Marketing Database Analysis & Recommendations for Educational Software Company - A Sample Report

The purpose of this document is to demonstrate the process and structure of conducting a database marketing audit and provide an example of the type of considerations which might be contained in the analytical report presented to the client company's management.

Table of Contents

• I. Background
  • A. Purpose & Objectives
  • B. Process
    • 1. Information Gathering
    • 2. Information Synthesis & Analysis
    • 3. Recommendations
  • C. Overview of Educational Software Company
• II. Situation Analysis
  • A. Overlapping Sales Channels for School Market
  • B. No Internal or External Database Captures Complete Sales History
  • C. Limited Customer Profiling data
  • D. TM Corp Telemarketing Database Limited in Scope & Integration
  • E. Limited Sales & Marketing Analysis of Marketplace; Limited Marketing Programs
  • F. Multiple, non-linked, incompatible, hierarchical (flat-file) databases
  • G. Limited ESC Marketing Activities; Limited (or Non-Existent) Links to Databases
  • H. ESC Is in Preliminary Stages of Upgrading MIS Capabilities; Has Concerns Regarding Development of External Database and the Expansion of TM Corp’s Role
• III. Recommendations
  • A. Presentation of Recommendations to Educational Software Company
  • B. Changes Effected In TM Corp’s Telesales Process
  • C. Initial Changes In TM Corp Database Structure & Reporting
  • D. Design, Contents and Application of ESC’s “Next Generation” Marketing Database
    • 1. Design Parameters for the Database
    • 2. Contents of the Database
      • a) Customer/Prospect Contact Table
      • b) School/District Table
      • c) ESC Product Purchase Table
      • d) Marketing Communications & Promotions Table
      • e) Authorized Dealer Table
    • 3. Application of the Database
  • E. Sales & Marketing Reports and Data Analysis
  • F. Enhancements to ESC’s Sales & Marketing Programs
    • 1. Need to collect more complete data on all product sales and schools/districts
    • 2. Conduct “trial analyses” of data to build experience base of sales patterns for future marketing activities and to identify criteria for Purchase Probability Model
    • 3. Increase frequency of contact to key customers & prospects
    • 4. Assess establishment of non-overlapping sales channels based on product and customer differentiation
    • 5. Reduce number of in-bound phone numbers to one “800” number with automated call branching to ESC Customer Service or TM Corp TSRs
• IV. Appendices
  • Appendix 1. Initial TM Corp Management Discussion Topics for Database Marketing Review of Educational Software Company
  • Appendix 2. Sales & Marketing Discussion Topics for Database Marketing Review of the Learning Company
  • Appendix 3. Accounting and M.I.S. Discussion Topics for Database Marketing Review of Educational Software Company
  • Appendix 4. Customer Service & Operations Discussion Topics for Database Marketing Review of Educational Software Company

I. Background

A. Purpose & Objectives

• Assess Educational Software Company’s (ESC) current utilization of database marketing techniques and systems
• Develop recommendations to improve the calling lists used by The Telemarketing Corporation (TM Corp) for ESC telesales
• Develop recommendations for improving TM Corp’s current ESC database

B. Process

1. Information Gathering

• July 22-24: Initial meeting with TM Corp management, sales & program managers and lead TSR
• July 27: Meeting with TM Corp program manager, ESC Director of Educational Sales and regional sales managers
• July 28: Meeting with TM Corp Executive VP of MIS and Telecommunications
• July 30: Meetings with ESC controller, MIS director, accounting Manager, customer service manager and Educational Sales division administrative assistant
• August 4: Conference call with ESC Director of Educational Sales and Western Sales Manager

2. Information Synthesis & Analysis

• Review discussion notes
• Review ESC catalog, TSR (telesales rep) Training Guide, ESC database printouts, warranty and trade show cards
• Document summary of findings

3. Recommendations

• Short-term changes effected in TM Corp’s telesales process
• Initial changes in TM Corp database structure & reporting
• Design, contents and application of ESC’s “next generation” marketing database
• Sales & marketing reports and data analysis
• Enhancements to ESC’s marketing programs

