What is the skill? Database Marketing. And, you already know how it works. You know because you’ve mastered the art and science of cold-calling. You’re a newsletter click-through-rates legend. Or, your social media influencer roster is full of viral sensations.
You know Database Marketing because you know Direct Marketing. Regardless of the marketing medium, you know what it takes to gain authentic and lasting buy-in. It takes personalization.
Database Marketing is an opportunity to make what you do even more personal. It’s a skill that marketers can leverage to position themselves as power players in the sport of Big Data.
A Quick History Of Database Marketing
The evolution of computers in the 1980s, specifically their ability to store large amounts of information, was the beginning of Database Marketing as it’s known today. Robert Kestnbaum is credited as one of the pioneers of customer-centered electronic databases. Starting his management consulting firm in 1967, Kestnbaum became known for his ability to develop strategies that featured intensive and imaginative analysis of customer data.
Along with Robert Shaw, an integral contributor in the world of marketing automation, efficiency, and measurement, Kestnbaum went on to create Database Marketing. The two are credited with developing telephone and field sales channel automation, contact strategy optimization, campaign management, marketing resource management, and marketing analytics.
Their work led to ground-breaking marketing technology innovations in the 1990s, including the development of CRM software. When the internet was added to the mix, the amount of data that marketers could support grew significantly. Marketers were able to update data more frequently and utilize data to understand and prioritize customer needs.
Database Marketing Today
Today, Database Marketing is a multi-billion-dollar industry. The access to customer information is immense, as systems of comprehensive, interrelated data can be utilized across applications in a fast and efficient manner. You can learn nearly anything about a customer, from purchasing habits and financial standing to cultural demographics and lifestyle choices. It just takes a CRM. Or so you thought.
Look at this typical digital marketing scenario. A customer is scrolling through social media. They come across an alert that one of their friends just became a fan of business’ page. The customer clicks into the business’ page, because like their friend they enjoy the specific type of product that this business offers. With this new customer, the business’ CRM social media integration is combing through their past social media interactions and activity, while simultaneously tracking how they are interacting with the page.
The new customer is interested in the business and likes/follows the page, but does not buy a product. The next time they log into their social media account, they are greeted with an ad noting free shipping on a product. The CRM has identified the new customer as a bargain hunter. The new customer takes the bait, clicking into the website and making a purchase using the ad discount. Here is where the real Database Marketing begins.
The Power Of Database Marketing
This business has direct access to the new customer’s contact information and can now engage them across digital marketing mediums, ultimately learning more about their habits and needs and further customizing the marketing approach. But, getting to that point was no easy feat and the work is just beginning. It’s inaccurate to say that CRMs are the magical key to this process.
Backtracking, the customer database comes before the CRM. Building that database is difficult. Sometimes, marketers are fortunate to work with clients that have already established a database by utilizing information collected from their sales. But having a database in today’s world is not good enough, the database must be as robust and current as possible.
The 2016-2017 Gartner CMO Spend Survey showed that marketing technology represents 33% of the average marketing budget. Of that budget, they reported that 28% of marketing technology spend goes to infrastructure to run marketing software.
But That Power Doesn’t Always Come Easily…
Marketers are just as committed to customer acquisition as they are to customer maintenance. Both require surveying the customer, whether you’re asking new questions or repeating old ones. Marketers have to help clients realize that work can’t truly begin until their database has been brought up to date.
The long-term catch is keeping the data updated. The pace of change is fast in today’s world, think about everything from a relationship status change on Facebook to a new home address. That’s why many marketing companies with the resources are outsourcing data management to dedicated software vendors and developers. It’s either that or beefing up the internal IT team with experts who understand how the data will be used.
“There’s a lot of effort to try to get to standardized platforms that become the foundation of marketing systems. But a lot of these foundational systems are also opening up their APIs, making it easier for a lot of other small companies to create innovative, specialized technologies that plug into their environments,” well-known computer programmer and entrepreneur, Scott Brinker, told Kapost.
Regardless of the route taken, marketers have to stay attuned to market research and industry standards on the most impactful and useful data that they should be collecting from customers. Every marketer has its own edge in what they know about customers, but when creating a database here’s a starting point for the information that should be included: Name, Job, Age, Race, Gender, Likes, Dislikes, Marital Status, Number of Children, Postal Address, Email Address, Phone Number, Preferred Method of Contact, Source of Lead, Source of Sale, Payment History.
Analyze the Data
Once you feel the customer database is robust and accurate, there is the integral, and often scary part for marketers, of analyzing the data. If you go to job board’s today, you will see that both companies and agencies are looking for database analysts. These analysts are the ones who evaluate the effectiveness of marketing tactics and campaigns based on data insights. They work with the marketing team and client to assess qualities of customers and customer groups such as lifetime value, acquisition cost, attrition, retention, and ROI.
