Database Marketing: A 24-point Checklist
Are you using all the essential database tools available today? Check this list to be sure
April 2007 By Arthur Middleton Hughes
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We have learned a great deal from database marketing in the last two decades. The following is a list of the 24 essential techniques used in database marketing. Anyone who works in marketing today has to be familiar with, and be able to use, all of these methods. Test your knowledge with this checklist.
#1—LTV
Customer lifetime value can be
calculated in any industry, B-to-B or B-to-C. It is used to guide direct marketing strategy. In the early days of database marketing, few marketers knew how to calculate it or how to use it. Today it is widely practiced.
#2—RFM
RFM (Recency, Frequency, Monetary Analysis) is a highly successful way of predicting which customers will respond to promotions. This segmentation tool has been around for 50 years, but many marketers still do not understand it or use it properly.
#3—Customer Communications
Personalized customer communications, based on information in a database, can be shown (using tests and controls) to increase customer retention, loyalty, cross-sales, upsells and referrals. They are effective, and the principal reason why you build a marketing database.
#4—Appended Data
It is possible today to append data to any name and address file to learn age, income, home ownership, presence of children and about 40 other valuable pieces of information about any household. This information can be used to create customer segments and guide strategy designed to create powerful customer communications. Similar information, such as SIC code, number of employees and annual sales, can be appended to B-to-B files.
#5—Predictive Models
Using appended demographic and behavioral data, it’s possible to create models that accurately predict which customers are most likely to defect and which are most likely to respond to new initiatives. Modeling, combined with customer communications, can be a powerful technique that can increase response and reduce attrition.
#6—Relational Databases
Putting customer databases in a relational form makes it possible to store an unlimited amount of information about any customer or prospect, and retrieve it in an instant in a hundred different ways. Relational databases are essential to modern database marketing.
#7—Caller ID
Linked to a customer marketing database, Caller ID permits a customer service representative (CSR) to pull up a customer’s complete record before taking a call. As a result, the CSR can speak to the customer as if she knows her, bonding with her and building close rapport. This helps deliver on the promise of database marketing.
#1—LTV
Customer lifetime value can be
calculated in any industry, B-to-B or B-to-C. It is used to guide direct marketing strategy. In the early days of database marketing, few marketers knew how to calculate it or how to use it. Today it is widely practiced.
#2—RFM
RFM (Recency, Frequency, Monetary Analysis) is a highly successful way of predicting which customers will respond to promotions. This segmentation tool has been around for 50 years, but many marketers still do not understand it or use it properly.
#3—Customer Communications
Personalized customer communications, based on information in a database, can be shown (using tests and controls) to increase customer retention, loyalty, cross-sales, upsells and referrals. They are effective, and the principal reason why you build a marketing database.
#4—Appended Data
It is possible today to append data to any name and address file to learn age, income, home ownership, presence of children and about 40 other valuable pieces of information about any household. This information can be used to create customer segments and guide strategy designed to create powerful customer communications. Similar information, such as SIC code, number of employees and annual sales, can be appended to B-to-B files.
#5—Predictive Models
Using appended demographic and behavioral data, it’s possible to create models that accurately predict which customers are most likely to defect and which are most likely to respond to new initiatives. Modeling, combined with customer communications, can be a powerful technique that can increase response and reduce attrition.
#6—Relational Databases
Putting customer databases in a relational form makes it possible to store an unlimited amount of information about any customer or prospect, and retrieve it in an instant in a hundred different ways. Relational databases are essential to modern database marketing.
#7—Caller ID
Linked to a customer marketing database, Caller ID permits a customer service representative (CSR) to pull up a customer’s complete record before taking a call. As a result, the CSR can speak to the customer as if she knows her, bonding with her and building close rapport. This helps deliver on the promise of database marketing.
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The Business of Database Marketing