C. Overview of Educational Software Company

• ESC develops and sells computer-based software designed to improve reading, writing, spelling, math and cognitive skills of elementary school-aged children
  • 13 home and 27 school software titles
• Product lines available for both IBM and Apple/MacIntosh systems
• Products sold to consumers and to schools through separate sales channels
• Schools may purchase ESC products through School Dealers, ESC’s Customer Service Department and TM Corp Telesales; occasional purchases may also be made through Consumer Dealers
• Limited sales and marketing data is available for school dealer network consisting of several hundred dealers
• Software Publishers’ Association forecasts that demand for educational software will grow 20-30% for the next few years; the 1989 computer-to-student ratio in the USA was 1:30 -- that ratio decreased to 1:20 by 1990
• ESC at early stage of using database information and analysis to drive sales and marketing planning and programs
• TM Corp’s initial role was to sell site and network licenses; this remains primary function, however, sales of all school products are conducted by TM Corp TSRs

II. Situation Analysis

A. Overlapping Sales Channels for School Market

• Educational Software Company Customer Service Department
• The Telemarketing Corporation TSRs
• Any School Division Dealer
• Any Consumer Division Dealer

B. No Internal or External Database Captures Complete Sales History

• ESC captures only Site/Network sales information
  • Information may be incomplete (i.e. at district level only, not at school level)
• TM Corp captures only sales data of TSR sales
• No information exists on dealer purchases, sales revenue, sales potential, etc.
• No information exists on sales to schools/districts through dealers

C. Limited Customer Profiling data

• Basis for school profile is 1990 MDR/QED compiled data on TM Corp Database
  • Updated annually
  • Sometimes inaccurate
  • Does not reflect interim changes in budget, computer systems or personnel
• Enhancements to database occur primarily through TSR contact
• School Division database contains only Site/Network licensed schools
• No sales/profiling /contact history for schools serviced by dealers
• No accurate data on number and type of computers and networks installed
• No data on total ESC products in use at school site
• No information on grades/teachers using ESC (or other) software at school site

D. TM Corp Telemarketing Database Limited in Scope & Integration

• Contains limited range of compiled data
  • School name, address, and associated district
  • Computer software decision-maker contact name not accurate
  • Primary computer type listed, secondary types not categorized or quantified
• No historical data captured or maintained, e.g.:
  • Previous TM Corp and/or ESC contact history
  • Sales history or source (i.e. ESC, TM Corp, dealer)
  • Competitive software in use
• No additional data (i.e. decision influencers, product users, grade levels using ESC products)
• Reporting capabilities limited to daily report of sales by school
  • Geographic, district, monthly and summary reports not available (data not stored, reports not created)
• On-line access of data not available to ESC and vice versa

E. Limited Sales & Marketing Analysis of Marketplace; Limited Marketing Programs

• Unclear understanding of who buys & why
• No prioritization (i.e. sales potential/probability ranking) in sales contact process
• No understanding of geographic sales potential or current sales penetration
• No measurement of dealers’ sales potential or performance
• Limited understanding of the school/district purchasing cycle and product decision/selection process
• ESC does not perceive any consistency or pattern in sales revenue by geography from year-to-year
• ESC has conducted some surveys of its existing customers, primarily to assess product interest:
  • types of computers in use
  • who makes software acquisition decisions
  • future network installation plans
  • regularly used software; satisfaction with same
• ESC has no detailed information on district spending patterns
• Returned warranty cards account for only 3% of total product shipped; WC information not compiled or used
• ESC regional sales managers have contacted top 200 school districts (e.g. Philadelphia, Dade County, NYC, etc.) and have categorized the districts into “A”, “B”, and “C” ratings based on the following criteria:
  • “A” districts have money, buy at the district level, and know of and like ESC products
  • “B” districts have money, buy at the school level, and know and like ESC products
  • “C” districts may buy at either school or district level, but lack one of the other two criteria
• A key marketing tactic is the “complimentary loaning” of evaluation software to key prospects
• The School Division catalog is not mailed to all schools/districts, nor does it appear that there is a policy to regularly mail the catalog to “priority” customers and prospects
  • Only 40,000 catalogs are printed annually; some distributed thru TM Corp, some given away at trade shows (there are over 15,000 school districts alone in the USA)
  • No analysis has been made to determine sales resulting from catalog
  • Plans exist to include a BRC in the Fall ‘92 catalog to determine whether the catalog is read/used

