Database Marketing For the Average Guy

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***tier3square.shtml***If you're are not using a database marketing technique, start now!  What are you waiting for? Data driven marketing has been around since well before computers. In fact, it's been around since the beginning of the last century.

So you really have no excuses! You need to start collecting the necessary data, if you don't have it and starting learning how to extend the lifecycle of your customers, or increase their current value to you.

Fat, dumb and stupid is no way to go through life

I'm not pointing any fingers here. Just trying to get your attention. If you've never focused on marketing your business because of all the mumbo jumbo out there, stop and take a deep breath. Database marketing can be very simple and very effective. You can even do it if you don't have CRM software. All you need is a spreadsheet and a plan.

Many marketers out there focus on demographics. They essentially throw customers into static buckets believing that everyone in a certain income bracket will buy X and everyone who has a dog will buy Y. If you have marketed using this sort of data all by itself, you've probably been frustrated.

One of the best kept secrets out there is measuring your customers activity. More specifically, database marketing can be used to analyze variances in customer activity outside the norm. These variances are the key to identifying when friction between you and your customer is increasing, or decreasing. Depending on your type of activity, either one could be good or bad.

The activities you measure will depend upon what type of customer interaction you have. For example, a customer service group may be measuring inbound calls. A business selling products will be measuring sales. It doesn't really matter what type of activity you are measuring as long as you grasp the concepts of Latency and Recency.

Latency refers to measuring the average time between customer activity events. You probably do this all the time in your head. How often do you think about friends you haven't heard from in awhile. You probably say to your self, "I need to give John a call. I haven't talked to him in awhile". While that's fine for friendships, you don't want to leave it to a gut feeling when your dealing with scores or hundreds of customers. That's why database marketing uses the data you've collected in your CRM or accounting system to make this more efficient for your business.

A lot of folks try measuring customer lifetime value. But in simple terms, you have a current value and a potential value. As the amount of time between customer activity grows, the lower the potential value in that relationship. Using this information, you can determine the most profitable time to reach out to customers that extend beyond the normal activity cycle. Yes, it's a bit more complicated than this, but I've found a great book that will walk you thru this step by step. Check out the sidebar above if you want to learn more.

Recency is a smarter model but is less intuitive. In fact, while I've seen the proof, it's one of those things you have to accept. People tend to be drawn to the familiar. A man is more likely to stand up when a woman enters the room if he's done so recently. Anyway, data suggests that the more recently someone has engaged in business with you, the more likely they are to engage in further business with you given the proper stimulus.

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Using Latency and Recency analysis together is relatively simple, and very powerful. It's the sort of technique that can take your limited marketing dollars and generate high ROI business. This is what database marketing is all about. Using the data you collect effectively and efficiently. If you'd like to read more on this topic I highly recommend you read this book. I was not disappointed!

Return to Customer Relationship Marketing From Database Marketing

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