to wait 24-48 hours to run a query of your own database.

A recent alternative to the mainframe or PC network has been the proprietary marketing database. These provide analysis, segmentation and selection capabilities. They run on a wide variety of hardware platforms. Unfortunately, you are committing to someone else's idea of what makes a good database. Just seven years ago, the ultimate in office word processing was the IBM Display Writer. Though it did the job with daisy wheel printers, it could not keep pace with the innovation in the PC world. Companies who invested large sums in those proprietary systems were slow to convert to the PC's. Consequently they were far behind the desktop publishing revolution. Because companies have a significant investment in the development of their software, they haven't been quick to move to the more flexible PC environment. We believe that there is a database marketing revolution in process and the dynamics point to the PC arena.

The SQL Alternative

An emerging platform incorporates the user feel of the PC with the power of the mainframe. The SQL environment allows smart PC's to act as "front ends" to smart file servers with large storage capacities. When a query is attempted, first the PC software walks the user through questions like, "which file do you want?" "which data fields?" and "what relevant data values are you looking for within the important fields?" Because PC capacity is relatively inexpensive and under utilized, it is easy to build these features into the PC. Once the user has built the query, the PC sends the SQL command to the smart SQL file server. The server processes the command on the high speed system, looking through the file for the requested records. When a record is found which meets the criteria, only that record is sent to the PC. This distributed processing allows much larger files to be handled on PC platforms. It also allows non-programmers to easily access data.

The SQL database is much easier to modify and enhance. As soon as a field is added to the file structure, everyone on the SQL network can access that field. Because this network is distinct from the mainframe, changing the files does not involve changing all the order processing, operations and accounting software. Also, running SQL queries does not interfere with mainframe processing (because you are using a different computer). In fact, moving processing to less expensive PC's will allow you to keep using your expensive mainframe longer... for a better return on your DP dollar.

To build an SQL database, data is transported from the mainframe. This typically includes customer and purchase information. These files are brought over in ASCII or other standard formats and converted to SQL. Typically, the SQL server is supplemented by a standard file server. This allows software applications to be shared across the network.

The SQL environment not only offers the power of mainframe capacity, several off the shelf packages enable users to tap into the power of Windows . These have made considerable strides beyond the PC standards like Dbase and the mainframe traditions like Oracle. For the typical marketing professional, query tools like Quest or Forrest & Trees would be dazzling. For high level software development, applications like SQL for Windows offer even more power. For repetitive applications and/or people unwilling to master Quest, high level applications can be developed where point and shoot will yield complex applications like list segmentation.

Loop MD Design

Giving marketing their own computer has definite advantages. The transaction computer is kept secure and reserved primarily for operations. In addition, marketing has the option of appending outside data to the customer file. Information like number of employees, SIC and financial strength is available from sources like D&B, ABI and Trinet. Unfortunately, much of that data is of questionable reliability. As privacy becomes a greater and greater customer concern, it will become more and more important to built proprietary non-transferable customer databases. By far the best way to add data is to question your customers while they place their orders. Unfortunately, if the only data acquisition is through the transaction process, mainframe programming is required.

A Windows PC is capable of emulating virtually any mainframe terminal. This means that a telemarketer can access the order processing system from a PC while in Windows . While on the phone with the customer, an order is entered as always. At the same time, the sales rep can be prompted by software (watching where she is in the order taking process) to ask additional questions. This data goes directly into the marketing database.

We now have the capability of asking for and using any information that marketing might imagine. The telemarketing prompts can be added without changing (or damaging) the transaction computer. Because the changes are object oriented, they can be implemented on the fly. This would allow sample surveys to take the place of elaborate customer questioning. If we found a variable that was important, only then would we attempt to capture it for the whole customer base.

The transaction computer is not flexible enough to allow rapid script changes. Off-line service bureaus are not able to accommodate data acquisition. We could set up a small network to capture the data then send it to the service bureau, but then we go through all the mechanisms of database creation without being able to use all the data.

