Have you ever spent hours crafting the perfect campaign only to see it fall flat?
Mistakes in marketing strategy and communications are common and often stem from issues with the customer database. Outdated information or poorly segmented lists can severely limit your campaign’s effectiveness.
These easily avoidable mistakes damage customer relationships, making database marketing crucial for marketing operations teams.
What is database marketing?
Database marketing is a targeted marketing strategy that uses customer data to deliver personalized communications and promotions. It helps to identify high-performing segments for effective campaign allocation, resulting in improved relationships and conversions.
Tools like relational database management systems (RDBMS) play a crucial role in database marketing by providing a structured means to store, manage, and analyze customer data. These databases organize data into tables that can be easily queried and linked, enabling marketers to segment their audience, identify trends, and personalize their outreach effectively.
Database marketing is not about funneling people into contact lists and spamming them with company communications. It’s about extending the lifetime value of accounts. A well-crafted database marketing strategy focuses on hyper-personalization and providing value.
Relational or SQL databases ensure that marketing data remains accurate and reliable, which is essential for crafting personalized and targeted marketing strategies.
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.
$138.8 billion
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. Social media has become so noisy that sometimes brands have just seconds to make an impact before the customer moves on.
The barrier to 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 the data found in marketing databases fuels these campaigns.
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 in which a company identifies key accounts and creates an individualized marketing and sales strategy to help close deals. Pairing this strategy with a well-managed customer database is a match made in heaven. Think of account-based marketing as a one-to-one marketing strategy in which 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 connect with your ideal client or current customer across several 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.
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:
- eBooks
- Webinars
- 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. 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 and direct-to-consumer 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 for mistakes to occur regarding customer data. 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 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 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
- Gender
- 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.
Database marketing adds a personal touch to all 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 personal interests or purchasing history can help you create hyper-specific content and offerings that catch your customers’ attention.
For example, if you segment your consumer database based on gender, you could ensure customers receive promotions 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.
Tips for building your own marketing database
Building your own marketing database requires a 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 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 decisions about your relationship marketing strategies, here are some things to keep in mind.
1. Identify your target audience
Understanding who your target audience is 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 qualification and help 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 information you’d like to know about them. 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 (MRM) 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
MRM systems can work alongside an RDBMS by managing workflows, campaigns, and assets. RDBMS, on the other hand, stores and analyzes the underlying data. This combination offers a powerful marketing management environment.
Investing in a software solution is especially crucial for enterprise businesses or B2C businesses. The volume of data 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 your job easier and make your data much better.
3. Collect your customer data
Customer data can come from various 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 decisions?
- Technology data: what devices does your customer use when interacting with your brand?
Collecting this information is just the beginning. As you begin building rapport with customers, it gets easier to discover and include more personalized data. Marketing communications pieces such as surveys, lead forms, and other data collection tools can help you continue to round out your customers’ data profiles.
You can take additional steps and meet with other leaders 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 professionals.
Examples of database marketing
It’s easy to discuss 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 using your marketing database. Hopefully, this will help give you a better understanding of how database marketing can benefit 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 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 targeted 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 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 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 customer’s interests. This is perfect for campaigns that have high-conversion goals.
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 compare your brand against competitors well before they are ever on your radar. Ensuring your first touchpoints with them are valuable and relevant to their interests will help endear you to them.
When done correctly, using the data in your marketing database to connect with your customers on a deeper level has virtually no downsides.
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 highlight 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 the information you’ve collected about a customer to market to them smarter. This data can be implemented at any stage of the 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 a few drawbacks to database marketing, there are a few key challenges.
Most problems with database marketing arise when the data isn’t 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 who is 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, 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 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.
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. Get your team on board with the value of marketing data early, and you’ll be amazed at what you can accomplish.
Learn how to use marketing information management (MIM) to get the data infrastructure and insights for your database marketing needs.
