Speaking Directly: Database marketing has many a moniker

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.'What's in...

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.

‘What’s in a name? That which we call a rose/By any other name would smell as sweet.’

I’ll admit it may be a quantum leap from Shakespeare’s Romeo and Juliet to the subject of database marketing, but the analogy is that database marketing does have many a moniker.

Let us count a few: relationship marketing; integrated marketing; loyalty marketing; relevance marketing; one-on-one marketing; dialogue marketing; micro-marketing; frequency marketing, and, I’m willing to bet that between the time I’ve written this and the time you’re reading it, somebody will come up with one or two more.

One thing you can count on: database marketing is much more than collecting names by running a contest and keeping a list of the names and addresses that you mail once in a while with your latest discount promotion.

It’s more than adding demographic and survey information to that same mailing list and thinking that you now ‘know’ your customer.

In our company, the phrase we use for database marketing is Customer Lifecycle Management. We arrived at this terminology by defining the objectives of database marketing as:

1. Understanding customers’ needs and wants by analyzing their historical ‘behaviors’ with your company.

Not just how much they spent, but the purchase detail at sku (stockkeeping unit) level, the date, the value of the entire order or transaction, the purchase method used, the promotion or mailing or ad they responded to, their customer service calls and the subject matter, the items returned, responses to survey information-gathering, etc.

2. Identifying best potential/most responsive customers and looking for matching new customer prospects.

This means sorting all that individual customer information into manageable groups and identifying your best customers, fast trackers, early risers, early birds, whatever you want to call them.

Really, they’re that small percentage of your customers who deliver the large percentage of your sales revenue. Once you know what your ideal customer looks like from every angle, you’re ready to go prospecting for new customers that look just like your best performers.

3. Building a relationship of repeat business that is measurable for the ‘lifetime’ of the customer. Too often, it’s only the sale or event of today, right now, just this moment that counts.

Meanwhile, Peter Frances, publisher of American Demographics, calculates an average individual will purchase just under $2 million worth of goods between birth and death within an average lifespan.

Take that $50 average annual spend you’re getting from a customer now and multiply it by the number of years you can reasonably expect a customer to buy from you.

Now, the next time you think you can’t afford to treat that customer in any special way, think again.

4. Personalizing the selling offer and communications appropriately to individual customers.

So, now you know who they are, what they’re buying, and all kinds of wonderful things about your customers. Don’t just sit on it. Talk to them. Make friends with them. Give them presents when they’re good and especially when they’re not.

5. Understanding and managing your customer lifecycle according, not only to who the customer is, but, also, at what stage they are with your company.

Is this their first experience? Think of going on your first big date. Talk about first impressions. It’s not much different with customers. Treat them really special and they’ll come back for more. Rocket science, isn’t it?

Or, are they at that previously mentioned ‘best customer’ stage. How are you going to keep them there? I submit that it won’t be with another discount offer and the only surefire way to the right answer is to ask them. Now, there’s a novel idea.

Here’s where testing, combined with traditional quantitative survey research adds tremendous value.

And, what about those customers you haven’t seen for awhile? You’ll want to really treat this lot with care.

Here’s where revenue and profit is quietly leaking out of your income statement and you might not even know it if you don’t go looking for it, nor will you know the extent of the leakage unless you analyze it.

Whatever you do, don’t focus all your marketing resources on any one aspect of the customer lifecycle.

Think of your customer file as your investment stock portfolio and how you would approach managing it: constant roi (return on investment) evaluation, testing by spending a little and watching results, making adjustments based on new learning and (unlike Barings Bank) balancing risk with opportunity.

Barbara Canning Brown, a 20-year veteran of the direct marketing industry, is a direct marketing consultant specializing in catalogues.