How many times have you opened an email from a brand or a company only to see your name spelled wrong or not included at all?
Or maybe you’ve seen a paid social ad that just doesn’t fit your interests. Mistakes in marketing strategy and communications like this happen all the time, and it’s often because there’s something wrong with the marketing data that customer data is stored in.
But the customer doesn’t know or care about that. They see a company that doesn’t value them enough to get their name correct. These sort of easily fixable mistakes can sour relationships with customers or prospects if repeated often. That’s why database marketing is becoming increasingly important for marketing operations teams to master.
What is database marketing?
Database marketing, sometimes referred to as customer relationship management, is a form of direct marketing that allows marketers to use the data collected in customer databases to create more personalized communications with customers.
In our data-driven world, it’s not enough to have access to customer data and information. The process for using this data effectively is an art in itself. Marketing data has quickly become a favorite tool of top marketing teams because this data can be used to predict which marketing communications will be most effective. This allows marketers to provide more value to customers looking to make a purchase.
Database marketing is not about funneling people into contact lists and spamming them with any and all company communications. That sort of spammy-style marketing tactic doesn’t work in the digital age where companies battle over the inbox. This strategy is all about extending the lifetime value of accounts. A well-crafted database marketing strategy is all about hyper-personalization and providing value.
This guide will take you through the different types of database marketing, examples of how to use each, and a complete rundown of how to build a better marketing database.
Why does database marketing matter for your business?
The oversaturation of choice on the market today has made it a buyer’s market. It has never been easier to research and compare products, and in turn, that makes consumer switching all the more risky for your business.
amount lost by U.S. companies each year as a result of avoidable consumer switching
Source: Outbound Engine
Marketing is no longer a competition about creating the flashiest customer campaign. It’s all about driving value for the consumer. How can you solve their problem and how do you communicate to the customer that you’ve got the answers? It’s the mix between database marketing and a fine-tined overall marketing strategy that will yield results.
It’s especially important to focus on database marketing if your marketing strategy relies heavily on crowded channels like social media or email.
Email marketing is a bloated industry and grabbing consumers’ attention is tricky. Personalized marketing communications can help you stand out from a crowded or spam-filled inbox. And social media has become so noisy, sometimes brands have just seconds to make an impact before the customer moves on.
The barrier for entry on many digital marketing channels is quickly increasing. Marketing automation is making it easier to have personalized conversations with leads even in the beginning stages of acquisition and it’s the data found in marketing databases that fuels these campaigns.
Benefits of database marketing
Customer data has become so integrated into our marketing strategies that consumers now expect a certain level of personalization. Nowadays, customers are comparing your brand against competitors well before they are ever on your radar. Ensuring your first touch-points with them are valuable and relevant to their interests will help endear you to them.
When done correctly, there are virtually no downsides to using the data in your marketing database to connect with your customers on a deeper level.
Database marketing allows your team to:
- Prioritize your most valuable accounts and customers first
- Real-time insights into your customers’ decision-making process
- Create detailed customer segments designed to drive higher conversions
- Inform consumer behavior and highlights common buying patterns
- Improve your product using customer feedback
- Increase brand awareness and sentiment with your target audience
- Centralize data can be used across marketing teams and projects
Database marketing allows you to use this information you’ve collected about a customer to market to them smarter. And this data can be implemented at any stage of customer journey whether they’ve been a customer for five years or five minutes. This information should be used to create highly personalized marketing touchpoints, designed to find the customer at the right time.
Challenges of database marketing
While there are few drawbacks to database marketing, there are a few key challenges.
Most problems with database marketing arise when the data isn’t being properly managed. Data is only as good as your own quality standards for maintaining it. Many companies choose to hire a database manager for this exact role. Having a dedicated member of your marketing team dedicated to keeping the data usable ensures that all of your other departments are getting the most accurate and helpful customer information.
Here are a few other challenges associated with database marketing:
Data decay – information changes rapidly and data decay is an inevitable byproduct. When your database experiences decay it means the information available is no longer accurate. The average decay for a marketing database is less than 5%. Aim to keep your decay rates low by keeping updating and confirming customer information regularly.
Data accuracy – human error is, unfortunately, part of the process. Customers often provide bad data in the form of typos, incomplete information, or inaccurate data. All of that data becomes part of your system and affects the quality of your marketing data. This problem can be easily avoided by limiting the number of input fields on your forms and replacing them instead with drop-down menus or checkbox modules.
