Previously, merchants and businesses had to keep a physical record of basic information about their most valued customers and send letters and postcards to market their products or brand. But with the recent technological development and our increasing reliance on smartphones and the internet, it has become much easier to create a database of all the customers and use it to promote your product or brand. So now the question is, what is database marketing?
In simple terms, database marketing is a subset of direct marketing. It uses a consumer database with information such as email id, phone number, name, and address, to promote a product or service. Generally, consumers are contacted via emails or messages and sometimes via phone calls.
In this article, we will discuss what database marketing is, its types, benefits and disadvantages, and some real-life examples to better understand the concept.
- 1 What is Database Marketing?
- 2 Types of Database Marketing
- 3 How to utilize Database Marketing?
- 4 Conclusion
- 5 FAQs
What is Database Marketing?
Database marketing is a statistical approach to marketing that uses a list or customer database with their personal information. Such as name, address, email, phone number, transaction history, membership details, and much more.
Analyzing this data allows businesses to segregate and prioritize customers to promote specific products, making marketing more straightforward and cost-effective.
While traditional direct marketing methods can still be effective, using digital techniques such as this, to analyze and digitally market products and brands can give more freedom to businesses.
To create a database of customers, businesses collect the following information: names, addresses, emails, phone numbers, purchase and transaction history, job titles, website cookies, credit history, and other parameters specific to the business.
Types of Database Marketing
Database marketing can be broadly divided into two types. They are differentiated based on the kind of your business and your target customer. The following are the two types of database marketing:
Customer Database Marketing
Customer Database Marketing is used by companies that want to market and sell their products directly to the customer. They can use customer information available in the database and analyze it to identify specific customer segments, create targeted marketing campaigns, decide which products to market to whom and when, and determine the best way to contact the customer.
As mentioned above, the customer database pre-digital era would only contain their names, addresses, and phone numbers. But after the technological advancement in recent years, creating and maintaining a more detailed database is possible.
With our increasing reliance on the internet and the popularity of social media platforms, it has become much easier to collect a person’s personal information. Also, with increasing ease in online transactions, companies can keep track of how much you are spending.
With the help of third-party businesses, corporations can buy customer data, such as web search history, bank account details, credit score, gross income, education, and much more, to include in the customer database.
Analysis of the database can help you establish fine details such as purchasing patterns, digital behavior and intent, websites, and social media interactions, and which product and brand philosophies customers are inclined towards.
Any marketing specialist or officer worth their salt can utilize the above information to develop a sophisticated marketing strategy tailor-made for the company and its customers.
Business Database Marketing
Business Database Marketing is used by companies that want to market and sell their products directly to other companies (B2B). They can analyze the information available on businesses in the database to optimize their marketing strategies.
A difference between customer and business database marketing is the amount of information in the database. Generally, business databases contain less amount of information on individual businesses than customer databases have on the individual customer.
A business database typically contains the company name, names of executives, terms of business partners or investors, number of employees, revenue, and SIC and NIAC codes.
Having a detailed database of businesses also helps with account-based marketing, which targets specific companies to promote your product rather than simply spamming every business on the list.
How to utilize Database Marketing?
Until now, in the article, we have understood database marketing. Now we will discuss the subject’s intricacies. We will also understand how to properly implement it as one of the direct marketing strategies.
So no matter what business you own, you should at least understand the usage of four primary techniques to efficiently and effectively implement database marketing.
Accurate and relevant customer data
When your company has an accurate and relevant database of its customers, you can think of innovative and insightful marketing strategies. This information can be used to understand your customers’ needs. It can also help to decide which new products to launch, and develop highly lucrative and relevant promotional offers.
Basic customer segmentation
The concept behind customer segmentation is that every customer is different and treating them customized will improve both customer satisfaction and product sales. Companies generally separate customers based on demographic parameters such as age, gender, or location. Other parameters based on which the segregation takes place are:
- Whether the customer is a frequent buyer?
- How much money the customer spends?
- What the customer buys?
Advanced customer segmentation
Advanced customer segmentation creates a more detailed customer database to analyze the data acquired statistically. Big data and other large-scale companies use this type of segmentation. They use it to simplify and segregate all the information they have in their customer database. B2B and B2C advanced segmentation is the most commonly used techniques here.
Customer Relationship Management (CRM) and database tools
Relationship management is also an essential part of this marketing strategy and is an added benefit. Companies can develop marketing strategies that attract new customers and retain existing ones. They can do it with the help of analyzing and segmenting the customer database. Hence companies also need state-of-the-art Customer Relationship Management (CRM) and database analysis tools and software.
See Also: The Beginner’s Guide To Video Marketing For Small Business
Database marketing is a marketing strategy that uses a customer database to develop marketing campaigns for a product or brand. In the article, we discussed what database marketing is, its types, and how to implement it. This article will give you the information you need. Until next time.
Q1. What are the benefits of Database Marketing?
A: Database marketing has many benefits for your business, whether small or big. Some of them are:
- Knowing who your customers are.
- I have a direct way to contact your customers.
- A customer database can help create loyalty programs to help with customer retention.
- Helps with customer relationship management.
Q2) What challenges can you encounter with Database Marketing?
A: The information in the customer database may need to be more helpful with time. Hence we need to update the data regularly.