An Introduction to Database Marketing

Neil Fletcher had been running the family’s retail business successfully for five years since inheriting it from his father. Fletcher’s Dry Goods was not only a well known landmark in the local area, but was also beginning to attract clientele from neighboring towns. Neil’s thoughts were now occupied with ways to take his business to a new level. The strength of Fletcher’s lay in their personalized service, which had helped them build long-standing relationships with customers. Neil wanted to reach out to a wider audience, yet retain that personal touch. That’s when someone suggested database marketing.

Since the founders of the business had always accorded special importance to their client base, customer orientation was very much part and parcel of Fletcher’s philosophy. Technological advances provided them with sophisticated tools to manage their customer information, and Fletcher’s goods were among the first in their county to adopt computerized data management. This put them in prime position to launch a database marketing campaign without expending extra effort to gather, sift and sort customer data.

If you own a business catering to a wide customer base that has a degree of homogeneity, it’s worth considering a database marketing initiative at some point. If you’re wondering what the hoopla is all about, allow us to offer a quick explanation.

Database marketing has many definitions, but broadly, it is the usage of an electronic repository of detailed customer information to drive marketing efforts. Companies that use database marketing spend time and effort in gathering, organizing and analyzing customer data on a continuous basis. This information is stored in the form of an electronic database, which makes it easy to retrieve, manipulate and draw conclusions. The power of database marketing lies in its ability to target individual or groups of customers with messages specifically tailored to their needs. For example, a bank might target communication about a new mortgage product to young couples in their thirties, but direct a similar message about college education loans to older couples with children.

Database marketing campaigns fall back on a variety of media, depending on factors such as budget, reach, customer preference, appropriateness etc. Thus, you could employ a mailing campaign, or use a direct contact approach such as the telephone. This brings us to the difference between direct marketing and database marketing. While both result in direct customer contact by marketers, the latter is notable for the attention paid to the analysis of customer data. Database marketers are likely to rely on data warehousing techniques to manage huge volumes of customer data and employ analytics and statistical methods to derive maximum insight from raw numbers. Further, they might build models that help refine customer segmentation and even predict behavior. This arms them with a better understanding of what value proposition they should make to each of their customer segments, and improves the chances of marketing success. The book “Statistical Modeling and Analysis for Database Marketing: Effective Techniques for Mining Big Data” by Bruce Ratner available on amazon.com might be of particular interest to data intensive businesses.

So, is database marketing the exclusive preserve of large consumer goods companies? Not so. While a reasonably large customer base is desirable in order to make the effort economically viable, business-to-business marketers also employ this technique to good advantage. While consumer businesses are likely to have detailed information about their customers, such as buying history, preferences and frequency of transactions apart from basic contact details, business-to-business marketers may have to rely on methods such as employing a sales force or using online contact to understand the end customers of their product. As far as marketing to prospects is concerned, both types of businesses can choose to purchase ready databases from a host of companies that sell them.

While database marketing offers many advantages including a high return on investment if used the right way, it does face some resistance from the target audience. Issues regarding privacy of information and solicitation of business have come under regulatory action, and database marketers must be careful not to violate any laws while launching their campaigns.

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