The Four Key Functions of Any Good Marketing Database

March 21, 2018 Aaron Ludwig

Building and managing a database marketing solution is not merely data warehousing, as some companies mistakenly assume. It is a complex set of activities that cut across both IT and marketing, and that involve specialized skill sets in a number of areas. Most IT staffs can build the data warehouse easily, but that is only the beginning of a successful database marketing initiative. 

There are four core activities and areas of expertise that surround a well-planned database marketing solution, including:

1. Gathering, cleaning and maintaining data. 

The customer database is in constant flux and is fed from a myriad of sources. Customer and prospect information flows in from every direction, not only from every conceivable channel (stores, agents, web, email, phone, mail), but also from dispersed locations and – where ethnic, international and global markets are engaged – often in different languages. 

Data from multiple channels must be provisioned, cleansed, standardized, updated and maintained on a constant basis. These processes are essential to minimize waste and respect customer preferences for how, when and if we communicate them, as well as what we say in those communications. After all, our goal of communicating with any given customer should be to converse with them as contextually—and as humanly—as possible. We can only do this with complete, accurate data.

Even a partial failure or breakdown in this part of the process can render the entire database marketing solution pointless. Building a customer database around false, incomplete or misleading data is by definition a waste of money—and conversing with customers based on bad data will render our conversations irrelevant. 

2. Gaining insight through analytics. 

Tapping into “clean” customer data enables marketers to find and apply insights into customers, their preferences, their buying pattens, and what they are trying to accomplish (or the jobs they are trying to complete). Analytics can help identify precisely the characteristics of best customers, how much they spend, how and where they like to shop, and what brand conversations are most likely to elicit their response. Analytics help marketers choose the right channel to reach each customer, and allow techniques such as one-to-the-moment marketing so that messages reach their recipient at the times they need them.

Strength in analytics also can drive improvement and integration across marketing activities, channels and brands. For example, applying predictive techniques systematically can help to build the data necessary to create omnichannel, longer-term conversation strategies at the segment and individual level. The insight resulting from such a “contact optimization” program can, in turn, be combined with econometric, demographic and transactional data to develop models that accurately predict the impact of decisions about media mix budget allocations and how each channel is weighted as a means for facilitating dialogue with a customer. Knowing these insights informs the marketer to have a better marketing mix and a better brand experience. In other words, customer insight can help companies predict and measure the impact of all of their marketing activities – direct and general – which in turn makes it possible to allocate resources for best effect.

Only through the use of consistent analysis and data mining can an enterprise hope to turn the myriad records and transactions in its customer database into a coherent, useful picture of its customer that enables more contextual, human marketing.

3. Planning and executing customer communications programs. 

Turning insights into action involves coordinated customer communications across channels, both inbound and outbound, and ideally across direct and general marketing activities. This is the traditional marketing sweet spot, except that a comprehensive database marketing solution affords decision makers with solid knowledge in order to converse with the appropriate individuals via the right channel at the optimal time. Such personalized communications lead to increased loyalty and retention, adding up to a bigger piece of market share and profit. Various software applications can help marketers plan and execute these types of highly relevant communications and ensure timely and appropriate customer communications based on insight gained from clean customer data.

4. Measuring response and results. 

Database marketing is a closed-loop process. It begins with available customer and prospect information. Then, through sales, service and marketing programs across all customer interaction points, more information is gathered allowing companies to fine-tune and constantly improve their return on marketing investment. The ability to measure and understand response will arm the company with data with which to further personalize communications—leading to a better customer experience, increased loyalty and finally, a bigger piece of market share.

Additionally, the ability to measure and report results from customer communications benefits other parts of the organization. Customer insight can inform decisions and processes in areas such as real estate, service and sales, and any other part of an organization that touches the customer.

For example, in support of a strategic decision to penetrate new markets, a business-to-business technology company’s real estate department opens a new location where data suggest a growing opportunity to gain valuable market share. The marketing team launches a multi-media communications designed to start conversations with nearby high-level executives and individuals with technical titles in multiple departments. Analysis of response and sales results identifies the best-performing industry segments, which titles create the most qualified leads, and which channels perform best in generating new leads. Through message testing, this effort also reveals the selling propositions that are most successful in the region. Marketing uses these insights to double the response in their next communications and provides the insights to the sales team, enabling more conversions.

Multiply these activities across every customer communication effort, through every channel, and it becomes easier to understand the complexity, and the opportunity, of database marketing. 

Stay tuned for my next post for a cost comparison on installed versus hosted database solutions.

About the Author

Aaron Ludwig

Aaron is VP, Global Strategic Accounts at Harte Hanks. For 18+ years, Aaron has been building integrated direct marketing solutions for global B2B firms. He's had the pleasure of working with top technology and manufacturing brands building solutions that support their needs and successfully deliver their desired results.

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