Database marketing only works if the customer
benefits by it, according to Arthur Middleton
Hughes, vice president/solutions architect for
Richardson, TX-based marketing services firm
KnowledgeBase Marketing. Many companies keep
databases on file, but never use them.
“The important thing about a database is using it to
make money,” Hughes says. "Building a database is
easy, but making money with a database is hard.”
The lack of a marketing strategy is a major culprit
in why databases fail, Hughes says. Basic strategy
dictates that you put yourself in the customer’s
shoes and ask, “Why would I want to be on this
database? What’s in it for me?” If you can’t come up
with a good answer, he says, the database will fail.
A common mistake is that companies focus on price
instead of service when conducting
database-marketing programs. “Database marketing
builds loyalty,” Hughes says. “Discounts do not
build loyalty. Do not use the database to provide
discounts. Use the database to provide dialogue,
recognition and service.”
Another problem is the failure to use tests and
controls. Everything can be measured in database
marketing, but companies must set up control groups
that do not receive new communications. Some key
measurements to test are response rates, return on
investment, profits, and lifetime value.
Also most catalogers need to make better use of the
Internet to gather and track customer data, he
notes. “The Web is really the greatest thing to
happen to database marketing,” Hughes says. Also, he
said customer service workers should have
information on customers when they talk to them on
the phone. Company websites should have this
information when they receive customers as visitors.
article was printed in a Jan. 2005 issue of List and
Data Strategies for Multichannel Merchant.