Database Marketing: A 24-point Checklist
We used to know that some customers were more profitable to us than others, but it was hard to measure. Today banks, insurance firms, B-to-B enterprises and many others can compute the monthly profitability of each customer. They’ve discovered that many customers are unprofitable. As a result, they’ve changed their marketing and pricing strategy to increase their profits.
Today, companies have many customers—some in the millions. A database is needed to store their information. To develop marketing strategies for all these customers, you have to divide them into segments that usually are based on demographics and behavior. Success comes from creating useful segments, and developing customer marketing strategies for each segment.
Customers buy through multiple channels: retail, catalog, Web, etc. We’ve learned that multichannel customers buy more than single-channel buyers. To be successful, you need a database that provides a 360-degree picture of your customer, coupled with strategies that recognize and communicate personally with the customer when she shows up in any of the various channels.
#20—Treating Customers Differently
All businesses have gold customers—a small percentage that provides 80 percent of your revenue and profit. With a marketing database, you can identify these gold customers. Then you can develop programs designed to retain them, and use resources you couldn’t afford to spend on all of your customers. Profits come from working to retain the best, and encouraging others to move up to higher status levels.
#21—Next Best Product
The database is used to determine what customers in each segment normally buy. From this, you can determine anomalies, such as customers who are not buying what the others are buying (usually because they are buying this product from somewhere else). This is their Next Best Product (NBP). The NBP is put into the customer database record, and then used by customer service and sales in communicating with customers.