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March 13, 2007

mdrdbs intro

Filed under: funding,mdrdbs,school — House @ 4:03 am

An Introduction to Database MarketingBy Susan Keipper Meell and Chuck Romans © MMS Education and Market Data Retrieval

What Is Database Marketing?

Database marketing is a process of identifying, collecting, and analyzing significant information from all sources, internal and external, about your customers, leads and prospects to drive strategic marketing and sales decisions.

All database marketing starts with customer information that is organized into a single, retrievable marketing database. The database is usually compiled from internal sources, such as orders, catalog inquiries, email requests for information, trade show leads, warranty cards, and other promotional efforts. It is not enough just to build a database of names and add external demographic information. Database marketing takes advantage of information in the marketing database to develop and implement action plans to enhance marketing results. There are many objectives and goals—from strategic planning to cost reduction—that database marketing can accomplish. The primary goal is to increase the profitability of the marketing investment.

Database marketing is not a means in and of itself. It is an integral part of the direct marketing effort. Database marketing is interactive and begins with the sale. The key behind database marketing is building the relationship with the customer. Developing and understanding this relationship is the cornerstone of database marketing. Developing this relationship can improve customer retention, increase lifetime customer value, and drive product development. Understanding the relationship will dramatically improve the efficiency of acquiring new customers.

What Are the Benefits? / Why Database Marketing?

Database marketing can vastly improve the economics of the marketing process through targeting the right message to the appropriate audience. But database marketing must have well-conceived and implemented plans. Building a marketing database and using the information effectively is not an easy task. It takes commitment from the whole organization to be truly effective. Commitment is needed from top management and sales and marketing personnel as well as the order entry staff.

There are four primary reasons to begin implementing database marketing—to improve profitability, to increase sales, to improve communications with your customers and prospects, and to improve product development. Strategies to meet these goals include:

1. To improve profitability: One of the benefits of database marketing is the ability to target marketing efforts and allocate resources in a way that improves efficiency and increases profit margins.

2. To increase sales: There are a number of database marketing techniques that are intended to save money by reducing waste and limiting unprofitable market segments. The primary goal of database marketing is usually to increase sales and take advantage of new market opportunities.

3. To improve communications: You may be communicating with your customers through direct mail, invoices, renewal letters/forms, advertising, conventions, customer service letters, new product announcements, and product updates. It is worthwhile to gather all of these communications together at least once a year and review everything that a customer or prospect may receive from you to see if the quality and content of the message are consistent with your customer profile and with what your customers have told you they want and need.

4. To improve product development: With a customer database, you should be able to communicate with your customers on a regular basis to gather information about the type of improvements they would like to see in your products or programs. Likewise, if you have a prospect database, it is important to talk with these potential customers to determine why they may not be purchasing your products or services. You should be able to conduct phone and mail surveys on a regular basis.

How Can I Use Database Marketing?

  • Design targeted, customized communications for customers.
  • Identify best customers and develop programs to reward them. Assign best customers to reps to work with them.
  • Increase renewal or repeat business that will improve lifetime value.
  • When doing direct mail, suppress educators/administrators like those who never buy from your mailing.
  • Use customer database for market research: surveys, sampling, focus groups.
  • Identify non-customers from universe and use for market research.
  • Compare best customers with the universe to identify new opportunities.

Keys to Successful Database Marketing

Start any database marketing plan by evaluating the customer information. Ask questions such as:

  • What is contained in the customer file?
  • What internal information is available that can be appended to the customer file?
  • How up to date is the information?
  • How can the customer file be enhanced/improved before undertaking the project?
  • What information is available from external sources?
  • What do I need to execute my plan?

What You Need

  • Commitment from management. One way to get commitment is to view the task as an investment rather than an expense, regardless of the size of the project.
  • A champion within the organization who acts as a general manager to optimize all of the company’s resources that are involved. The champion has to fully understand the marketing goals, the plan and its importance to the overall organization. He or she must also be empowered with a certain level of responsibility and accountability to implement the plan.
  • Internal and external resources. Most education marketers do not have unlimited internal resources. Be very aware of how much you expect from internal resources. Rely on dependable external resources in areas that are outside of your internal resource capabilities. It is usually much less expensive in the long run to use external vendors than to learn new technology, whether it is hardware or software.

How to Begin Database Marketing

Once your company has made the commitment, begin by asking all the questions that will help you determine exactly what information you will need. Some suggestions:

  1. Work backwards.
    • Evaluate your needs and what you want to know before you design your database.
    • Try to isolate what will be the most useful information, determine why it will be useful, and then design the database to capture it.
    • Think about what information will be truly useful versus what would be nice to know.
  2. Begin small. Build a database of your best customers and test the database design. Work with the database for six months and refine it as you work with it.
  3. Develop, test, enhance, and improve the design of your database.
  4. Words of caution:
    • Building a database takes total commitment from management (resources).
    • Maintaining a database can get complex very easily.
    • Test assumptions.
    • Validate results.
    • Retest.
    • Use outside resources to supplement internal efforts.

Developing a Database Marketing Strategy

As mentioned previously, to get the most from a database marketing system, there needs to be a champion to function as a general manager. The champion’s responsibility is to coordinate all the activity generated by the database marketing team. When developing a database marketing system or program, don’t forget the most important element: The management staff of the program.

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