Database Marketing

Your database of clients or prospects is possibly your company’s greatest asset. Whilst trying to create new sales and finding new clients, maybe you have missed an important point. You already have a list of clients or prospects held on your computer or server.

This could be in the form of Outlook contacts, a Customer Relationship Management system such as ACT!, those clients you have invoiced, or those that have enquired but not made a purchase. Hopefully, you have been smart and retained this information in a form that can be exported and analysed.

This data can be extracted, analysed and segmented by various criteria like post code, amount spent and a thousand other possible variations.

At Objective Marketing we have much expertise in data segmentation and manipulation. It may surprise you to discover that you can make greater use of the data you already hold. You have spent money in acquiring this information, so why not use it?

Database Marketing is a form of direct marketing
Database marketing is a form of direct marketing using databases of customers, or potential customers to generate personalised communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

The distinction between direct and database marketing stems primarily from the attention paid to the analysis of data. Database marketing emphasises the use of statistical techniques to develop models of customer behavior, which are then used to select customers for communications. As a consequence, database marketers also tend to be heavy users of data warehouses, because having a greater amount of data about customers increases the likelihood that a more accurate model can be built.

The “database” is usually name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled “list” from another organisation, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms.

The communications generated by database marketing may be described as junk mail or spam, if it is unwanted by the addressee. Direct and database marketing organisations, on the other hand, argue that a targeted letter or e-mail to a customer, who wants to be contacted about offerings that may interest the customer, benefits both the customer and the marketer.

(Some countries and some organisations insist that individuals are able to prevent entry to, or delete their name and address details from database marketing lists).

Sources of data
Although organisations of any size can employ database marketing, it is particularly well-suited to companies with large numbers of customers. This is because a large population provides greater opportunity to find segments of customers or prospects that can be communicated with in a customised manner. In smaller (and more homogeneous) databases, it will be difficult to justify on economic terms the investment required to differentiate messages. As a result, database marketing has flourished in sectors, such as financial services, telecommunications, and retail, all of which have the ability to generate significant amounts of transaction data for millions of customers.

Database marketing applications can be divided logically between those marketing programs that reach existing customers and those that are aimed at prospective customers.

In general, database marketers seek to have as much data available about customers and prospects as possible.

For marketing to existing customers, we often build elaborate databases of customer information. These may include a variety of data, including name and address, history of shopping and purchases, demographics, and the history of past communications to and from customers.

Marketing to prospects relies extensively on third-party sources of data. Such data is usually restricted to name, address, and telephone, along with demographics, some supplied by consumers, and others inferred by the data compiler. Companies may also acquire prospect data directly through the use of lotteries, contests, on-line registrations, and other lead generation activities.

Analytics and modeling
Companies with medium to large databases of customer information risk being “data rich and information poor.” As a result, a considerable amount of attention is paid to the analysis of data. For instance, companies often segment their customers based on the analysis of differences in behavior, needs, or attitudes of their customers. A common method of behavioral segmentation is RFM (recency, frequency, monetary), in which customers are placed into sub-segments based on the recency, frequency, and monetary value of past purchases.

We hope you found this information useful. We would like to remind you that this subject is best served, and more effective as part of a complete marketing plan or strategy, rather than in isolation. For further expert advice please contact us to discuss your requirements or post a question in our blog.

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