F. Multiple, non-linked, incompatible, hierarchical (flat-file) databases

• ESC Accounting: Minx software -- inflexible, difficult to import and export data or to create custom reports
  • Runs on a Zenix-based microcomputer
  • Accounting key code is a derivation of school name
  • Accounting reports provide dollar sales sorted by state with no detailed school/district-level breakouts by product/sales/name/zipcode, etc.
  • ESC accounting reports cumbersome: provide sales reports to reconcile TM Corp orders sold/shipped but not by school name
• ESC Customer Service: DBase software
• ESC School Division Sales: Microsoft Works on MacIntosh IIsi
  • Maintains only data on site & network sales, with associated data (ordered, shipped, etc.)
• The Telemarketing Corporation: Informix database application
  • TM Corp reports provide single page daily “snapshot” of sales, but provide no detail or sorted summaries
• Databases are not linked, no dynamic updating of information, no data merging possible
• Multiple manual data entry of same information required to transfer TM Corp sales data to School Sales Division database then to ESC accounting/order processing/shipping database

G. Limited ESC Marketing Activities; Limited (or Non-Existent) Links to Databases

• Sales and marketing strategy and programs not database driven
• No [automation of] customer contact based on current purchase or upsell potential
• No attempt to stimulate consumer sales of families within ESC-curriculum schools
• No push/pull promotions to drive sales through dealer network
• No relationship-building or sales stimulation activities directed at either dealers or customers (i.e. schools/districts)
• Multiple “800” numbers (i.e. ESC customer service and TM Corp phone numbers in catalog) may create customer confusion and complicates tracking of customer/prospect contacts

H. ESC Is in Preliminary Stages of Upgrading MIS Capabilities; Has Concerns Regarding Development of External Database and the Expansion of TM Corp’s Role

• ESC management may be unfamiliar with the development and application of full-function integrated marketing databases
• Strong concern on part of Controller that:
  • Proprietary ESC customer, operations and sales data not leave ESC
  • External database will not be compatible with ESC’s current or future MIS systems, software & hardware
  • External database may duplicate ESC’s future MIS systems and increase total costs
• ESC appears to have a preference for maintaining an internal database with real-time on-line access
• Some ESC managers may believe that TM Corp’s role should be confined to Telesales and providing timely, detailed reports of same; it is possible that ESC may wish to internalize telesales function in future
• Sales management is much more receptive to the concept of an effective marketing database than was the Controller
• Sales management has concerns regarding its perceptions of TM Corp’s ability and willingness to responsively address their requests, and regarding TM Corp’s proactive capabilities

III. Recommendations

A. Presentation of Recommendations to Educational Software Company

• A TM Corp management-level response to ESC sales management’s concerns regarding past and current service/support issues should be prepared, reviewed with the Director of Educational Sales, and if appropriate/necessary presented to ESC senior management
• A CEO-to-CEO level “strategic philosophy” discussion should introduce the expanded vision of TM Corp’s role and mission to ESC; buy-in to the concept and its appropriateness to ESC’s growth and strategic development should be solicited at the CEO, CFO and CMO (VP-Marketing) level
• Database development recommendations, rationale, benefit analysis, cost and timetable prepared and presented to Director of Educational Sales and other ESC decision-makers

B. Changes Effected In TM Corp’s Telesales Process

• TM Corp should evaluate the feasibility of assigning TSRs to specific markets or geographic territories in order to:
  • (1) provide more structure to the telesales process,
  • (2) increase the TSRs’ understanding of any market-specific peculiarities,
  • (3) provide continuity of customer contact and
  • (4) eliminate the possibility of individual prospects/customers or of different schools within the same district receiving contacts from multiple TM Corp TSRs
• Sales and prospect contact documentation processes should be more formalized and, wherever possible, computerized
• Until analysis of contact and purchase histories from a database are possible, a strategy based on TSR experience and ESC input should be formulated to guide prospect selection and establish contact and follow-up criteria and processes
• Recording of TSR contact results should be standardized for every contact, with certain data elements “mandatory”
• The narrative “comments” field of the current calling screen should be evaluated for standard categories of responses. These categories should become check-off boxes with fields for variable data (e.g. call back date/time) with implementation of “next generation” database
• A prospect’s specific ESC product interest, or category of potential educational software need should be recorded in all instances in which an immediate sale is not made
• Generally, the TSRs must be made aware of the value of standardization of the telesales process and the importance of the corollary information-gathering function. The better the quality and frequency of information retained, the greater the potential for improving the TSRs’ “hit ratio”
• TSRs should regularly categorize their contact’s sales potential/value via detailed criteria (i.e. High/Medium/Low on Variable (A, B, C, D, etc.) as well as an overall ranking (i.e. ESC’s A/B/C classifications)

