What is a data warehouse? And do you need one?

The language of business intelligence can be confusing. Cubes, data warehouses, OLAP, and data mining are all terms that are not exactly self-explanatory. One of the most often used terms in business intelligence is the Data Warehouse, which conjures up images of vast spaces filled with digits. As if 5’s and 8’s all had their own bin in a super-efficient warehouse.

So what is a data warehouse, and how is it different from other databases?

Just about every company has at least one transactional database, and most have many. They store accounts data, contacts, stock or project data. Transactional databases are the ones we use to run our businesses:

• Those that get updated on an hourly, daily or weekly basis
• The systems (whether we recognise them as databases or not) that we could not do without.

But not every company has a data warehouse. They are often considered the domain of very large companies, even though that is not necessarily true.

A data warehouse holds historical information. It’s where the data goes after it’s been used in a transactional database system.

As an example, a hotel reservation system is used to let customers know whether there is availability for their preferred dates, and to produce an invoice for hotel services used during their stay. A data warehouse for the same hotel might hold this information summarised by day, month and season so as to better understand customer booking behaviour.

Transactional systems hold detailed information such as the alarm call time for the guest, whereas a data warehouse summarises several years’ data to get a more accurate picture of how promotions or seasonality affect bookings.

In addition, data warehouses can bring data together from several different transactional systems to gain new insights into a particular problem. In the hotel example, costing information might be added to find out which customers are most profitable.

So whether or not you need a data warehouse depends on what your business priorities are. Whether, for example, you want to:

• Better understand customer behaviour
• Understand which customer segments are most profitable
• Send more appropriate marketing communications to your customers

There are many, many more uses for data warehouses, but understanding customers and profitability better is a good start if you haven’t started planning your data warehouse.

Five Criteria for Greatness

This is not my list, but paraphrased from someone else’s blog post. She had read about James Dewey Watson, who discovered the structure of DNA with Francis Crick. Ruby's original post appeared on Zen Habits and is well worth a read: Why Discovering Your Obsession Can Lead to Your Greatness.

The list apparently came from a speech Watson made on why he deserved to discover the structure of DNA.

1. Go for broke - if you are going to do something important, do it.
2. Have a way to get the answer – if you haven’t a clue, you’re going to waste time.
3. Be obsessive – think about it night and day.
4. Be part of a team – have a partner to bounce ideas off and support you.
5. Talk to your opponents – share your ideas, cooperate and talk to others.
6. Never be the brightest person in the room; so you can always learn something.

I was so impressed with the list that I keep a copy in my notebook. I hope you get something useful from it too.

Why marketing is difficult to measure

Despite its central importance, marketing's value to the business can be difficult to quantify. There are 4 main reasons for this:

1. Marketing is about perception. It's about positioning products and services within a space in people’s minds. This can only be measured over a period of time and in relation to alternatives. Damage done to a brand today may not translate into lost sales until the day after tomorrow.


2. Marketing is multi-channel. People often purchase after exposure to a variety of different messages. All, some, or none may have contributed to the final decision; the advertiser does not (always) know. Hence the most often-repeated saying in marketing: ”half my advertising is wasted, but I don’t know which half”.


3. Marketing is creative. It is populated by ideas-people, visual-thinkers and wordsmiths. Not by statisticians or accountants. Yet numbers are the language of business and some argue that marketing would have more influence if they were more willing to quantify.


4. Marketing is part of the whole. The marketing led company has products and services designed with customers in mind, serviced by customer-care departments and created or provided by customer-focused people. When considering sales or profitability, it is impossible to split out the influence of the product, the after-sales service, the marketing, sales effort or the skills of Human Resources to find good people.

However, moving towards a data-driven culture in marketing has big benefits, not least of which is making decisions based on fact rather than guess-work. As innovative technologies become more powerful and more affordable for marketers, measures become more relevant. And excuses less so.

How involving is your marketing?

“Tell me and I’ll forget, show me and I’ll remember, involve me and I’ll understand.”

Marketing is often thought of as the way of getting a message out to a particular audience; a way of broadcasting our message in the hope that someone hears and finds it interesting enough to buy. Television, radio or cinema advertising is an example – advertisers expect their audience to sit, listen and absorb their message. They hope and expect that next time consumers need their product or service they will remember the advertisement and buy.

