How To Stalk Your Customers To The Fullest: Database Marketing

Last week I spoke about SQL and how to use it when searching through your database. What I didn’t go into was how you optimize the data that makes the database. Today I am going to talk about how to market the data in your business database.

Database Marketing

This is a form of direct marketing that uses databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. Database marketing takes advantage of information in the marketing database to develop and implement action plans to enhance marketing results.  There are many ways you can use database marketing for your business. Some ways are very beneficial but then there are ways it can be used that could be detrimental to your business. 

The benefits of database marketing is that it can improve profitability. It does this because you can specifically target and allocate resources  to improve efficiency, which increases your profit margins. This also improves your sales because if done well you can save money by limiting the unprofitable markets segments. Database marketing also enhances communication with your customers because you can look at all the data you collected and see which types of communication are consistent and worthwhile to keep up with. Another benefit is that database marketing can improve your products. By collecting information about customers buying habits and the commentary they provide you, you can keep improving the products that need improvement and drop that products that are not beneficial to your brand. An example of this is Starbucks and their loyalty card.

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Starbucks currently has 6 million registered card members. By being a member Starbucks is collecting data about you; the kind of drinks you get, what time of the day you get a drink, how many times a week you buy a drink, etc… So Starbucks took all of this data that they collected and can now segment their customers into different markets. They can create personalized promotions to send to specific gold members immediately, usually through your mobile device. By using the data collected, not only are they able to communicate with their customers better, but they have been able to focus on the key indicators that effect a customer’s satisfaction and attempt to improve upon them.

Another great example of database marketing is going to take us across the pond to British Telecommunications.

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They partnered with Devon Direct, a full service direct marketing agency.  British Telecommunications main problem was customer retention. By using the data in their database BT created fully customized and personalized brochures for their customers. These brochures introduced new products and services that might be of interest to the customer. The personal savings and order forms were customized specifically for each customer, based on the database information.  By doing this and sending out over a million brochures  a week they gained response rates of 14%-32%. In one mailing, one-third of the 11.5 million households responded to the brochure and bought one of the products.  Now this was not easy for BT to do. Behind database marketing are very highly skilled techies. Granted everyone should learn how to fiend for themselves when it comes to databases and looking through data, but to customize and personalize advertisement successfully you are going to need IT people. The software structure behind personalization is very complex.

Now I have painted a bit of a pretty picture for database marketing but be aware you can go down a wrong path when using database marketing. A very popular example is Target.

target

You probably have heard about the discovery that Target made after going through thousands of  pieces of customer data, but if not I will give you a brief overview. Target knows everything about you. They have demographic data on you and they have trends based on you. They essentially want to be you, so that they can know exactly what and when  you going to buy and have the products available for you.  Target began studying the shopping habits of customers who were going through life changing events, particularly new parents. They studied what these  customers bought once they had a child and then dug into their history and analyzed what they bought before the child was born.  One trend that Target found was women will buy large quantities of lotion when they are in their second trimester. In the end Target found 25 products that women are likely to buy when they are pregnant. They even were able to estimate due dates. By knowing this information Target began sending out coupons to customers who they believed to be pregnant. They would  even be sending coupons out to customers who didn’t even know they were pregnant. To Target this didn’t really seem like a huge problem, just another way to market and gain profit. Then a parent came into Target and began accusing Target for sending his “not pregnant” child maternity coupons. Eventually the father found out he was wrong and obviously needed to have a few more conversations with his daughter, but the lesson of this story is they were invading the privacy of the customers. Granted most of the advertising these days invades our privacy but it does it in a way that we don’t really notice it. By just sending customers personalized coupons about being pregnant Target was flaunting it in the customers face that they knew more about them then they knew about themselves. Target was luckily able to catch this problem before it became to large and now are hiding the fact that they may know you are pregnant. They are doing this by putting random ads, for like rakes, on one page and the other page has maternity sales. I guess the moral of this story is pay attention to the ads that Target sends you because they may  be trying to tell you something.

As you can see database marketing is a great way to better your business and the products that you provide but it can be a little disturbing for customers. Make sure that when you begin utilizing database marketing that you keep your customers in mind and how they might feel about the information that you know about them.

If you would like to read further into Starbucks, BT, or Target follow these links:

http://markstaton.files.wordpress.com/2013/10/print-at-starbucks-data-pours-in-but-what-to-do-with-it.pdf

http://www.dbmarketing.com/articles/Art164.htm

http://markstaton.files.wordpress.com/2013/10/how-companies-learn-your-secrets-nytimes-com.pdf

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