News
 12
More Database Marketing Techniques
By Arthur Middleton Hughes
Do you know what the most successful database
marketing strategies are? Address hygiene is tops on
the list, so is having web access to your database.
Database marketing specialist Arthur Middleton
Hughes gives his top 12 database marketing tips. See
if you’re on the right track.
The following is a list of the next 12 essential
techniques used in database marketing. Anyone who
works in marketing today has to be familiar with and
be able to use all of these methods.
1. Web Access to the database. Today the marketing
database is in a relational format on a server which
is accessed online over the web by anyone in the
company, from any location. Instead of a couple of
analysts working with the data, it is available to
management, sales, customer service, marketing, and
market research. Web access has made marketing
databases a useful tool throughout the enterprise.
2. 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,
including data on more than 240 million American
consumers and millions of businesses. Sharing of
lists created the catalog industry, and has spurred
the growth of hundreds of other direct response
industries.
3. Campaign Management Software. Direct marketing
campaigns used to be generated by memoranda to a
service bureau: “Select these groups, divide them
into these segments with these codes, and fax me the
counts”. The process of getting the mail out the
door took three to six weeks. Today, marketers have
campaign management software linked to their
database so that they can do the planning and the
actual selections themselves in an afternoon. It
cuts weeks off of the direct mail time, resulting in
higher response rates.
4. Address Hygiene. Modern service bureaus can take
any large or small file of customers or prospects,
reformat them to a common format, correct the
addresses to USPS standards, consolidate the
duplicates, apply National Change of Address (to
determine the new address if people have moved) and
get the records ready for mailing or storage in your
marketing database in one or two days after receipt
of the data. This service has made modern database
marketing possible.
5. Profitability Analysis. We used to know that some
customers were more profitable to us than others,
but it was hard to measure. Today banks,
supermarkets, insurance firms, business to business
enterprises, and many others can compute the monthly
profitability of each customer. They have discovered
that many customers are unprofitable. As a result
they have changed their marketing and pricing
strategy to increase their profits.
6. Customer Segmentation. There used to be so few
customers that sales and marketers could keep needed
information about them in their heads. Today,
companies have many more customers – some in the
millions. A database is needed to store the
information. To develop marketing strategies for all
these customers, you have to divide them into
segments usually based on demographics and behavior.
Success comes from creating useful segments, and
developing customer marketing strategies for each
segment.
7. Multi-channel marketing. Customers buy through
multiple channels: retail, catalog, and web. We have
learned that multi-channel 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 three channels.
8. Treating customers differently. All businesses
have Gold customers – a small percentage that
provides 80% of your revenue and profit. With a
marketing database, you can identify these Gold
customers. Then you develop programs designed to
retain them. You use resources that you could not
afford to spend on all of your customers. Profits
come from working to retain the best, and
encouraging others to move up to higher status
levels.
9. Next Best Product. The database is used to
determine what customers in each segment normally
buy. From this, you can determine anomalies:
customers who are not buying what the others are
buying (usually because they are buying this product
from somewhere else). This is their Next Best
Product. The NBP is put into the customer database
record and used by customer service and sales in
communicating with customers. It can be a powerful
tool.
10. Penetration Analysis. Using a database and on
line analytical software, marketers can do their own
penetration analysis. What percent of sales do we
have in each zip code, or SIC code, or 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.
11. Cluster Coding. Claritas and others have divided
US (and Canadian) consumers into 66 different
clusters with catchy names and similar spending
habits. In many industries, using clusters with
penetration analysis can help you identify who is
buying your products, and who isn’t. It can be a
creative tool to use in improving your marketing and
sales.
12. Status Levels. The airlines started it:
Platinum, Gold, and Silver. It has spread to other
industries. Customers now understand their status,
and work to move up to a higher level. Companies
provide special benefits, rewards and services for
higher status customers. In a democracy, it is an
egalitarian method of customer differentiation which
assists in building customer loyalty and company
profits.
If you are not familiar with and using all of these
techniques in your work, you may not be getting the
level of customer retention, cross sales, up sales,
referrals and profits that others are getting. To
learn more, attend the National Center for Database
Marketing or consult your service bureau.
---- Arthur Middleton Hughes is vice
president/solutions architect at KnowledgeBase
Marketing (www.kbm1.com). He is the author of The
Customer Loyalty Solution (McGraw Hill 2003).
Contact Arthur at Arthur.hughes@kbm1.com or at (954)
767-4558.
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