Data handling has now made it possible to interact with potential purchases to a great degree than has ever been possible before. Database marketing, Twitter, Facebook and LinkedIn are all good examples of involving people in a company’s brand, product or service.

A simpler, but no less effective device is the survey or questionnaire as a way of involving customers or prospects. Instead of guessing what people want, you ask about likes and dislikes. Some companies even listen to the answers.

At its simplest level, involvement marketing is getting customers to DO something, rather than passively listen to a marketing message. Involvement includes signing up for a loyalty card, answering a survey, joining a group on Facebook or LinkedIn, attending a webinar or requesting a sample. All these things indicate that the person not only knows about your company, but they care enough about what you are saying or selling to join in the conversation.

Involvement marketing is all about creating a mutually agreed communication link – where both parties understand the ground rules, and both parties benefit. It sounds simple, but it takes thought and technology to get right. But it’s more cost-effective than broadcasting, and therefore ultimately a better deal for everyone.

What do you think? Get involved and leave a comment with your examples of the best and worst of involvement marketing.

Can you buy loyalty?

Before I was able to drive I remember my Dad getting given glassware from petrol stations. Drinking glasses and glass bowls were carefully brought home after paying for a tankful of petrol. We had quite a collection – I suspect many people did. I can’t remember who gave away the glasses – was it Esso? Perhaps. Would my Dad have filled up there anyway? Probably. I guess the petrol station was on his way home.

So did the glassware buy loyalty? If it did, it wasn’t much.

Before glassware there were Green Shield Stamps: little machines spewing out yards of green stamps that were pasted into books and exchanged for a variety of “gifts”. Green Shield Stamps were popular, and a type of currency in its heyday – but expensive for retailers to administer. They purchased stamps, gave them away, but did they get loyalty in return? That was the idea, but as retailer after retailer stopped the scheme, I’m guessing they concluded it was a cost to their business, rather than an asset.

Today we have loyalty cards such as Tesco’s Clubcard and the Nectar card. At least with these schemes the retailer gets something in exchange – data about what you have purchased. But do they get loyalty? Look into many people’s wallets and they probably have “loyalty” cards for as many supermarkets as they regularly shop in. Would they change where they shop because of their loyalty cards? I doubt it, and from the small survey I’ve done, others agree: they shop where is most convenient. All retailers have good food, good prices, and reasonable customer service.

Loyalty schemes are expensive to administer, but according to Tesco at least – well worth the effort in terms of additional sales. I guess if the schemes were to be renamed “cards to encourage you to buy things you wouldn’t otherwise buy” they would be viewed differently by customers. But that’s exactly what they are: ways of incentivising customers to part with their personal details in exchange for money off promotions targeted to their profile.

What makes these schemes successful is the company’s ability to analyse and make sense of the data – understanding what customers like and what they don’t like. Without that the supermarkets may as well be giving away wine glasses.

Tesco – driving growth through better data

This week Sir Terry Leahy of Tesco announced that he would be stepping down next March from the role of CEO. It prompted a number of articles in the press about Leahy’s achievements in building Tesco into the UK’s largest supermarket chain, and global brand (almost 30% of its revenue comes from overseas sales).

Leahy was responsible for launching the Tesco Clubcard, the loyalty scheme which uses data gathered at the tills and has been much copied in retail. By making good use of the enormous volume of purchasing information stored every day, Tesco are able to target promotions more accurately. In a world where direct mail often gets less than a 1% response, Tesco get up to a 95% take up of their offers. How? By carefully tailoring their offers to known customer preferences.

One of Tesco’s rivals recently enclosed a free sample when my shopping was delivered a month or so ago. It was for a new brand of baby food. How kind I mused, as I threw it away. No babies in my household. There are many, many more examples where that came from. Not only are such promotions wasteful but they also underline that the company isn’t interested in what their customers like. They are only interested in what they might get back from the promotion.

So whilst the meteoric rise of Tesco is not without its detractors, they have done a great deal to demonstrate how to use data to increase sales. Food for thought, huh?