C. Initial Changes In TM Corp Database Structure & Reporting

• Early development and maintenance of a cumulative/historical TM contact database is critical
• Reporting capabilities must be enhanced to permit, at minimum:
  • (1.) daily, weekly, monthly and YTD sales/contact summaries
  • (2.) sorting of data by state and zipcode
  • (3.) associating school-level data with the appropriate school district
  • (4.) “Top 200” market data breakouts by ESC’s “A/B/C” classifications
  • (5.) summarization by school/district of computerization information (i.e. hardware, networks, ESC software currently in use, other relevant variables)
• TM Corp MIS staff to review and address technology-issues to improve TM Corp-ESC data flow:
  • Short-range (i.e. 3-12 month) data gathering, data transfer, report generation, and reduction of redundant data entry (at TM Corp and ESC) recommendations to be developed; migration to mid-range (i.e. “the next generation” 1-5 year database ) solution issues to be considered
  • Process and schedule should be prepared for migrating from current database to a more inclusive relational database on Informix V.4
  • Implementation of ESC’s MacIntosh/Microsoft Works-based database, or alternative process for computer-integration of TM Corp and ESC computer data should occur

D. Design, Contents and Application of ESC’s “Next Generation” Marketing Database

1. Design Parameters for the Database

• Must allow real-time access of database from both TM Corp and ESC facilities
• Must have flexibility to add tables and fields in future
• Should be able to easily download contents into an as-yet-unbuilt ESC data management system
• Should provide selection screens for on-screen and hard copy standardized reports
• Should provide multi-year data capture of data from:
  • (1.) telesales contacts
  • (2.) ESC Customer Service inquiries
  • (3.) multiple external data and data enhancement sources
  • (4.) ESC sales management input (e.g. rankings, surveys, trade show contact, etc.
  • (5.) direct mail, seminar and other marketing communication program contact and prospect reply
  • (6.) warranty card and other customer/prospect feedback tools
  • (7.) authorized educational sales dealers
• Should allow rudimentary ad-hoc inquiry and report-generation capabilities by non-MIS users
• Should allow for simple, convenient and timely downloading (directly or to floppy disk) by TM Corp MIS or [preferably] any authorized database user of selected data fields to MacIntosh and DOS-based spreadsheet and database applications
• Should provide report-generation preparation screens which permit flexibility in:
  • (1) sorting data by various fields and parameters (using Boolean operators)
  • (2) selecting fields to be reported
  • (3) adding summary and mathematical fields (e.g. subtotal, percent of column/row, percent of subtotal, absolute and percentage change [D] between two periods, etc.)
• Should have automated capability to generate order processing, inquiry fulfillment and shipping reports and/or shipping labels and form letters

2. Contents of the Database

a) Customer/Prospect Contact Table

• Name and title
• Customer/prospect flag
• Account I.D. number
• School/district
• Last contact date
• Last contact results
• Prior contact date(s) and result(s)
• Next future contact date (e.g. tickler file)
• Action to be taken on next contact date
• ESC product(s) interested in
• ESC products currently in use
• Original prospect source (e.g. QED, MDR, Apple, trade show)
• ESC products purchased
• Source of previous ESC product sale (i.e. TM Corp, ESC, dealer name)
• Reason(s) for current non-interest in ESC product (field for each individual product)
• Preferred contact method/time of day/week/season
• Other research or response data
• Promotional contact history/results

