What Is Database Marketing and Why Do I Need It?

Marketing

What Is Database Marketing and Why Do I Need It?

5e8c15d280dd187b0e4a4303 Carena Marchi Profile Pic Copy
by
Carena Marchi
on
Mar 25, 2021

These days, it’s common knowledge that data is the key to a successful marketing strategy. But what can your customer database really do for you when you’re trying to find ways to stand out in the crowd? Many competing brands are turning to database marketing as a method of developing stronger relationships with their customers to ultimately achieve brand loyalty.

Database marketing uses data the right way; that is, it enables you to create a unique, evolving outreach strategy that focuses on personalizing your product or service’s value to better help your brand shine.

This article will:

  • Explain what database marketing is and why it’s so useful
  • Explore what types of data you should be collecting and how to utilize that data
  • Highlight which software may benefit your efforts
  • Look at different examples of database marketing in action

By the end, you’ll gain a deeper understanding of how you can use database marketing strategies to leverage your customer database.

What is database marketing?

The world we live in has become incredibly data-driven. Companies in all industries collect mountains of data pertaining to their customers’ preferences and behaviors.

Collecting this data is one thing; database marketing is understanding your customer database enough to make that data useful for your brand.

Its purpose is to help businesses reach their target audiences more efficiently by knowing what they want to see while allowing for the ongoing optimization of marketing efforts to boost ROI. Ultimately, database marketing allows you to create relevant messages and meaningful experiences for your audience.

Why is database marketing important for your brand?

So, where’s the data behind database marketing? We thought you’d never ask.

According to a study conducted by Forbes, companies who adopt data-driven marketing are more likely to have an advantage over the competition and increase profitability. In fact, they are six times more likely to be profitable year-over-year. This shows the true value that comes along with implementing database marketing strategies.

Additionally, it’s important to note that data enables marketers to determine the exact moment a message is most relevant to a customer or subscriber.

People receive between 300 and 3,000 marketing messages a day but can only retain a maximum of three. Therefore, if you’re not offering personalized and customized content at the most vital and receptive times for your audience, you end up wasting valuable data and opportunities to shine.

With database marketing, you’re also able to:

  • Identify and prioritize your most loyal customers.
  • Separate your audience into relevant segments.
  • Analyze insights in real-time when it comes to tracking customers throughout the decision making process.
  • Use customer feedback and behavior to update your marketing strategies.
  • Improve your level of brand awareness and identification.
  • Create a well-organized resource full of useful data and information to refer back to.

Who can benefit from database marketing?

Well, pretty much every type of company. Database marketing isn’t a free solution; you’ll need to implement and maintain a customer relationship management (CRM) system. But, you should be able to offset those costs with the increased profits generated from a database marketing strategy. Businesses already generating ample web traffic and selling multiple products are typically the best candidates for database marketing.

How do you build your database?

Before you can use that coveted data to inform your marketing strategies, you need to collect it.

There are so many different ways you can build your brand’s database depending on the types of interactions you have with your audience and the ways you typically offer information and content. Here are some of the most effective ways you can grow your customer database:

  • Content marketing
  • Web forms
  • Transactions
  • Email
  • Social media
  • LinkedIn
  • Events
  • Webinars
  • Surveys
  • Coupons, discounts, and exclusive offers

As discussed earlier, it’s also good to know which category of database marketing your brand falls under: business-to-business (B2B) or business-to-consumer (B2C). This will help you determine what kind of information will be most important to capture for your customer database.

B2B marketers should capture:

  • Names, titles, and tenure at the companies of your prospects
  • Details of the company: name, size, employee numbers and ratios, etc.
  • Estimated annual revenue and other important financial information
  • Profiles and information of all key decision makers at the company
  • Current and past influential marketing partnerships

B2C marketers should capture:

  • Customer first and last name
  • Contact information including email, phone number, mailing address, etc.
  • Gender and other demographic information
  • Location-based data
  • Transaction history and customer behavior information

How do you maintain your database?

In addition to maintaining your database, you should also think about how you can optimize your data collection throughout your entire marketing operations process. For starters, you can use continuous data profiling on your customers. In doing so, you’ll be able to keep your customers coming back for more.

Another way to optimize your data collection is to keep your requests to a minimum. You never want to overwhelm your customers when asking for information. Think about what information matters most to you. When you ask for too much, you decrease your customers’ willingness to complete whatever you place in front of them.

