Database Marketing 101: Part 3

Hopefully, after last week’s article, you have a clear sense of the importance of your customer data — particularly as it relates to your email campaigns.

So now it’s time to put that good data to work, to lay out a solid strategy for building an effective customer relationship management (CRM) model. How? Well, as most of you know, I’m a direct marketer through and through, so I firmly believe in plenty of testing. But to determine WHAT to test, you need to plan your goals at the outset.

What exactly do you want to accomplish? In other words, would it enhance your customer-relationship-building potential to be able to address questions such as those below? (The answer? Yeah, of course it would). So here are a few to stir your brain:

• Which of my site’s products are top sellers? (And which have the lowest sales?)
• Who are my best customers? Would it help to rank them A-Z? What criteria will determine that? (Number of purchases per customer? Average dollar spent per customer? Lifetime value of the customer? Types of products purchased by each customer?)
• What kinds of purchasing behavior should I look at? Do I want or need to pull off those who receive email promotions but never click through and never buy? How about those who do click but never buy?
• Would classifying select groups of people into various categories help my efforts? What sorts of categories? Demographic and/or psychographic data? Buying patterns, as noted above? Credit ratings? Some other finite category?
• Which segments of my data will need to be routinely and regularly updated? Do I need to capture outside information that’s not related to my customers or products, such as interest rates, stock market indices, and so on?

Of course, you can probably come up with a list of hundreds, even thousands, more questions like this. And depending on your list, you can then determine the specifics of your campaigns and decide which components will most effectively build those all-important relationships. After you’ve determined those, you can then implement tests and strategies similar to the scenarios outlined below.

Real World Scenarios

Credit Card Company A wants to create an email promotion for its latest card and send it to its existing customer base. The goal is to promote with value and personalization. The powers that be determined that interest rates could be customized based on each customer’s credit rating and history. The better the credit, the lower the rate. That way, the best credit risks could take advantage of a truly outstanding offer, while the company would still not be leaving its other higher-risk customers out of the loop. So Credit Card Company A created a set of business rules (i.e., all customers with R1 credit get a 9 percent fixed rate offer, R2s get a 12 percent, etc.). The unique messages are then created for rule. Most solution providers can then dynamically generate these customized messages for you to get the right message to the right customer at the right time.

Record Company B just figured out that the 80/20 rule does indeed apply to its database, meaning that a small percentage of its customers purchase regularly and make up the largest chunk of its profits. So the top brass decide to focus its marketing efforts to that very profitable segment by giving those customers what they want each and every time. Based on past buying behavior, lifestyle, and industry trends (performers who are hot and those who are not), Record Company B creates multiple messages within very fine-tuned segments of its database. In other words, the message tests are much more specific than simply country music customers versus hard rock customers. They are completely customized campaigns. In fact, each message is so unique that only a handful out of thousands receive the exact same one. Again, dynamically generated messages based on that valuable database info.

Take a look at the above scenarios from the customers’ eyes. Can you see how valuable this type of email communication could be? Can you see where it could take you?

In-House Versus Outsourcing

But it’s not easy to do alone. I am constantly asked what small businesses can do to create a top-notch CRM strategy while not spending beyond budget. There are certainly software and small business solutions available, such as Lsoft, Roving, MessageMedia MailKing, Responsys Jumpstart, and EmailFactory.com. Just keep in mind that some of these players have their limitations; however, they may be good places to start, particularly if you’re working within tight budget constraints.

On the other hand, some of the more robust solutions and agencies, such as e2Communications, MessageMedia UnityMail, Post Communications/Netcentives, Responsys Interact, Accucast, Digital Impact, and FloNetwork, offer a suite of CRM-focused solutions to help you test, maintain, and build your customer database in a variety of ways.

Make no mistake about it: Knowing the value of your data and having the ability to enhance your customer communications will surely determine your future success in this venue. And given that some of the most recent projections tell us that a good portion of current offline-only retention efforts will move to email over the next couple of years, well, this is something for all of us to be mindful of. Especially now, while the “getting” is still good.