Build your brand

Just lately I’ve been thinking a lot about brands. You might think that brands are only important to large companies, the Coca Cola and Pepsi’s of the world. I think brands are important to all of us.

A brand is the idea in someone’s head about what the product or service will deliver. That idea will have been formed by perhaps trying the product or service, seeing it advertised, or by passing by the store twice a day. Talking to others about their experiences will also change our views about what a company sells. In today’s socially connected world, views expressed on Twitter, on blogs or online forums also contribute to views formed about a product or service.

The more consistent all those messages are, the stronger the brand.

So if every time you stay with a certain hotel chain their service is always impeccable, the room clean and attractive, the staff friendly and their advertising consistent with their service, your estimation of them will go up. If you hear colleagues talk of their good experiences, it will strengthen your view that you might want to stay with that hotel chain again. The larger the number of consistently good experiences you have, the more likely you are to forgive the occasional mistake, or to ignore a bad review.

A poor brand, on the other hand will have mixed feedback. Trains that run late, product lines that fail, poor feedback from customers, etc.

So whether you are Coca Cola or Joe’s Printing Works, consistency in delivery and promotion is important in building up a good image in your customers’ minds. Strong brands, large or small, come with valuable benefits according to Drayton Bird:

• You can sell products or services at a higher margin
• You get more repeat purchases
• Higher sales volumes means economies of scale which increase competitiveness
• People are more likely to forgive mistakes.

That’s a pretty strong list. And when we think of such mighty brands as Hilton Hotels, Heinz, Coca Cola, Perrier, IBM and Microsoft, it rings true. It is also a list that would be of value to any business. Which is why it's worth thinking about building your brand - whoever you are.

The vision thing

“If you want to build a ship, don’t drum up the men to gather
wood, divide the work and give orders.

Instead, teach them to yearn for the vast and endless sea.”

Antoine de Saint Exupery

Why measuring matters

What we choose to measure makes a big difference to what we finally achieve. In business it is financial results: sales revenue, profitability or share price. In sport it is goals scored, distance run or races won. But these “lag indicators” can only measure the success of past actions, they cannot predict future success. Measuring the things that contribute to the final result is what keeps you on course, and guides future success.

Before I sprained my ankle I was training to run a half marathon. Running 13 or so miles seems like a very big challenge to me, even though it would be easy for many people. Although I cannot control the final outcome (success/failure/jubilation/humiliation) I can control the “lead indicators” along the way such as number of kilos lost, overall distance run in a week, number of times I train in a week or attending running club. None of these things on their own will guarantee me success in the half marathon, but week by week they will increase my chances – even with the occasional injury.

The sales pipeline is one business equivalent. The number of people who enquire about your product or service as a result of marketing campaigns might be the lead indicator. Or the number of visitors to your web site who view more than 4 pages. Or the number of sales conversations you have in a week. Or whatever. Taken in isolation none of these things guarantee healthy financial results, but they are excellent progress indicators.

So measuring the right things really does matter - whether you want to run a marathon, or enjoy financial success. The key is choosing the right measures, and being consistent in monitoring progress over time. And if some of your measures turn out to be not as instructive as you anticipated then change them; they are there as helpers on the journey and not the final destination.

Ten reasons time is so precious

1. You can make more money, but you can’t make more time.
2. You can store money to be used later, but time stops for no man (a bit like the tide).
3. You can borrow money to achieve an important goal, but you can’t beg, steal or borrow more time.
4. We all work with the same 24 hours, no ifs or buts and no way to inherit a tidy pile more.
5. Most resources can be bought, borrowed, sold or lent. Time cannot be traded, and so is the scarcest of all resources.
6. You can’t swap time for all the tea in China. Unless you have a plan. In which case time can be used to earn a lot of the tea in China, a bigger house or a faster car.
7. Writing a cheque won’t allow you to spend a sunny afternoon in the park with those you love, but using some of your precious time will.
8. No one ever laid on their death bed wishing they had spent more time in the office. But I suspect a few wished they had spent their time more wisely, doing the things that were important to them.
9. Time flies like the wind, and fruit flies like bananas.
10. Once a day is done, you cannot get it back again, whether it was well spent or frittered away unthinkingly. But tomorrow, said Scarlet, is another day.