Building and executing the right business model is critical to success in today’s uncertain economy. Data-Driven Business Models unlocks the code to data mining, offering mid- to senior-level managers practical insight into how to choose and how to use the most effective tools to measure business performance and more effectively turn their businesses.

Measuring business performance has long been a topic of enduring interest among marketing and other senior-level executives. This book explains business models and strategic planning in terms of “where the money is”—a company’s customers and their unmet needs and wants. The author uses this concept to show how to model and continuously reinvent an organization to meet current customer needs.

Data-Driven Business Models combines text with a CD with “live” material from actual (anonymous) clients to marry basic notions of business modeling, data mining, and direct marketing. The result is an unusually effective blending of theory and practice.

Preface

Chapter 1 Business Models: What They Are, How They Work, Why They Are Important

Elements of a Business Model
Business Modeling and Business Models
     Fact-Based Decision Making
     Cross-Silo Cooperation
Types of Business Models
     Four Basic Business Model Structures
     Autonomous Business Models
Business Models in the Environment
Creating and Competing with Business Models
Understanding the Internal Culture
     Describing the Unique Value Proposition (UVP)
     Information Flow Within the Business Model
     Defining Which Behaviors Can Be Measured


Chapter 2 Describing the Customers

Profiling
     Mapping as a Profile Tool
Profit-Based Segmentation
Predictive Modeling
Descriptive Modeling
     Multi-Channel Profiling
Overlay Data
Survey Data
Learning from Our Customers


Chapter 3 Describing What Customers Do

Tracking Behavior
Measuring Lift
Break-Even(s)
     Case Study: Variable Break-Even
Profitability by Campaign
     Case Study: Profitability by Campaign
Predictive Modeling
Advocates, Buyers, and Tryers
     RFM vs. RFA Analyses
     Case Study: Recency-Frequency-Average Order (RFA)


Chapter 4 Quantifying Customer Behavior

Lifetime Value
     Case Study: Lifetime Value
Customer Value
Customer Value Index
     Action Based on a Customer Value Index 


Chapter 5 Building Customer Data Files

The Progression of an Analysis
Merge/Purge Is the Foundation
Data Checks
Relational Versus Flat Databases
Data Format Versus Data Content
Different Data Sources Equal Different Data Meanings
Realistic Time-Frames
     Case Study: Business-to-Business Medical Equipment Manufacturer
     Case Study: Consumer Cataloger
Rapid Development Approach 


Chapter 6 Building a Contact Strategy

Segmentation Is Tactical; Marketing Is Strategic
Segmentation by Frequency of Contact
Understanding House File Segmentation
     Who Should Be Contacted?
     What Makes Segments Different?
     What Offers Are Likely to Be Appropriate?
     Which Customers AreLikely to Be Most Valuable?
     When Should Contacts Be Made?
     Where Do Best Customers Come From?
     Which Media Are Most Effective in Making Contacts?
House File Inventory
     Quantifying the House File Inventory
     Building Budgets and Sales Projections Using the House File Inventory 


Chapter 7 The Process of Building a Business Model

Building a Team
     Top Management as Director
     Investors
     Facilitators
     Internal Lead Roles
     Support Roles
     Employees’Personal and Professional Strengths
Business Model Situation Analysis
Initial Review
     Step One: Employ Database Marketing Methodology
     Step Two: Load Data
     Step Three: Data Check
     Step Four: Data Hygiene
     Step Five: Set Data Dictionary
     Step Six: Create Reports Describing the Data
     Step Seven: Data Mining
     Step Eight: Exploring and Defining Relationships
     Step Nine: Create Descriptive Statistics
     Step Ten: Predictive and Descriptive Modeling
     Step Eleven: Create Final Report Set and Define Update Report Set
     Step Twelve: Develop and Implement Strategy Based on Findings
     Step Thirteen: Adjustment Period and Scheduled Updates
     Step Fourteen: Application Development


