10 Steps To A Marketing Database
It takes a lot more than ten steps to build a successful marketing database. Many of them are hidden within the ten presented here...to make it sound easier. But we are focusing on the steps that relate to the most critical phase: planning.
This report is written to CEOs and senior managers of companies about to build -- or rebuild -- a marketing database (MDB). It's meant to give a "creative perspective" to what otherwise might be considered a technical project, and to raise issues that we believe will have a dramatic impact on the outcome of your vision.
To some people a MDB is simply a cost-efficient way of keeping data on customers and prospects. We prefer to think that a marketing database offers the creative marketer a powerful data-based tool for developing a working relationship marketing program. The objective is to build long-lasting, individual relationships with the customers who represent your real profits.
We are appalled by the evidence that most attempts at building a database fail the first time. We are uncovering a number of reasons for this, but the common denominator almost always includes a flawed plan. For whatever reasons, managers simply underestimate the task or are afraid to tell you (the boss) just how big a job building a MDB really is.
A second theme of this document is that the MDB is a wonderful creative opportunity.
From our perspective as direct marketing consultants, an MDB offers the opportunity to achieve double-digit response levels. Why? Mostly because it gives us the ability to cut through the clutter of wasted communications with people who have little or no chance of making a specific purchase -- people we shouldn't be advertising to anyway.
We speak with real conviction here because by narrowing the audience and having access to appropriate information, we can speak in near personal terms with them. Instead of 1% or 2%, we begin to see potential response rates of 7%, 16%, 27%, 42% and more!
The ten steps that follow are not designed as hard and fast rules to be followed in the sequence presented. They are, rather, a "planning checklist" to help you realize your vision and avoid costly mistakes.
#1. MAKE SURE YOU REALLY NEED TO DO THIS.
Not everyone needs a true marketing database. If your customers spend, on the average, less than $150 a year with you, it may be hard to justify the cost of a real MDB. But, if you had one, perhaps they would spend $300, $400 or even $1,000 or more a year!
If you're starting with a Customer Information File (CIF), it will probably need extensive work to become a true marketing database. And building the MDB is just the beginning. Updating the MDB means a serious commitment of time and money! It's an ongoing process that works best as an integral part of your business operations.
Are you ready to make these changes?
Sometimes a simple mailing list will accomplish what you need. If you're looking at a single project or a short-term mail campaign, a mailing list can probably be enhanced to refine your audience, at least enough to get the results you're after. And, while an enhanced mailing list may technically be a database, it's not the subject of this report.
There are really only a handful of good reasons to assemble a marketing database. Our two favorites are growth and profits. But your reason may be survival.
#2. GET MANAGEMENT BACKING!
Don't even think about building a marketing database without senior management support and long-term commitment. Period!
If you didn't know before, by now you must realize that building and maintaining an MDB is a complex undertaking. It is unfortunately one that is all too often underestimated.
Database marketing is a commitment to a way of doing business and communicating with people over the long haul. It's a focus on customer needs, wants and expectations. Without a solid commitment from the top, the odds against successfully building the MDB are simply too great and the temptation to cast it aside in favor of short-term programs may become too appealing to resist.
A true MDB will take months, even years to build, test and implement. It will impact the way you do business and require the commitment of every employee in your sales and service chain. It is a major project with a huge potential that simply cannot be realized without senior management support.
The best of all possible worlds: when the CEO truly understands the value of one-on-one customer communications and personally oversees the key strategy and progress meetings.
#3. KNOW YOUR BUSINESS, YOUR CUSTOMERS AND THEIR VALUE TO YOU.
Understanding your business is an absolute must. You build a database around your business. Not vice versa!
While database marketing may change some of the ways you conduct business, it should not require you to change your business. But, neither can it overcome any serious flaws. It will, in fact, magnify your business...the bad points as well as the good!
Do you really want more customers that bring you little or no profit? If you have problems with 5% of your transactions, what will happen when you expand activity and raise the expectations of customers when they start hearing from you more often? You will discover problems you didn't know you had.
What are the characteristics of people who become good customers? What motivates them, how much do they buy, how often? How did they find you (or how did you find them)? How long were they on the books before they became profitable to you? What is your customer's Lifetime Value?
Are there more people out there like them? What characteristics will help us find them on lists? Once we find them, how do we talk to them to entice them into your customer base?
What data needs to be captured to make Database Marketing work for you? Knowing why you are in business, what you sell, who buys and why are absolutely paramount to success with database
#4. BUILD YOUR MDB INTO YOUR BUSINESS PLAN.
Have a current Business Plan and plan your Database Marketing Program(s) around your business objectives.
A clear, detailed description of your business is the foundation of the database planning process. The plan should be as specific and thorough as possible.
When you know how many customers of any one type you want, what you want them to do or buy, etc., you can begin to define the fields you need for your MDB, how to collect and update information most effectively.
In turn, building the MDB will help you understand more about the minutiae of your business as well as help identify trends useful in planning global marketing strategies.
But the MDB is still only a tool to use in carrying out your plan. Without a solid business plan and clear marketing objectives, Database Marketing will only help you get nowhere faster.
#5. TREAT THE DATABASE-BUILDING ACTIVITY AS A MAJOR PROJECT.
Building an MDB is like constructing a building.
You start with a blueprint drawn to approved standards, put a solid foundation in place, raise the walls, attach the roof, put your wiring and plumbing in place and begin the finishing process. Rushing the project, skipping details in one of the steps or attempting it without a plan heightens the chances of errors that require expensive repairs later. Faulty data not only hurt profits, they ruin companies.