Do you understand what database marketing is? Do you know how it could benefit your business?
What is it?
Database marketing is the use of information about customers and prospective customers that is stored in a database to to generate marketing communications. A database is nothing more than a file, either electronic or paper based, containing information about customers and/or prospects. You currently probably have various databases in your business without even thinking about it. You’ll have customer details in your accounting system as well as customer and prospect details in your CRM or website mailing list. The capability of your database to group or segment customers allows your business to target them with relevant and specific messages. This targeting can improve both responses rates and sales from marketing communications.
So why wouldn’t we start by sorting customers into some simple groups based on the following:
- Demographics – including income, age, sex
- Purchasing History – what the customer purchased, when they purchased it and how much they paid
- Geographic Factors – where customers live and where business customers are located
We can now use our database to achieve the following objectives:
- Identify the most valued customers and develop a strategy to retain them
- Sell more to existing customers
- Identify the best prospective customers
- Reactivate lapsed customers
- Target offers to the most relevant customers
- Measure and evaluate our marketing efforts
What are the benefits?
Research has shown that finding new customers costs businesses up to 6 times more than selling increased volumes to existing customers. It just makes clear economic sense to invest resources into retaining current customers.
A database will allow you to track your customers’ profiles and collect information on what, when and why they buy. You can use this information to develop customised offers for specific profiles. Database marketing can also assist you to identify potential new customers for your business. By having a clear understanding of the characteristics of your customers, you can develop a marketing campaign specifically designed to acquire more customers of a particular type.
The benefit of database marketing over other forms of marketing is that you know exactly who you are targeting and who is responding to your campaign. Such information allows you to measure the success of your campaign, better understand the cost of sale of a particular product and will assist you in planning your next marketing campaign.
Tips for successful database marketing
A couple of simple things to keep in mind to make the most out of your efforts:
- Your database is the backbone of your marketing so keep it up to date.
- Mark sure that your goals are SMART – specific, measurable, attainable, realistic and timely.
- Match your product or service with relevant customer groupings.
- Don’t go too broad and select your target customers carefully.
- Make your offer easy to respond to.
