According to 90% of leading marketers, personalization is a significant contributor to the profitability of your business.
But there’s more to personalization than just marketing to customers based on their purchase history.
Imagine if someone bought toys for their toddler nephew’s birthday only to get tons of marketing emails about toddler toys. This person doesn’t have any kids of their own, gets annoyed at the irrelevant marketing, and unsubscribes from your email list.
Database marketing can help you avoid these costly mistakes. It helps you create personalized marketing communications, lets you create targeted campaigns, and so much more.
Keep reading for everything you need to know about database marketing in our ultimate guide.
Key Takeaways
- Database marketing allows for personalized marketing strategies that go beyond basic customer purchase history, aiming to avoid irrelevant marketing that can lead to customer dissatisfaction and unsubscribes.
- It involves collecting and analyzing a wide range of customer data through CRM systems, enabling targeted campaigns, loyalty programs, and predictive analytics for improved customer engagement.
- Effective database marketing requires accurate data collection, up-to-date customer information, and timely action to ensure personalized communication that builds trust, increases marketing efficiency, and enhances overall MaaS performance.
What Is Database Marketing?
Database marketing is a type of direct marketing where you collect customer data and analyze it to create a personalized experience for each of your customers. You can also use this personalized experience to entice potential customers.
Some of the data you might collect for your database marketing strategy includes:
- Customer names
- Customer phone numbers
- Customer addresses
- Transaction data
- Any support tickets sent
- Purchasing behavior patterns
To collect this data, database marketers use a CRM system, which stands for Customer Relationship Management.
This is software that lets you gather all your data in one place and gives you the tools to make sure every customer interaction with your company goes smoothly.
Any type of company can benefit from database marketing, from brick-and-mortar stores to law firms.
The Difference Between Database Marketing and Direct Marketing
Many people use business database marketing to collect customer names and addresses so they can mail prospects their flyers or postcard. This is traditional direct marketing.
With database marketing, you might send out fewer mail or emails, but you’re targeting your customers with personalized information. You learn how your customers want to be marketed to and tailor your strategy to suit the best method to reach them.
What Can I Do With Database Marketing?
If you’re used to sending your realtor postcard to dozens of city blocks and hoping for an inquiry call, then you’ll be glad to know that database marketing can help you create a much more efficient strategy.
Database marketing allows you to do the following:
- Create targeted campaigns
- Add a loyalty program for long-time customers
- Give discounts to new customers
- Use analytics to figure out the best time to market
- Use analytics to predict customer behavior and buying patterns
- Segment customers into detailed groups
You can see how all the above functions of database marketing allow you to create an incredibly personalized experience for your customers.
And when you personalize your brand messaging, you stand out from your competition and keep your brand top of mind.
Detailed Customer Segmentation
Customer segmentation is when you separate your customers into groups depending on the similarities these groups share.
You can segment customers into groups based on:
- Demographics (age, gender, income, marital status)
- Geography (country, state, city)
- Personality, values, and interests
- Needs and wants
- Technology use (mobile, desktop, software)
- Behavior (product use, habits, repeated actions)
Customer segmentation is a vital step in personalizing your marketing strategy for each group that you will market to.
How To Manage Database Marketing
While database marketing has a slew of benefits, your job doesn’t stop at collecting the data. You need to efficiently manage your marketing data so that it reaches the customer with the right messaging.
Make Sure Customer Information Is Accurate
You need to make sure the data entered into the marketing database was accurate in the first place. If you’re collecting customer data via an online form, a customer might easily include a typo.
Consider replacing fillable areas with drop-down menus where you can to reduce the likelihood of typos.
If you’re collecting data via a handwritten form in your store, then you not only have to deal with typos but illegible handwriting as well. Try including some boxes your customers can tick off to reduce the chance of this happening.
Keep Your Database up to Date
With hundreds (if not thousands) of customers in your database, it’s guaranteed that some of their information will change over time.
Customers move, change their phone numbers and jobs, and make other life changes, all of which impact the accuracy of your data.
To reduce the likelihood of your data becoming out of date, try to focus on information that’s less likely to change. This includes customer phone numbers and personal emails vs business emails and addresses.
Also, consider following up with customers to make sure the information you have on file is correct. This is especially useful if they’ve saved their shipping information on your website before.
Act in an Appropriate Time Frame
You also need to make sure you act on your data within an appropriate time.
Imagine if your customer needed their car repaired and inquired with your repair shop. You quickly entered their information into your database but didn’t follow up until months later.
You can be sure that this customer went elsewhere for their car repair and likely won’t be coming back to you since you took so long to respond.
By using database marketing strategies like customer segmentation, you can set up your CRM software so that you contact all your potential customers with a personalized message before they go to one of your competitors.
How Database Marketing Impacts Your Marketing Performance
Not only does database marketing create a better experience for your customer, but it can also help increase the success of your marketing campaigns, which in turn can increase your sales.
