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Complete Databases Help Boost Sales February 2004 The rise of Customer Relationship Marketing has forced marketers to realize that customers are not created equally. Some people are driven by promotions, some by brand loyalty. How do cutting edge marketers discover and manage such valuable data? A well-managed customer database, of course. A comprehensive database not only reveals secrets about customers and buying habits, but can also help increase sales. The key is to track your marketing efforts along with your customers to see what's working, who's buying and how to move forward. Recording customers' names and addresses is a start, but without more demographic information this list is nearly useless. At the bare minimum there is a record of who has done business with you. Some of these customers may have been tourists and will not likely buy again. Some are seasonal purchasers, while others only buy when there is a sale. The most valuable customers, though, are the regulars who are loyal to your store or business. These people have developed a personal connection to your business and probably have referred friends as well. Keeping track of who buys what when, and how much they spend is important because effective marketing gears messages differently to each of these different types of customers. When thinking about CRM and database management, keep the 80:20 rule in mind. Remember, 20 percent of your customers account for 80 percent of your business. The question is, who is among this 20 percent in your database? The first step in discovering that gold mind in your database is to identify your "model customer." Use your database to find the people that have bought from you most recently, most often and who spends the most money. We call it RFM in the industry: Recency, Frequency and Monetary Value. In identifying these people, it is likely that certain similarities will reveal themselves. Your model customers may live in a certain area, may buy a certain item/product or spend about the same amount of money. This valuable information will help better target marketing efforts and will cut wasted marketing dollars. Now that this information has been gathered, do something with it! Try sending a customer appreciation promotion or a simple thank you card. The model customer likely has an emotional attachment to your business; you should develop a similar attachment to them. It is important that this connection works both ways. It is the heart of CRM. Let's take this a step farther. Once the model customer has been identified, find more of these people! Like the saying goes, birds of a feather flock together. Its called geo-demographics and its prominence has grown among marketers in recent years. It is likely that many of your model customers live in a certain area or a specific type of neighborhood. Try saturating these places with mailings to generate more business. Or try brokering a list based on known demographic criteria about the model customer. Tracking a customer's RFM is a great starting point in direct marketing. By disseminating this information it will become easier to target different types of customers based on what drives them to buy. And since direct mail is a measurable medium, it is simple to track a promotion's success. A comprehensive database is the first step in effective marketing. Knowing what to do with all that information is the key to unlocking the potential in your database. |
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