Catching customers’ attention – once you have the data segmented and ready to run, it’s imperative to strike while the iron is hot. The window of opportunity to grab a customer’s attention is limited. Marketing automation tools are often used to help segment, personalize, and deploy marketing campaigns using your data as the guide. By automating the process, you can accelerate the time to launch and improve your chances of making an impact on the customer.
Tips for building your own marketing database
Building your own marketing database requires specific focus on two things: choosing the right data to collect and then choosing the right software to house that data. Because so much of the buyer’s journey happens online, it’s important to invest in a software that can help you track these interactions.
If you rely on in-platform analytics it can be easy to let interactions and soft-touches slip through the cracks. As your team begins making these decisions about your own relationship marketing strategies, here are some things to keep in mind.
1. Identify your target audience
Understanding who comprises your target audience is the first step toward collecting data about them. Building a customer profile is a popular way to pinpoint your ideal customer. Customer profiles act as a form of lead qualifying and helps your marketing team discover how customers like being communicated with, what motivates them and what turns them off.
If you’ve never built a customer profile before, here are some tips you can use to get started:
- Focus on your long-term team and company goals
- Highlight what makes your company unique
- Discover which channels your customers use most often
- Track which competitors your ideal customer might choose over you
Once you’ve built a detailed profile of your ideal customer, you can start deciding what kind of information you’d like to know about this customer. This entire process can seem tedious and it’s easy to forget why this step is important. Understanding the target customer will help give you a complete picture of who you’re marketing your product to and how best to reach them, which results in more won accounts and marketing influenced revenue.
2. Choose the right software
Before you can start collecting and processing marketing data, you’ll need a system powerful enough to handle all that information. The most popular software option for housing marketing databases is a marketing resource management system.
Marketing resource management software allows your team to:
- Collect and store data across multiple marketing channels in a single place
- Manage marketing budgets and campaign planning within the same platform
- Track and build reports on the success of marketing campaigns and assets
- Integrate with third-party marketing tools to execute marketing campaigns
- Easily share and distribute marketing data and materials across teams
Investing in a software solution is especially crucial for enterprise businesses or B2C businesses. The volume of data being handled at that level is often too much for one person to track manually. Ensuring your marketing database manager has the correct tools for the job will make their job easier and it will make your data much better.
3. Collect your customer data
Customer data can come from a variety of data sources both internal and external. As you begin transferring data into your marketing database of choice, be sure to include everything you think you might need to track.
While many systems will allow you to create new categories of data over time, those new categories will not be pulled into historic reports created before they were added. This can create inconsistent reporting, which can be a pain if your reporting cycles use data older than six months back.
Here are the four different types of customer data you should consider when building a marketing database:
- Acquisition data: which marketing channel or campaign did the customer come from?
- Demographic data: information about a customer’s age, gender, location, income, industry, and more
- Psychographic data: what interests, hobbies, or beliefs could impact your customers’ buying decision?
- Technology data: what devices does your customer use when interacting with your brand?
Collecting this information is just the beginning. It gets easier to discover and include more personalized data as you begin building a rapport with customers. Marketing communications pieces such as surveys, lead forms, and other data collection tools can help you continue to round out your customers data profile.
There are additional steps you can take and other leaders you can meet with before making decisions, but marketing databases are often built with these three simple steps. Don’t fall into the trap of inviting too many cooks to the kitchen when it comes to building your strategy. Database marketing management is a very technical job that should be left to the professionals.
Types of database marketing
There are only two types of database marketing: business database marketing and consumer database marketing. Deciding which to use is as simple as deciding whether you’re a B2B business or a B2C business. B2C businesses should opt for business database marketing, whereas B2C businesses should stick with consumer database marketing.
Business database marketing
If you’re a B2B business looking to connect with your customers, you’ll want to use business database marketing.
Business database marketing is often less time-consuming to manage than consumer database marketing. That’s because B2B marketers often focus on marketing to specific customers and high-priority accounts. It’s less important to reach a large number of people and often more valuable to use account-based marketing.
Account-based marketing is a strategic marketing approach where a company identifies key accounts and creates an individualized marketing and sales strategy to help close deals. Pairing this strategy alongside a well-managed customer database is a match made in heaven. Think of account based marketing as a one to one marketing strategy where you tailor your approach based on the individual needs of a potential client.
Here are just a few things account-based marketers like to know to help keep things personal:
- Prospect names, titles, and tenure at the company
- Company size, market, and employee headcount
- Estimated annual revenue
- Current tech stack
- Social profiles of all decision-makers
- Current or ongoing co-marketing partnerships
This information is then used to create a digital marketing strategy designed to cross-paths with your ideal client or current customer across a number of digital marketing channels. The type of content you distribute is just as important as the message. Choosing the right content to interact with your ideal B2B customer takes time and testing to get right. The good news is that database marketing can help add a personal touch to any of these communications.