The best marketing analysts are able to use data to recognize and analyze patterns in client behavior then turn that information into strategy reports and predictive models. They are investigative and systematic thinkers with programming experience and fluency in database languages such as in SQL, which is used to query, manipulate and define data.
Use This Data to Craft Your Marketing Strategy
The next part is the fun part for most marketers, using the data to create beautiful stories that attract customers. Speaking in their voice through various culture nods, generational colloquialisms, and insider lingo. Selecting imagery that reflects their lifestyle and interests. Combing through product and service catalogues to create perfect matches. Thinking five steps ahead for add-ons, follow-ups and discounts. Then, finally, working all of the finesse, data, and creative into the CRM.
Assessing Campaign Results
The rest is not a waiting game. It’s active game play. Every day of the marketing campaign, you’re assessing how customers react to what you present to them and adjusting to meet their need before the campaign has ended. Because a second round of data analysis will soon come. But, it won’t be on the customer it will be on the marketing team.
Did you identify the right customer? Did you engage them? Did you make the sale?
Answering “yes” to all of those questions results in a customer transition from curious browser to active purchaser. But, if you answer “no” to any of those questions here’s what likely went wrong.
Pivoting & Optimizing Your Strategy: Pinpointing The Flaws
Contact and demographic information are keys to success with the first question. The quickest way to end up on a spam list is with incorrect information, it’s just how the technology works. That’s why the tedious, and sometimes invasive or aggressive, nature of customer data acquisition is necessary. If you have too many incorrect phone numbers or email addresses, your list will be flagged and ruined.
The power of the customer’s choice makes for a similar situation with phone calls and social media, as “blocking” someone is always an option. They’re more likely to be blocking your content because it doesn’t resonate with them than they are because they don’t like it.
In 2016, HubSpot reported that 77% of consumers would prefer to ad filter than completely ad block. When it comes time to report to the client, and you have low open and click through rates they can only assume that you weren’t reaching out to the right people.
Remember the part that was discussed as being fun to most marketers? The part where data is used to cater content to lifestyle, likes, dislikes, interests, etc. Pinpointing behavioral information is the most challenging part in the equation because it’s where you solidify the buy-in. With so many options and so much knowledge available, you can’t forfeit the chance to break through the noise. Every click, like, comment, and question from a customer is earned. And, it is your only way to confirm your data and prove to the client that you understand their customer.
Then, there’s the sale. It seems like the easy part in this perfectly curated and crafted outreach to a customer. But, miscalculating transactional information can cost it all. Take the scenario used earlier, for instance. What if that customer actually had a longer history of in-store purchases than online?
Opting to send everyone who liked/followed the business on social media that shipping discount then becomes a bad call. It is an opportunity that you missed to take the data further by creating two ads for customers who liked/followed the page – one to be redeemed online and one in-store. Because in the end, the client doesn’t really care about its social media presence for sales leads, it cares about its social media presence for sales sources.
Using Big Data To Your Advantage
The possibility for failure is what scares people about Big Data. Having all of the information and still getting it wrong. Database Marketing has been at a crossroad since the Dotcom boom. There are plenty of resources to collect and now, with cloud systems, store information. But, there still aren’t enough businesses who have figured out how to capitalize on the information.
Marketers have the unique opportunity to figure it out with Database Marketing. There has to be an overhaul on the marketing mindset first, though. No longer can marketing teams work in silos. With this much information, everyone must be in the same conversation and on the same page at all times.
“Ads, blog posts, social interactions – either they’re interesting (or entertaining, or engaging, or helpful, etc.), or they’re not. Brands must integrate paid, owned and earned channels now. It will not only make marketing more effective and efficient, but it will prepare them for the future,” advisor and analyst, Rebecca Lieb, said on her blog.
The plethora of information to utilize is why integrated marketing is appealing to so many businesses. While clients may see it as a cost-saving and efficiency approach, it actually comes down to effectiveness.
True Database Marketing requires collaboration. There is no reason for a customer to be receiving different marketing messages on social, web, and email. It should instead be an ongoing conversation.
According to HubSpot, in 2016 only 39% of marketing executives said they were able to understand their customers’ cross-device behaviors.
If done right, marketing teams have the propensity to become consumer group experts. They have the opportunity to become information proprietors. And not just for the sake of attracting clients based on being a go-to resource on say millennials or women. In the bigger picture, marketers can sell their databases to businesses. It’s already happening. You can buy and rent prospects lists today.
Marketing firms are also finding themselves between their clients and database management vendors, fighting for the information they have collected and analyzed. Who owns the database? The company storing it? The company analyzing it? Or the company providing it? It’s something all sides of the table are considering in their legal agreements now.