Chapter 8 Changing the Business Model

The Pressure for Change
     Hysteresis
     Adoption Hurdles
     Disruptive Technology
     Disruptive Competition
     Disruptive Marketplace
The Importance of Management Push
Obstacles to Change
     Pressure for Immediate Success
     Organization Charts Reflect Strategy
     Managing Rewards and Measurements
     Agents of Change Versus Agents of Inertia
     Knowledge of the Business of the Enterprise Is Key
Driving Change
     Organic Growth
     Partnering
     Acquisition
     Creating a Subsidiary
     Divestment
     Specialization
     New Media Channels
     New Sales Channels
     New Constituent Relationships
     Consummating the Sale
     Pricing 


Chapter 9 Case Studies

How Profiling Changed a Business Model
How Cluster Analysis Changed a Business Model
How Profit-Based Segmentation Changed a Business Model
How Predicative Modeling Improved
     Subscription Marketing Effectiveness

Index

Alan has given us the step-by-step approach to truly looking at our donor base. It is needed by many not for profits across the United States.

Duana Linville Dralus
President of the Board
Mid Continent Council, Girl Scouts

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Where this book seems to me to differ from many books about marketing is in its specificity. The advice and guidelines that it offers are clear, crisp and specific. The ideas contained in this book can be of enormous help across a wide range of industries. The non-profit performing arts world would benefit agreat deal from applying the principles found here.

Henry Fogel
President
American Symphony Orchestra League

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This book contains many key components of things that must be understood to run beneficial marketing programs. Worth conscientious usage.

Barnett C. Helzberg, Jr.
Former owner
Helzberg Diamonds
Author of What I Learned Before I Sold to Warren Buffet

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Data-Driven Business Models offers unique insight into database marketing. Alan Weber created a “how to book” that methodically takes you step by step through a rational process and the benefits of change. This book is more than analytics, it is an entrepreneurial treatise fully exploring the direct linkage between customers, business models, teams and the need for measuring execution.

Thomas H. Holcom Jr.
Vice President
Pioneer Financial Group
Founder
Angel Flight Central

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Alan Weber's knowledge of database marketing is based on many years of hands-on experience. He also writes extremely well. His explanations avoid jargon and concentrate on getting his points across very clearly so that readers can understand them. There are few experts in the industry who have both the experience and writing skill of Alan Weber. His new book, Data-Driven Business Models is great. I love it. I can highly recommend Data-Driven Business Models to anyone who wants to understand the marketing industry today.

Arthur Middleton Hughes,
Vice President, Solutions Architect
Knowledge Base Marketing
Author of Strategic Database Marketing 2nd Ed. (McGraw Hill 2000)

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Almost every busy person I know wants to find “the answer” on how to best grow their business. However, so few take the time to look for those answers in a systematic way. Even fewer have the ability to take those answers and put them into action. In his new book Data-Driven Business Models Alan Weber gives business leaders the information they need to set about building their organizations in a logical and strategic manner. From the latest in business modeling to customer value indexing, Alan’s book delivers what business leaders must know in order to achieve sustained success.
Like Peter Drucker said, “Marketing is everything.” Drucker would love this book.

Steve S. Little
Senior Consultant
Inc. magazine

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Alan Weber has written the definitive “how-to” political bible for implementing a database marketing program. An essential read for any business that is trying to revamp their current database operations and systems. He shares his war stories and his tactics for successful campaigns to win the war in database marketing. Alan’s keen insight and careful observations come from years of experience in the trenches of database operations. Reading the book is akin to having your own database consultant by your side!

Pegg Nadler
Pegg Nadler Associates, Inc.
Chair of the 2003–2004 Direct Marketing Association
Non-Profit Federation Advisory Council

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This comprehensive book offers a broad scoped introduction to the use of data driven decisioning. The author offers a seamless blend of direct marketing subjects with real life examples. This book is a must for your library.

Kurtis M. Ruf
Ruf Strategic Solutions