Building Database Direct Marketing Response

Photo Credit: Dave Duarte

Simply collect data on customers interested in your product or service.

Typical Usages of Information:

• Financial Management
• Membership Contact
• Marketing Campaigns
• Client Management

Types Of DataBases:

A significant marketing strategy is to utilize the proper database for your business, which will build up direct marketing leads.

1.) Operational Database

Primarily takes orders and fulfills them. Also keeps track of inventory and payments.

2.) Marketing Database

This creates marketing campaigns for different segments. The lifetime value is used to predict value of each customer.

3.) Master Database

All campaigns and customer documentation are done on one database, which are built primarily from marketing leads.

4.) Integrated Database

Customers information is distributed over several functions, with links provided for data.

5.) Relational Database

Communicating with customers via personalized messages, such as birthday cards/direct marketing tips/newsletters/emails and other personal messages.

An excellent PC based Contact Management software would be Brokers Ally or Goldmine.

6.) Prospect Database

-- Collects names and addresses. A service bureau can supply detailed information on customer.

-- Gathers all customer information. However, compiled names usually have a lower response rate than response names.

-- Accurately predicts future response from data models.

-- Scores names on a decimile system of 1-10.

-- Combines compiled and response names for cost savings.

-- Designs mailing campaign for targeted segments.

Rewarding Database Direct Marketing Benefits:

• Increased Sales
• Profitable Direct Marketing Idea
• Faster Processing
• Easily Updated
• Gain Referrals
• Build Trust
• Cost Savings
• Receive Cross-Sales
• Boost Retention Rate
• Reduce Acquisition Costs
• Higher Response Rates
• Modify Data Easily
• Increase Customer Assets
• Marketing Strategy Success
• Reduce Wasted Mailings
• Keep Existing Customers
• Acquire New Customers
• Create Long-Term Loyalty
• Personalized Customer Communication
• Lower Name Rental Costs
• Eliminate High Risk Prospects
• Creative Direct Marketing Idea

Overall Database Direct Marketing Tips And Objectives:

1.) Create a database that not only generates profits, but also tests results data as well.

2.) Establish customer retention by helping them build up their equity.

3.) Market to the most potential customers, then to the prospects which most act like your current customers.

4.) Build customer relations with trust and loyalty. This is best done by giving them recognition.

5.) Establish and maintain a clients database from direct marketing leads.

They appreciate the little things like personal letters, gold cards, special parking, newsletters, being greeted by personal name, and so forth.

Do you have a great business, but need some help with how to manage it better? Take advantage of Operational Planning And Business Management to help you get started right.

RFM Coding:

This is an excellent marketing strategy that determines what kind of response to expect - by constructing predictive models for response rate graphs.

1.) Regency Code

Divide database into 5 equal quintiles. Sort records by the most recent date of purchase.

Group them between 5 - 1, with 5 being the highest for the most recent purchase. Now you have 5 quintiles with a 1 digit response code.

2.) Frequency Code

Using the same formula above - sort by the total number of purchases made by the consumer.

Place the greatest number of purchases in the top 20%, being assigned a 5; next 20% a 4 and so on, down to 1. Now you have 5 quintiles with a 2 digit response code (55-11).

3.) Monetary Code

Again, using the same formula as above - sort by the total dollar amount that the customer had spent.

Place the greatest amount spent at the top 20% and apply 5-1 accordingly. Now you have a 3 digit response code for all 5 quintiles (555-111, with 125 RFM total cells).

Ideally you'll need a response rate of at least 1.77% or better, to initiate any kind of marketing campaign.

RFM codes should be constructed once a month.

Consumer Database Direct Marketing:

In order to generate higher returns, an analysis must be done to properly target potential prospects.

1.) Regression Analysis

This is the technique of scoring customers, based on relevant characteristics. A scoring system can be constructed from their past behavior.

2.) Cluster Analysis

Categorize different types of customers, and classify them by their characteristics.

3.) CHAID Analysis

A computer based system that analyzes consumers according to determined segments of past responses.

It then builds a list of customer with probability scores, and shows which ones are most likely to respond to your particular offer.

Database Direct Marketing Lead Strategies:

• Loyalty programs that people can participate in.
• Target prospects with the same interests as previous customers.
• Allow clients and prospects to get involved by participating in submitting direct marketing ideas.
• Advanced predictive modeling techniques to improve response rates.
• Reward most frequent buyers for their business.
• Integrate new data methods to improve response performance.
• Customize and personalize messages to targeted segment.
• Calculate the future lifetime value of current customers.
• Provide freebies and special discounts for repeat business.
• Send out brochures, catalogs, flyers and postcards to remind clients.
• Issue periodical newsletters with database direct marketing tips and updates of new trends and products
• Market to your best paying customers regularly.
• Use website cookies to cause interaction with customers.
• Measure effectiveness of campaigns with tests and control groups.
• Diversify marketing with combination of differentdatabase direct marketing strategies.
• Create segments with appended data to improve customer communications.
• Establish relational database to access unlimited information about customers and prospects.
• Caller ID develops bonding and close rapport.
• Inquire of customers their preference for contact - either by newsletter, phone call, email or website.
• Use cluster coding to identify customers who buy your products. Combine this with penetration analysis for better impact.
• Status levels provide special benefits, rewards, and serve as incentive for customers to upgrade.
• Select a control group that doesn't receive any of the perks. This will show management the actual cost of your expenditures verses a return on investment.
• Segment customer list by niching down to make it even more targeted. Then match and personalize your offer to make it very special for that targeted segment.

Direct Marketing Leads Strategy:

• Customers love personal attention and communication.
• Stimulate prospects to increase your sales volume.
• Always use a database list with your customer list.
• Communications increase customer retention, loyalty, cross-sales and referrals.
• The solution to selling is an automated follow up to prospects.
• Outsourcing construction of your database is cheaper and faster.
• A relational database can be used with access software (Access).

People prefer a personal relationship with their suppliers. Recognize and thank them. Take the time to chat as well.

• A service bureau is beneficial because they can eliminate and prevent possible glitches in your system.
• Customers like to give their profile over the net.
• Service bureaus will negotiate their annual fee, which allows you to create more predictive models; score records; and test control groups.

Database Direct Marketing Tools:

1.) Analytical Software (Star Probe)

2.) Website Cookies

3.) Email Marketing tools

4.) Software Programs (Access, SQL and Excel)

5.) Neural Clustering Segmentation (Star Probe)

6.) Caller ID

7.) Campaign Management Software

8.) Database Automated Email Software

9.) Automated Database Management Software

Responsive Promotions:

• Rented Lists
• Store Exhibitions
• Sales Visits
• PDF Literature
• Web Seminars
• Direct Marketing -

  Emails, flyers, letters, telemarketing, newsletters, brochures, catalogs and postcards.

Quick Direct Marketing Tip::

Database Direct Marketing is a strategic way to determine who your potential customers are, and to customize a marketing campaign for them.

Also, a database backup and recovery system should be put in place in advance to protect your data.

Be sure to store backup files in a safe place to avoid inadvertently losing your database.

Remember that good marketing strategy equals financial success!

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