How to Build Your Customer Database
   By Craig Huey

Your database is the key to survival in bad times. And it’s the key to maximum profits in good times. The goal of your database is to maximize customer value through conversion, retention and repeat sales. And, it allows you to create new marketing opportunities. Here’s what you need to know about database marketing.

Everyone is collecting data on who is, or should be, buying their products or services. This data does not just consist of names and addresses. It includes buying history: what people bought, when they bought, and how much they bought. It also includes birth dates, anniversary dates, marriage status, number and age of children, likes and dislikes. It opens up new ways to market more products and services for both consumer and business-to-business marketers.

It means:
• New ways to market smarter and reduce costs.
• New ways to market additional products or services.
• New ways to keep customers—through extended product usage.

The business market today is changing rapidly. Those who properly master the understanding of how, what and why customers make purchases, and those who are able to influence buying decisions with highly targeted marketing efforts—mail, video, telemarketing, etc.—are going to come out on top.

A database is not just a collection of names. It’s a collection of individualized, consumer behavioral information, isolated to each customer. The database concept inputs data and generates information that allows for selective targeted marketing. It provides comprehensive, up-to-date and relevant information about prospects and/or clients, and will pay for itself quickly with visible, measurable sales.

As database marketing has evolved during the last 20 years, it has become more and more cost-effective. In 1973, it cost $7.14 to access a customer’s name, address and purchasing information. Today, it costs about $.01-.02. This is due to advanced microchip technology that makes processing information faster and easier than ever before.

Building Your Database
As you start your database, the most elementary data collected is your customer’s buying history: what they bought, when, how much and the source of the order. Here is an example of a typical database structure. An element of information about the customer is called an attribute—a fact about the individual or company. The following attributes are common to most direct marketing databases:
 

Your goal is to ultimately develop a high-quality, long-standing relationship of repeat business. With proper analysis of the database, predictive models can be created to mail selectively and with the right frequency.

The ultimate result is that you can provide your customers with what they really want, when they need it. Properly implemented, you can increase your response rate and lower your cost-per-order. The result is higher profits.

---Source: Craig Huey is president of a direct response advertising agency, Creative Direct Marketing Group, Inc and InfoMat. 310-212-5727 (craig@cdmginc.com).