Lastly, always take the time to test anything and everything that you can. Using A/B testing to determine which form design or call-to-action button performs best with your customers will provide the optimal opportunities to facilitate conversions and grow your database.

How can you use your collected data?

Once you’ve taken the time to collect customer data, it’s time to put all of the pieces together and leverage your shiny customer database.

In order to maximize the potential of your database, here are some tactics you can implement:

  • Segment your audiences and send targeted email campaigns
  • Remind your customers and subscribers to engage
  • Showcase your brand’s product announcement and improvements
  • Create targeted social media campaigns
  • Conduct focus groups and surveys
  • Identify potential issues in your process

Segment your audiences

This is the first and most vital step, especially if you’re a B2B marketer. It’s important to always group your audiences based on similar traits, such as geography or shopping patterns, so that you can send targeted campaigns that will ultimately send your conversion rates skyrocketing. The more you segment, the more you can target your messaging, and the greater your overall response rate will be.

Remind your customers and subscribers to engage

This is a very common tactic among self-improvement and learning companies like Duolingo and Headspace, but the basic method can be applied across many industries. Reminders allow you to reach out to inactive customers and try to get them to re-engage with your brand.

If you’re ad-based, this will mean that you want more eyes on your offerings. If you’re subscription-based, people are more likely to renew if they interact with your brand regularly. Your customer database holds the key to knowing when is the right time to target each segment of your customer base.

Showcase your brand’s product announcements and improvements

If you develop a new product or service, you always want to start promoting it by reaching out to existing clients or customers who are familiar with your brand and more likely to implement it first. If you don’t have that database available, how can you gain their approval and continue that loyal relationship?

Similarly, let’s say you develop a new offering, and you think it’s great and then bring it to market. Your current customers are a great way to gauge the potential success of a new or updated offering. If your customers don’t find what you have to offer particularly intriguing, you can ask for feedback and go back to the drawing board to make the necessary changes.

Create targeted social media campaigns

Social media insights are extremely useful in this day and age. Users are constantly interacting with different brands through platforms like Facebook, Instagram, and Twitter. These platforms allow you to see what resonates with your audience in a new, evolving way.

You can use your data for targeting on platforms like LinkedIn, which allows you to create paid ads targeted towards email addresses you specify.

Conduct focus groups and surveys

At some point in your marketing operations process, you’ll need market feedback. What better place to source this from than your database! Throughout different curated surveys and focus groups, you can get a better idea of what your customers are looking for in the particular product or service you provide. You can then use this information to improve your offering(s) and optimize your marketing strategy.

Identify potential issues in your process

This doesn’t only relate to your products or services; it can also relate to internal issues. A customer database is especially useful when trying to recognize problems like fraud or poor user experience.

Database Marketing in Action

We’ve discussed a lot thus far, so some tangible examples might help to drive home exactly what database marketing is all about.

Let’s take a look at the following two brands and how they use database marketing:

  • Microsoft (B2B)
  • Netflix (B2C)

Microsoft

Microsoft has become a key player in the B2B database marketing space with its technology solutions, which are targeted towards businesses of all backgrounds and industries. By building a wide range of different content, contact, and database management systems, Microsoft is able to implement a variety of marketing strategies to attract different business customers. In doing so, Microsoft has become an influential part of many different brands’ day-to-day operations.

Netflix

Netflix has mastered the art of B2C data management in the entertainment media space.

Its recommendation-based algorithm that suggests programming based on customers’ viewing patterns is a prime example of effective and efficient database marketing. Once Netflix’s algorithm suggests something to a viewer, it will then cross-reference that with other viewers who have similar taste and viewer preferences.

Ultimately, Netflix’s use of data continues in this cycle, catering to its diverse community of subscribers with personalized suggestions to simplify the user experience.

Conclusion

So, there you have it. If you’re not already using database marketing in your overall marketing strategy, it’s time to get started. If you are, it’s important to remember that cultivating a customer database doesn’t happen overnight. Without high-quality data, you’ll have nothing to go off of when it comes to improving your marketing efforts. Lastly, keep in mind that maintaining and optimizing your database is just as important as growing it, so be patient, and the success will come.

Tags:  Sales

Ready to close more deals with less effort?

Try the Marketing Manager FREE for one month.

Request Free Trial

Subscribe