Database marketing can improve your marketing performance in the following ways:
It Builds Trust
Personalized messaging lets you build trust whether you have new or existing customers.
Rather than looking like you’re just trying to make a quick dollar, customers will feel like their needs are important to your company and that you’re truly interested in helping.
And when you build a long-lasting relationship with your customers based on trust and a smooth, positive experience every time, you dramatically increase the chance of repeated sales.
Not only that, but happy customers are some of the best ways to advocate for your brand without spending a dime. Satisfied customers won’t hesitate to tell their friends and colleagues what a great experience they had with your company.
It Can Increase Your Efficiency and ROI
Even if database marketing means you send out fewer marketing materials than you did with your mass-mail flyer, targeted marketing is more efficient for both your time and your budget. You increase the chance that you’ll get leads that actually convert into paying customers.
Always keep in mind your return on investment (ROI) when creating a database marketing campaign. If you spend thousands of dollars on a marketing campaign and only get one client for 50 dollars, then your ROI is not good.
But if you send a personalized campaign to 200 customers and 100 of them convert, then you’ve got a much better ROI.
Keep in mind that a good ROI is dependent on your business and the goal of your campaign, so it’s better to personalize your ROI goal to your own business rather than compare it to others.
It Provides Next-Level Personalization
When you create detailed customer segments, you also create incredibly personalized marketing messages.
For example, you can send a follow-up email to everyone who’s just bought your product, or you can send a discount coupon to a first-time customer who’s left a product in their shopping cart.
Personalization helps you anticipate customer needs and get these products or services in front of them precisely when they’re needed.
If you’re stuck on how exactly to create more effective messaging, there are a variety of online tools to help you, from helping you research to improving your written content.
How To Get Started With Database Marketing
Now that you’ve seen the invaluable benefits that database marketing for your business, you might be wondering how to get started.
While these are the basic steps, you want to personalize them to your business and to your business goals.
1. Get the Right CRM System
Before you start to gather customer information, you want to make sure that you select the right CRM software for you and your business.
When selecting a CRM system, you want to think about your company’s budget. You also want to consider what’s currently not working in your business that you’d like to improve or streamline with a CRM system.
Think about how many employees will need to use the system, as well as what other software you’d like to use alongside it. These considerations will impact your budget as well, so it’s important to do some brainstorming and pre-planning.
If you’ve narrowed your selection down to 2 or 3, try a free trial from each to see what works best for you and contact customer service if you have any questions.
2. Who Is Your Target Audience?
Next, figure out who your target audience is. To do this, you want to create a customer persona.
A customer persona is a fictional person you create that best represents your ideal customer.
While the persona itself is fictional, it is based on your real-world research and is a representation of your audience’s needs, interests, and demographics.
Creating a customer persona helps you target your customer’s pain points so you can focus on providing their ideal solution. As your product evolves, it’s okay for your target audience to change as well.
3. Gather Data
Now you want to gather customer data. The exact way you do this depends on your business, but you can gather customer data by looking at how often customers buy from you, where they found out about you, and whether they’ve contacted you for support or to ask a question.
Before you gather data, it’s a good idea to evaluate your business goals and update them if necessary. This way, you’ll know exactly what customer data to focus on.
Also, think about what kind of customer data you need as you input customer information into your database. If your business is solely online, you want to focus on email addresses as opposed to physical addresses.
4. Back up Data and Set Up Privacy Protocols
Even though 61% of consumers in the US and the UK would rather get personalized offers than keep companies from viewing their online activity, you still must respect privacy laws.
This includes being aware of data privacy laws in your country and state, as well as spam laws that apply to your customer database.
Check if your CRM software automatically backs up and/or updates data. Also check whether it stores the backup internally or on the cloud, as this affects both your backup strategy and your privacy management strategy.
5. Start Your First Campaign
Now that you have enough data to start with, it’s time to start your first campaign.
First of all, you want to segment your audience so that you have targeted marketing for each group. If you’re feeling overwhelmed, start with the largest group or the group that you’re the most familiar with.
Using the data you’ve gathered, look at how the best channel through which to market to your users. A digital marketing channel is how you get messages to your audience. This includes email marketing, social media marketing, and content marketing.
Also, have a specific goal for your campaign. Do you want people to sign up for your service? Contact you for a quote? Buy your product?
After you’ve launched your first campaign, analyze your results and see what you could change to get you better results next time.
Get Started With Database Marketing Today
Personalization with database marketing lets you spend less time guessing and more time precisely targeting your audience for measurable results.
By feeling valued and seen, your customers will have a good relationship with your company and will want to come back again and again.
Are you excited to implement database marketing in your business strategy but unsure of where to start? An experienced professional can help.
For data-driven marketing services that are custom-tailored to your business, contact me today.
