Database Marketing: Mining for Customer Gold



While it might appear as though database marketing is a fairly new concept, the fact is that it has been around in its most basic form for decades.

Database marketing can be defined as managing a relational database of comprehensive, up-to-date, relevant data on customers, inquiries, prospects and suspects to identify the most responsive customers for the purpose of developing a high quality, long-standing relationship of repeat business. The days of “one size fits all” marketing solutions no longer exists.

As you’ve no doubt experienced yourself, attitudes and behaviours are changing towards the unrequested, unsolicited messages of advertisers. In an effort to insulate themselves from the intrusions of an ever growing number of marketers using more sophisticated tools and techniques, people are going beyond simple “cocooning” and beginning to “burrow” even further for greater safety and comfort, making it far more difficult for advertisers to reach their target audience.

It’s an interesting paradox that on one hand, consumers are demanding more choices and greater variety yet on the other hand they’re confused by all of the choices available to them. So, while they want to belong to a group or modern day tribe of people sharing common interests, they simultaneously want to be dealt with as individuals.

That’s the unique strength of a well executed database marketing program – the ability to use information to market to a “market of one”. Traditional broadcast media (TV, newspapers, radio, radio, and magazines) has, for the most part, lost its ability to locate and communicate to these consumers effectively.

Every business owner today is searching for ways to get more “bang for their buck”. Budgets for traditional marketing and advertising are shrinking, while the number of media choices available are growing dramatically. The new social based communities such as Twitter, LinkedIn, Face Book, etc., demonstrate a clear desire for people to gather together with other like-minded individuals. These sites and services allow for an exchange of ideas, stories, experiences and even photographs of their pets.

The over abundance of advertising messages often appear as clutter, making it difficult, if not impossible, to break through and make a favourable impact.

Savvy marketers aren’t satisfied with audience measurements based on the industry standard of reach X frequency. Media must deliver more than “tonnage” in terms of audience numbers. They must also demonstrate an audience that is responsive to their advertising offer. Customer response rates, once the domain of direct marketers have become the new marketing focus.

Until now, most local marketing programs aimed at making the sale to the widest possible cross section of customers in a “one-size-fits-all” approach. What was once impossible for the majority of small town, small business marketers – locating and selling to the most logical product user one-to-one, with a message tailored to that particular individual – is now commonplace. Database marketing techniques are available to anyone willing to implement them in their overall marketing and advertising programs.

With regards to targeted, focused marketing efforts, the smallest “mom and pop” business can now compete with the giants who previously dominated by virtue of their access to massive computing power. Database Marketing is about information This is accomplished by developing predictive models which enable us to send desired messages at the right time in right form to the right people – with the result of pleasing our customers, increasing our response rate per marketing dollar invested, lowering our cost per order, building our business and increasing our profits.

When our grandfathers ran their businesses, the only database marketing systems they had were in their heads or on time-worn index cards. Now the most basic desktop or laptop computer provides the great leveller – the ability to collect and analyze customer data quickly and accurately.

What kind of information should be collected and analyzed?

Start with a name, mailing address, phone number and email address. As the relationship with your customer continues, look for ways to collect more information regarding their age, occupation, marital status, family size, home ownership status, anticipated major spending plans or investments, etc.

The information file should contain a record of their history with your company including the recency, frequency, and monetary value of their business transactions to date.

Go slowly. Using the dating analogy; there are questions you can ask on the fourth date you would be slapped for asking on the first date! Take your time.

Build a comfortable relationship with your potential client and collect the valuable data in an appropriate manner and time frame. To be truly effective this database marketing process requires that at each request for information, there needs to be an exchange of value.

The customer is always asking themselves, “What’s in it for me?” and if they feel there is not a fair value exchange, they will choose to end the relationship and search for a competitor to provide the product or service they desire.

“Fair value” need not be about money exclusively. Consumers are looking for information. You may decide to “trade” a special report or white paper in exchange for some information. Alternatively, you might offer a product specific discount in exchange for filling out a short survey to augment your data file.

The proprietary database you create will become your most valuable asset. It is the heart and soul of your business venture and it needs to be protected at all costs as you would protect precious gems.

Having a better understanding of your customer will help you select the most appropriate media to communicate your small business marketing message, allowing you to adjust the tone and content to strike a responsive chord.

Utilizing the principles of database marketing in your business correctly will ensure you have the ability to measure the results of your marketing efforts. This provides the necessary feedback required to correct or alter your course to maximize your return on the marketing investment.


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