This graphic illustrates the interaction at the point of customer contact. ANI moves data on the incoming caller to the SQL marketing database. The telemarketer then selects the appropriate customer. Non-customer addresses can be verified against the USPS ZIP+4 CD-ROM. The telemarketer is prompted to ask marketing questions. The marketing data moves directly be necessary. To append order information to the marketing database, we can use exact match!

While the telemarketer is adding line items to the order, the computer will access the national ZIP+4 files to insure that the address is deliverable. This will not only improve both the marketing and transaction databases, but to the extent that this type of system becomes broadly accepted, it will clean all the mailing lists we rent! Peripheral designers are now building first for the PC market. This means it is far simpler to hook up enhancements like E-Mail, FAX, EDI, telescripting and even field sales interface packages to the PC network.

As you can see, several other applications are possible based on this platform. Not only marketing, but telemarketing and field sales can be "plugged" into this system. Because development tools are faster and peripherals are "off the shelf" we are now able to truly link the communication process together.

It is difficult to move to any new platform, but the elements most easily moved are those of marketing. The fact is that every data element you can take off the mainframe allows your investment to work longer for you. With the Loop MD System, you can continue to use your transaction computer for the efficient operations it was built for. You can also give marketing a flexible platform for today's questions... which will also allow them to use whatever new technologies come down the line.

Data Processing Needs

Before you begin to build your Model-to-MailTM system, we will begin with a review of your current and future marketing and database needs. Though mailers have similar systems and needs, every company has particular ways of looking at information. Our goal will be to make everything look as familiar as possible at the start. We will identify two or three "must have" systems plus several additional wish list applications. We will take the time to learn your system, or perhaps the system you would like to build. We will also identify key players and their levels of comfort and experience in application generation. We will not attempt to layout all your database possibilities until the end of time. This system is more than flexible enough to accommodate future changes. For this reason, we will not attempt to delve into every possibility right at the start.

Our current Model-to-MailTM program allows you to receive your first advanced models of your database, including actual customer pulls for mail drops or telemarketing, in the first month or two after we receive your data. We will operate your system for you, similar to a service bureau, until the system is built enough to install at your site. Over time, the build process includes funding to build key applications customized to your needs. This is important to help your marketing staff to get off the ground quickly with basic application of the system. They will be trained in the application tools to build their own queries, reports and analysis systems. The system can be rewarding as early as the first day after installation. The applications will easily allow your marketing and merchandise people to generate SQL queries. Soon they will be able to develop most marketing reports, data manipulation and file analysis unassisted by data processing. All applications developed by Miglautsch Marketing are fully documented and customized to your business.

Finally, though all non-application software will be supported by each manufacturer, we provide unlimited phone support for one year following installation. We are available after installation is completed on a demand basis. Our goal is to provide the easiest-to-use platform. Just as your people use off the self tools spreadsheet or word processing tools, you will feel comfortable using these new database tools. Within a few months, your marketers will be completely self sustaining (in terms of getting at and analyzing your data). Long term, Miglautsch Marketing will continue to support you installation by upgrading the set of tools available to your system, based on your marketing requirements. We will give you advanced insight into what will make you more productive in the database market place.

Support

Obviously, the key to this operation is making all the elements work together. The system support breaks down into four areas: Applications, Installation, Training and Consulting.

We begin the build of your system at Miglautsch Marketing... allowing us to inexpensively convert files, build basic applications and confirm correct operation of the database using your data. First, we build specific programs for list segmentation, data update and maintenance. Next, we build enhanced list and merchandise analysis systems (to your specifications). We build an operational system with current customer and transaction data. All custom applications are fully documented by Miglautsch Marketing. You receive documentation after we complete these basic applications.

Then we bring the system to you to add the rest of the suite of analysis tools at your site. There are important considerations to be explored in linking your mainframe to this database system. We detail those at the inception of the project in your custom basic system database specification. As new applications are added over time, we discuss specific needs for each user. Some may need high end statistical software, others desktop publishing. Obviously, high end software requires much more powerful workstations.