Here are just a few content types you can use in business database marketing:
- Free trial offers
- Industry reports
- White papers
- Targeted email campaigns
- Social media marketing
All of this is done in the hopes of reaching decision-makers. Business database marketing is designed to shorten the length of time between first contact and a signed contract. And the use of this hyper-personalized marketing strategy can help your company cut through the noise and rise above the competition.
Consumer database marketing
B2C and direct to consumer businesses should focus their efforts on consumer database marketing.
Consumer database marketing is most commonly used in e-commerce businesses; however, this strategy works for anyone who sells a product to a customer and not another business. In this case it’s more of an advantage to cast a wide net and reach as many customers as possible to generate revenue.
For this reason, it’s very common that mistakes regarding customer data happen. The larger pool of customers means there are more chances for data to get corrupted, mishandled, or even misplaced. And because the customers you’re trying to reach are often making a one-time purchase, it’s much easier for them to disengage with your brand if they feel their time is being wasted.
Luckily, this also means the amount of information and personalization needed to make direct connections with your customers is lower. Customers often expect less from your business because if there is no pre-existing relationship. That means it really only takes collecting a few crucial data points to make an impact on potential customers.
Here are some data points B2C marketers should consider collecting:
- First and last name
- Email address
- Phone number
- Mailing address
- Location data
- Transaction history
This information is then used to create a digital marketing strategy designed to cross paths with your ideal client or current customer across a number of digital marketing channels. The type of content you distribute is just as important as the message. Choosing the right content to interact with your ideal B2B customer takes time and testing to get right. The good news is that database marketing can help add a personal touch to any of these communications.
Here are just a few content types you can use in consumer database marketing:
- Online contests
- Social media giveaways
- Discount codes
- Free shipping offers
- Customer loyalty programs
- First-time buyer perks
- Direct mail and postcards
The key to a successful customer database marketing strategy is segmentation. Building customer lists based on things like personal interests or purchasing history can help you create hyper-specific content and offerings to catch your customers attention.
For example, if you were to segment your consumer database based on gender, you could ensure that customers receive promotions deals and information about clothing or accessories they are more likely to purchase. Consumer database marketing allows you to cast a wide net while maintaining the quality of your customer interactions.
Examples of database marketing
It’s easy to talk about marketing theory, it’s harder to understand how your business can best utilize these strategies. This section will cover a few real-world examples of leveraging your marketing database. Hopefully, this will help give you a better understanding of how database marketing can be beneficial for your business.
Upselling customers to a paid plan
A SaaS company is looking for a way to upsell customers currently using their free subscription model to the next pricing block and turn them into paying customers. They use their customer database to identify which of their users are utilizing the free version of their product the most to decide who is most likely to start paying for their services. From there, they design a target email marketing campaign offering a discount for a paid subscription to their service for a limited time.
In this case, the data was ideal for finding customers who were already enjoying the free version of the product and delivering them a deal that is hard to pass up.
Offering personalized customer support
A customer success representative for a large e-commerce business in the fitness industry receives an incoming support call. They pull up their caller’s profile in their marketing database and see that they are a new customer who received the product as a gift. With this information, the representative can assume that this customer is having trouble with their new product and give them personalized support to ensure they receive excellent customer support and a quick resolution.
In this case, the data was ideal for helping a new customer onboard their product and have a pleasant experience with the company. This is great for building rapport with new consumers that will keep them coming back.
Choosing the right product to pitch
A global airline company has recently added a new customer loyalty program for frequent business-class fliers. Before rolling out the program, they use their customer data to view purchasing history and demographic data to find eligible customers. They then use this list to send a personalized direct mailer to the customer thanking them for their loyalty and encouraging them to sign up for the program.
In this case, the data was perfect for finding loyal customers and offering them an incredibly personalized offering that aligns with the customers’ interests. This is perfect for campaigns that have high-conversion goals.
The devil is in the data
As you’ve learned by now, the make or break moment comes down to having better marketing data than your competitors. Even the best data is only as good as the marketing strategy it’s used alongside with. Get your team on board with the value of marketing data early and you’ll be amazed at what you can accomplish.
Interested in getting really in the weeds with your marketing data? Discover how some companies are using CRM analytics to gain new insights on potential customers.