b) School/District Table

• Shipping address
• Billing address
• Direct mail address
• Telephone
• Other third party data enhancements
• School-to-district, district-to-school association
• Type of school (public, private, parochial/religious)
• Types and quantities of computers, networks, software applications
• Last, current, next software/hardware budget ($$)
• Budget available for software now ($$)
• Budget ranking (hi, med, low)
• School/district level purchasing flag
• Number of students
• Student-to-computer ratio
• Media coordinator / purchasing agent name
• Other decision maker/influencer name, title, address & phone
• Approved software vendor status required?
• Last (i.e. final) purchasing/requisition date for current year
• ESC ranking classification
• ESC authorized educational software dealer name(s) in regular contact with
• Other educational software dealer name(s) in regular contact with
• TM Corp TSR assigned (include history if TSRs change)

c) ESC Product Purchase Table

• Product name & number
• Quantity ordered
• Product price
• Discount
• Terms
• Invoice number *
• Sale amount
• School/district purchase order number
• Date ordered
• Date P.O. received
• Date site/network license application received
• Date product promised
• Date product shipped
• Shipped via carrier name *
• Tracking number *

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d) Marketing Communications & Promotions Table

• Event type (e.g. direct mail, catalog, cross-sell letter, seminar, product preview, trade show)
• Event date
• Event I.D. (unique identification/definition)
• List source, source code, quantity, flag (to customer contact table)
• The offer
• Special “800” number or response tracking code
• Creative format variations
• Fulfillment package elements
• Communication/promotion cost per contact
• Promotion-specific associated in-bound and/or outbound telemarketing

e) Authorized Dealer Table

• Dealer name
• Mailing address
• Contact name
• Contact title
• Phone number
• Territory
• Active ESC school/district accounts
  • Product sales: item, quantity, date
• Sales quota: last, current, next
• Sales revenue produced: last & current

3. Application of the Database

• Build detailed customer history profile for future marketing applications (e.g. list selection, special promotions, customer segmentation analyses, etc.)
• Provide TSRs with more accurate, detailed and up-to-date information regarding accounts in order to:
  • (1.) tailor their sales presentation to prospect profile and previous contact history
  • (2.) enhance cross-selling opportunities
  • (3.) reduce non-productive phone contacts
  • (4.) reduce prep time per call
  • (5.) improve their closing ratio
  • (6.) increase average revenue per sale
• Analyze sales performance by period, by geography, by school selection criteria (e.g. computer systems & budgets)
• Develop and refine a sales probability model to categorize customers and prospects with respect to frequency and type of contact (e.g. outbound TSR priority, outbound TSR occasional; inbound TSR responding to catalog and selected direct mail, catalog only, dealer only)
• Improve reporting capability
• Reduce or eliminate paper-based record keeping and multiple data entry of same information
• Evaluate incremental sales contribution of selected communications & promotional programs

E. Sales & Marketing Reports and Data Analysis

• Weekly/Monthly TSR Sales Report
• Weekly/Monthly TSR Contact Report
• Hot Contact Report
• Prospect Profile Report
• Catalog/Direct Mail Effectiveness Report
• Sales by Decile Rank Report

F. Enhancements to ESC’s Sales & Marketing Programs

1. Need to collect more complete data on all product sales and schools/districts

• Solicit school/district level sales data for dealers
  • Provide incentive (“requirement”?) for dealer to supply data
  • Guarantee confidentiality
• Increase return of warranty cards
  • Revise card to simplify data entry by customer and data transfer to database
  • Provide immediate tangible reward to customer for completion of warranty card
• Collect profiling data through TSRs and “mail surveys”; add to database
• Assess value of adding city/county economic data to database

2. Conduct “trial analyses” of data to build experience base of sales patterns for future marketing activities and to identify criteria for Purchase Probability Model

• Run periodic “what if” analyses using various combinations of sorts and cross-tabs
• Begin to develop sales potential forecasts of geographic areas & dealers
• Plan multivariate cluster analysis (1993-4) of data to identify behavioral clusters segmented on basis of criteria other than gross sales revenue

3. Increase frequency of contact to key customers & prospects

• Establish account-contact categories (frequency and type of contact)
• Structure relationship marketing program for customer retention and up-sell/cross-sell
• Test effectiveness of selected programs (see table below) against different market segments

4. Assess establishment of non-overlapping sales channels based on product and customer differentiation

5. Reduce number of in-bound phone numbers to one “800” number with automated call branching to ESC Customer Service or TM Corp TSRs

IV. Appendices

Appendix 1. Initial TM Corp Management Discussion Topics for Database Marketing Review of Educational Software Company