Training will be conducted when the basic system is completed, and at the introduction of each specialized application. Our staff will train your marketing personnel in the use of SQL front and back end tools as-well-as custom applications. Your staff will know how to maintain the database, including file conversion and update. They will be trained to select list segments generate marketing reports and analysis files.

Support is perhaps the most difficult to delineate. After months of research, we have selected SQL tools which link you to the Borland database strategy. Borland is the company which brought us Quattro, Paradox, Object Vision and now Dbase and Interbase. Borland is committed to deliver more powerful interactive database structures than any other software company. This means that within months, you will be able to access your database using tools which nearly all marketers are comfortable. Borland received the highest rating of all software companies in J.D. Power's evaluation. Beyond that, we must say that they provide simply the best customer service. Since our commitment is to connect you with the best tools from the best companies. Much of your routine support will come from them. However, Miglautsch Marketing is in the business of presentation and interpretation of data, as well as enhancing your system over time. We hope to build a dynamic relationship with you into the indefinite future. We help companies across the country, providing a powerful network of information on what is really working for real marketers.

Should you wish to go it alone you will do so with the absolute best support available. If, on the other hand, you are looking for database marketing support, we will work with you for the long haul. What our system avoids is the day-to-day detail questions and problems which has characterized proprietary marketing database solutions in the past. You have good, capable people. They will love the freedom of doing it themselves.

Price

Pricing for Model-to-MailTM is designed to make entry easy and continually fund development while generating real payback in your mail and telemarketing operations. We firmly believe that a marketing database is not worth owning unless it makes money for you.

With that in mind, we have structured the pricing to begin with an up front cost of between $50,000 and $100,000. That will include a real pull of data using the database at our site and delivery of a model that you can use perpetually. With most companies we work with, this represents the typical cost of building a model and pulling names for mailing. This way, the initial cost of the system is easier to justify economically.

After the initial pull and mailing with the Model-to-MailTM model, we will watch the results come in. You will have the option, as you evaluate those results, of continuing with Model-to-MailTM , or going back to the old way of pulling names that you currently use. When you discover the power of the model and its benefits to you, we are confident you will elect to continue to build your very own customized Model-to-MailTM database that you can keep onsite at your location. You can find your yearly cost for the system by contacting John Miglautsch at 262-369-3900 x 12.

Conclusion

The system specified above not only allows you to build and maintain an advanced marketing database; it allows you and your staff to select the most productive segments of your customer files for mailing. This selection capability, in turn, allows you to more precisely target your telemarketing and promotional efforts. To say that it will pay for itself is not possible without knowing your present level of segmentation sophistication. If you are using Nth name selects, it certainly will bring profit. What ever your present system can achieve, this database will allow you to understand your system in new ways... because you will be getting your hands on the data for the first time! Who knows what new insight that will bring. It will also provide you with the base platform to add future capabilities which will enhance your marketing options, including interactive online reporting, mapping and, most significantly, advanced segmentation modeling. It means that the creative process can more tightly integrate with the data processing. This integration inevitably leads to more creative ideas about how the data and/or the marketing communication can be enhanced.

Additional applications which can be added to this LAN system in the future include: Integrated, E-Mail between inside support personnel, ANI, EDI, CD-ROM, file cleaning match logic, statistical analysis, On-line and Off-line FAX capabilities, Telemarketing interface with on-screen scripting, and Field Sales Interface and management.

The greatest benefit may be that these can be incorporated without significant changes to the order processing system. Off loading marketing functions saves space on more expensive mainframe peripherals. When marketing has its own self supporting IS tools, that frees up data processing personnel for critical operations programming. Finally, the Loop MD System positions you and your company to know the most about your customers and therefore provide them with the absolute best service for their money... and that keeps your customers coming back!