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Database Marketing Defined

    Database marketing is the technique of gathering all the information available about your customer, leads, and prospects into a central database and using that information to drive all your marketing efforts. The information is stored in a marketing database and can be used at both the strategic and tactical levels to drive targeted marketing efforts.

    A company that utilizes database marketing continually gathers, refines, and analyzes data about their customers, their buying history, prospects, past marketing efforts, demographics, and so forth. They analyze the data to turn it into information that supports all their marketing and sales programs. More enlightened marketing companies also use customer and prospect interests and preferences, generally gathered on their web site, to tailor marketing efforts right down to the individual level.

Who Uses Database Marketing?

The most successful marketers on the Internet today are database marketers. Dell Computer and Lands’ End are great examples.
Database marketers can…

  • Send targeted promotions to any segment of their customer and prospect lists
  • Measure the value of their individual customers
  • Track promotional efforts, measure responses, purchases, and the return on investment for every dollar spent on their promotional efforts.

Database marketing has long been in the domain of the Fortune 500 - companies that spend millions of dollars on their marketing efforts. It is now in the domain of smaller organizations with smaller budgets!

Database Marketing & Direct Marketing

Direct marketing describes a collection of tactics and communication channels (direct mail, email, telemarketing, etc) that share a common attribute – the results can be measured. (“I mailed 1000 letters, 10 people responded, and I made 2 sales”). A common, if simplistic, definition of direct marketing is “marketing with measurable results.”

Database marketing organizes a company’s customer and prospect data so that it can be used more effectively in a direct marketing effort. It is a way of organizing the whole marketing process. Database marketing allows you to choose what to market to whom - and when, based on the sum total of your knowledge and experience with a customer or prospect. Then, assuming the use of good direct marketing techniques, you can measure the effectiveness of the effort.

Benefits of Database Marketing

The single most important benefit of database marketing is the ability to target your marketing efforts, which means specific groups in your marketing database get specific messages that are important to them. You will focus your marketing dollars on customers that are most likely to buy and spend less on customers that are less likely to buy. The result is an increased return on your marketing investment.

Database Marketing Examples

  1. Your clothing store is going to have a sale on children’s clothing. Rather than mail a postcard to the whole customer list, you mail the postcard only to customers who have purchased children’s clothing in the past. The result of that targeting effort will be reduced marketing costs and increased return on your investment.
  2. You are about to introduce a new product line of very attractive purple widgets. In your database you select two lists; people who have purchased your widgets in the past, and people who haven’t. You design a special introductory offer for past widget buyers and send it to all of them. Then you send a special ‘first time buyer’ offer to just part of that list of non-widget-buyers to see if your offer works. If it produces good results, you send the offer to the rest of the list. If not, you either save your money or design a new offer and test again.
  3. A sporting goods company has a web site on which people can sign up to receive special offers. At the same time, people can indicate their areas of interest – soccer, camping, tennis, etc. They can also indicate a preference for receiving offers by mail or email. At the beginning of camping season, the sporting goods company selects four different lists:
     
    1. customers that have purchased camping equipment or indicated an interest in camping and prefer email offers
    2. customers that have purchased camping equipment and prefer offers by mail
    3. prospects that have indicated an interest in camping and a preference for email
    4. prospects that have indicated an interest in camping and a preference for mail
  4. Four different marketing campaigns are designed, implemented, and the results are measured for effectiveness. Everyone has received offers that interest them (camping) using the delivery method (mail or email) they prefer. There is no “junk mail” in this effort, and marketing dollars have been utilized very efficiently. The chances for a profitable marketing campaign have been maximized.
  5. By analyzing your marketing database you determine that your best customers meet certain identifiable criteria, say married couples with children. On the mailing list sign up page on your web site, you ask people to indicate if they are married or have children, thereby identifying them as likely prospects to become good customers. Further, you rent a prospect mailing list and limit the selection to married couples with children as a way to target your prospecting efforts more accurately.

In summary…

Database marketing lets you work more intelligently by making marketing decisions based on facts gleaned from your marketing database. The result is enhanced sales with limited marketing expenses – and better return on your marketing investment.


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See IAG PROMOTIONS for information on using direct marketing to drive traffic to your website and create an opt-in database!!!

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