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 A 12-Point Checklist for Database Marketing
   By, Arthur Middleton Hughes

What can we take away from the past two decades of database marketing? Anyone who works in marketing today has to be familiar with and be able to use the following twelve methods. Test your knowledge with this checklist.

#1 Address Hygiene
Modern service bureaus can take any large or small file of customers or prospects, reconfigure them into a common format, correct the addresses to U.S. Postal Service® standards, consolidate the duplicates, apply National Change of Address, and get the records ready for mailing or storage in your marketing database in one or two days after receipt of the data.

#2 Relational Databases
Putting customer databases in a relational form makes it possible to store an unlimited amount of information about any customer or prospect and retrieve it in an instant, in a hundred different ways. Relational databases are essential to modern database marketing.

#3 Customer Communications
Personalized customer communications, based on information in a database, can be shown (using tests and controls) to increase customer retention, loyalty, cross-sales, up-sells and referrals. They are effective and the principal reason why you build a marketing database.

#4 RFM
(Recency, Frequency, Monetary Analysis) is a highly successful way of predicting which customers will respond to promotions. This segmentation tool has been around for 50 years, but many marketers still do not understand it or use it properly.

#5 Appended Data
It is possible today to append data to any name and address file to learn age, income, home ownership, presence of children and about 40 other valuable pieces of information about any household. This information can be used to create customer segments and guide strategy designed to create powerful customer communications. Similar information, such as SIC code, number of employees, and annual sales, can be appended to B-to-B files.

#6 Web Sites
A Web site with cookies can show customers pictures of the product, instructions, background information, and details, while enabling them to print this customized information. Web sites are a tremendous research tool and customer bonding and ordering tool. No database marketer can really be successful without a personalized Web site with cookies or some other customer identification mechanism.

#7 E-mail Despite SPAM, e-mail marketing has emerged as a powerful database marketing tool. The ability to contact customers immediately with transactional information makes for vastly improved customer relationships, leading to retention and increased sales.

#8 Tests and Controls
Since 1980, marketers have been sending out direct mail and measuring the response to each campaign. Setting aside customers in a control group, we can measure with pinpoint accuracy the short- and long-term effect of any marketing initiative.

#9 Loyalty Programs
Most customers are delighted to participate in well-designed loyalty programs. Airlines have been successful with these programs and their use has spread to supermarkets, hotels, retail stores, and a variety of industries. They are part of the mix of retention-building services that database marketing has made possible.

#10 Rented Lists
In the past, most companies kept their customer lists strictly private. Today, most lists are shared, exchanged or rented. As a result, there are more than 40,000 lists on the market which include data on more than 240 million American consumers and millions of businesses.

#11—Multichannel Marketing
Customers buy through multiple channels: retail, catalog, Web, etc. We’ve learned that multichannel customers buy more than single-channel buyers. To be successful, you need a database that provides a 360-degree picture of your customer, coupled with strategies that recognize and communicate personally with the customer when she shows up in any of the various channels.

#12—Penetration Analysis
Using a database and online analytical software, marketers can do their own penetration analysis. What percent of sales do you have in each ZIP CodeTM, SIC code, income level or age group? This is a versatile tool that can help you to locate retail stores, place advertising, and direct your sales force.

If you are not familiar with and using these techniques in your work, you may not be getting the level of customer retention, cross-sales, up-sells, referrals and profits that others enjoy.

Arthur Middleton Hughes is vice president/solutions architect at KnowledgeBase Marketing (arthur.hughes@kbm1.com).

 
Melissa Data


 
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