Database marketing is becoming more and more popular in today’s business world, and for good reason. According to Forbes, companies who adopt data-driven marketing are more likely to have an advantage over their competition and increase profitability. Although database marketing is popular, there are still a lot of business owners and CEOs who do not know what it is, or how to use it properly. If you are one of those people, today is your lucky day. In this article, I will be discussing everything you need to know about database marketing, and how to use it properly.
What Is Database Marketing?
Database marketing is defined as a form of direct marketing that uses databases of customers to generate targeted lists for direct marketing communications. It is the process of marketing your products and/or services to a select group of people who are more likely to purchase what you are selling based on information that was compiled by a database. Some of the information that a database may contain include customers’ names and addresses, phone numbers, emails, genders, and purchase histories. For example, let’s say a business is unveiling a new product that is specifically designed for females. In this situation, a business owner would not want to waste time and money on marketing this product to a male because the likelihood of them purchasing it are slim. Instead, databases could be used to find out who your female customers are, what are their spending habits, and what their demographics are.
Advantages of Database Marketing
When it comes to database marketing, there is a multitude of advantages. However, there are three specific advantages that are worth noting above all the others. Below is a list of those three advantages.
Allows You to Easily Identify Customer Groups: Database marketing allows you to easily identify which customers are loyal, which are new, and which are occasional buyers. This is useful information for a business owner or a CEO to know because it allows them to market their products more accurately. For example, if you are trying to market a new product, it would be more beneficial for you to directly market it to loyal customers who have a history of purchasing items from your store as opposed to people who are occasional buyers who don’t buy from your store often.
Improves Your Overall Marketing Efficiency: Database marketing also improves your overall marketing efficiency because it allows you to identify which type of people are purchasing certain products. When you know which type of people are more likely to purchase a specific product, you can then directly market said product to them instead of wasting time and money sending campaigns to those who are unlikely to respond. Saving time and money will automatically increase your overall marketing efficiency.
Improves Your Customer Service: The third and final major advantage of database marketing is that it improves your customer service. Having access to all of your customers’ information enables your support staff to answer customer questions faster and more accurately. This will inevitably increase your customer service.
Challenges of Database Marketing
Although the advantages of database marketing far outweigh the disadvantages, it is worth noting some challenges that you may face along the way if you decide to adopt database marketing into your business. Below is a list of two challenges that you may face.
Inaccurate Data: Although databases provide a multitude of information that a business can use in order to market more effectively, the reality is that there is no guarantee that all the data is accurate. This is due to consumers not always providing accurate information. Sometimes consumers do this unintentionally, and sometimes it is intentional. Regardless of the intent, the fact of the matter is that the odds of all of your information being 100% accurate are slim to none. However, you can limit some inaccuracies by replacing input fields with standardized drop-down menus or checkboxes.
Data Decay: Anytime a consumer changes their address, gets a new job, or makes any other significant life change, their data immediately becomes obsolete. Just like inaccurate data, there is virtually no way to stop this. However, you can limit it by focusing on information that is less likely to change as opposed to things that have a high probability of changing. Focus on things such as name and phone number as opposed to email.
In summary, database marketing is something that many businesses are starting to adopt, and for good reason. Although database marketing is not perfect, it is definitely something every business owner and CEO should adopt because it allows you to market more efficiently, and saves time and money.