1. Introduction to Sharrow & Associates: Corporate and analyst backgrounds

2. Objectives:

• - identify opportunities to better target “hot prospects”, improve telemarketing contacts, and increase sales (both absolutely and “per hour”)
• - other (discussion)

• - Background
• - Current sales & marketing strategies/tactics
• - TM Corp’s role/mission

• - General overview & processes
• - Issues pertinent to Educational Software Company sales process
• - Leads, prospecting, closes
• - Lead sources & quality
• - Difference between non-TM customers & successful/unsuccessful TM leads

• - Standard, custom

• - Overview
• - Integration of TM processes
• - screens
• - data capture
• - data storage (files, structure, accumulative?), reporting, analytical capabilities
• - software, programming flexibility

8. Next steps

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Appendix 2. Sales & Marketing Discussion Topics for Database Marketing Review of the Learning Company

2. Current distributor, dealer, customer information (i.e. $ sales, products, demographics, profiling, etc.)

3. Are there ESC user support group, frequent purchaser programs, newsletters or other ongoing communications / relationship marketing programs in place?

4. What process/procedure is in place for cross-selling and upselling existing users?

5. What are the characteristics of strong vs. weak geographic market/sales areas?

6. What are the characteristics of strong vs. weak dealers?

7. What processes/procedures are in place to develop “low computer usage” schools as future customers?

8. What sales and marketing information/reports do you currently use to make marketing management decisions?

9. What sales and marketing information/reports would you like to have?

10. How is marketing research and analysis currently conducted within ESC?

11. How are marketing/sales/advertising program effectiveness analyses conducted? What data and criteria do you use?

12. How and when do you solicit product usage and satisfaction criteria?

13. Do you incentivize users to make prospect referrals? What is the process?

14. Discuss the warranty card program. What information do you solicit? How is the program used? How effective is the current program?

15. What evaluation of calling list sources have been made? Screening criteria?

16. What is your vision of ESC ideal marketing database? How it would be used? Who would access it? What linkages would it have with other ESC computer applications (i.e. shipping, accounting, etc.)?

17. What features of TM Corp’s current Telesales program do you like? Which could be improved?

18. What features would an ideal telemarketing/telesales program have?

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Appendix 3. Accounting and M.I.S. Discussion Topics for Database Marketing Review of Educational Software Company

2. What are ESC’s mid-range (2-5 year) MIS strategy and plans (i.e. hardware/software, database software applications, operations/inventory/accounting integration & automation, etc.)?

3. Do you currently have a multi-year purchase history by product for any category of accounts (e.g. consumers, distributors, dealers, schools)? What percentage of total sales revenue or quantity shipped does this represent?

4. What is the current level of integration that occurs between accounting, inventory management, sales, shipping & receiving and customer service? (E.g. Does a single data entry generate an invoice, create a pick & pack slip and address label, tally sales revenue, update the “inventory on hand” records, revise the account purchase history and flag marketing to revise their promotional follow-up to this customer?)

5. What type of operations, sales and marketing management reports are currently generated?

6. Would there be difficulties in integrating an off-site database into your current system, or in periodically downloading data from your system to populate a separate marketing database?

7. Are there system functionalities that you would want to have in an off-site marketing database? Any that you plan to incorporate into your "next-generation" corporate MIS capabilities that do not currently exist?

8. What is your vision of ESC ideal marketing database? How it would be used? Who would access it? What linkages would it have with other ESC computer applications (i.e. shipping, accounting, etc.)?

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Appendix 4. Customer Service & Operations Discussion Topics for Database Marketing Review of Educational Software Company

2. How is the warranty card data logged and used? What percent of school vs. consumer product sales result in returned warranty cards? Are you satisfied with the information being captured by the warranty cards? (Reminder: Get copy of warranty card)

3. Discuss the nature of customer contacts with the customer service department. Are the calls categorized and logged (by nature of inquiry or by customer/prospect)? Is any follow-up contact made to these callers (by mail or phone) immediately following their contact or at any time in the future?

4. What type of customer information (or type of report) that is not currently available would make you operation more effective and productive? Are there programs or processes that you would like to implement which are currently prohibited because of a lack of proper sales/ marketing/ customer data?

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