How Should Local Businesses Think About Database Marketing?

One of the latest buzzwords or phrases to be thrown around in the marketing world is the term database marketing.  For many local business owners, this conjures up an image of bespectacled analysts poring over onerous amounts of data in the offices of large corporations, trying to develop new marketing strategies based on complex theories and analytics.  It’s expensive.  It’s complicated.  It’s for the major players only.  Not so.

Database Marketing 101

At its most basic, database marketing is the practice of collecting and analyzing information to determine customer preferences, and using the results to create a more targeted marketing campaign.  To some degree, most small business owners are already doing database marketing in some form or other.  Anytime you collect and analyze information about sales, customer demographics and even customer surveys, and use it to inform your marketing efforts, you are practicing database marketing.

Sales History

One of the key ways of determining customer needs and preferences is by analyzing past sales.  What has the customer purchased and when?  Is it time for a replacement?  Will they need filters, batteries, accessories, complementary items?  What brands do they favor?  Do they tend to purchase high end or discount items?  What the customer has purchased from you in the past reveals a wealth of information about their potential needs and desires, and allows for a much more targeted marketing approach.

Customer Demographics

When customer contact information includes a physical address, this information can be used for a variety of purposes.  Simply analyzing the customer’s residential neighborhood can provide average age, income level and ethnicity, which may determine the products and services that the customer is most likely to be interested in.  Marketing concert tickets for a symphony orchestra, for instance, is likely to go over like a lead balloon in a young, urban neighborhood.  Understanding customer demographics will help to more effectively target your marketing campaigns.

Customer Surveys

Conducting customer surveys is a great way of collecting a myriad of data, not just on customer preferences but also to find out which marketing campaigns are outperforming the others.  Some key questions to ask are how the customer found you, what they did and didn’t like about the purchase experience, brand preferences, future purchase plans and whether price is a key differentiator in their purchase decisions.

Collecting and Storing Data

To start building your database, you’ll need to comb through your server and/or paper records for all of the customer information you can find.  For each customer, input contact information, items purchased and purchase dates.  Then add in any information you can glean from any customer surveys you have already done.  This is a good starter database that you can build on, not only to help you remarket to existing customers but also to get a clearer picture of your customer demographic.

Low-cost database marketing software programs and services are readily available to help you streamline and automate the process, sending out follow-up emails after customer purchases and separating out your customers into different email marketing groups based on purchase history and demographics.

At the end of the day, database marketing is not just some whiz-bang technical tool for high tech marketers to use.  In its most basic form, it’s likely something that you’re already doing.  And with some fine tuning, it can save you a fortune in advertising dollars by helping you get the right messages to the right customers at the right time.