Guest post by Nick Rojas.
A form of direct marketing, database marketing uses business and consumer databases to generate targeted recipient lists. Through various enterprise data sources and marketing technology tools, this practice leverages consumer and business user data to deliver relevant, effective, and personalized messages to both existing and potential customers/clients.
What distinguishes database from direct marketing is the awareness to the analysis of data. Emphasizing the use of statistical techniques, database marketing aims to develop models of customer behavior. This is then used to select the recipient list for communications.
As a result, database marketing tends to put a heavy reliance on data warehouses to incorporate insights from a greater variety and amount of data.
Database Marketing Types
There are two general types of database marketing: business and consumer. The main difference, obviously, is their target group; business data and consumer data. But the format, frequency, and focus of messages also differ between business and consumer audiences.
Consumer Database Marketing
Designed mainly for business-to-consumer (B2C) companies that sell directly to consumers, consumer database marketing has tight security in place for storing consumer data. Information about prospective and existing customers typically includes transaction history, name, address, demographics, and communication history with the company. Often obtained directly from the consumer, information can also be accessed through third-party data companies.
Business Database Marketing
Geared primarily towards business-to-business (B2B) marketers, business database marketing focuses on targeting (industry segment, company size, user role) and interaction data rather than demographic and behavioral characteristics used by consumer marketers. Information stored in business databases is less personally sensitive and therefore generally more lightly regulated than consumer database marketing data.
Business database marketing derives its information from it’s own company’s marketing department and sales data, acquired through various enterprise software systems from direct interactions with consumers or third-party businesses. This may be supplemented by information from third-party data providers.
Both consumer and business database marketers are likely to use marketing automation tools. Here are four potential benefits of implementing a solid database marketing strategy.
Personalized Customer Segmentation
The main goal of database marketing is to deliver compelling, personalized messages that are relevant to each customer. Effective marketing initiatives require a thoughtfully segmented customer database, with each contact grouped according to shared interests or purposes. This allows you to create content that will resonate with each recipient.
At the most basic level, you can segment existing customers from potential customers. Doing this allows your marketing team to distinguish between which types of emails each should be sent (upsell vs. acquisition).
Better Customer Service
A carefully crafted database marketing strategy helps you understand what consumers want and need, helping you respond with engaging communications that match those needs. With their desires in mind, consumers experience better customer service through custom approaches, rather than a standard marketing message.
Additionally, as more data on buying behaviors and post-purchase feedback is collected and stored into the database, future messages can be revised appropriately.
Greater Brand Affinity
A metric that helps market researchers make predictions about consumer behavior, brand affinity increases as customers develop trust and confidence in your ability to deliver, leading to increased emotional loyalty.
As your marketing team begins to consistently send out helpful and relevant content to the appropriate audiences, your company will begin to be seen as a trusted brand. When you tap into consumers concerns about your brand and change content accordingly, you build and promote brand affinity.
Improved User Experience
Database marketing improves marketing messages and content for online ads and emails. However, this is not the only added benefit. When consumers visit your website, they leave behind browsing data that can be used as an additional source of information to help improve their user experience.
For example, consumer activity of their web experience can be collected and analyzed to help improve the site. Different pages and areas of your site that are causing difficulties to consumers can be improved and altered to better fit their needs. The improved user experience can improve your conversion rate.
Database marketing is a great way to improve already existing marketing practices. As you gather more pertinent information and develop better relationships, the messages you send out will create personal experiences that evoke a positive response from your customers.
Nick Rojas combines 20 years of experience working with and consulting for small to medium business and a passion for journalism to help readers grow. He writes about technology, marketing, and social media for the aspiring entrepreneur. When Nick is not sharing his expertise, he can be found spending time at the beach with his dog Presto. Follow him on Twitter @NickARojas.