Database marketing helps Amazon recommend home decor items via email after your recent purchase of an eye-catching side table, or Netflix suggest top thrillers via push notifications when you binge-watch six episodes of Stranger Things.
So what exactly is database marketing and what are its types? How do you collect the required data? And what benefits can you expect from database marketing? We talk about all this and more, along with examples of successful global brands implementing it.
What is database marketing?
Database marketing involves collecting, organizing, and processing customer data to deliver personalized and relevant marketing communications to existing as well as potential customers. Having a database equips you with enough customer data to create successful strategies to reach a diverse customer demographic.
This marketing approach helps marketers learn more about existing and potential customers, refine customer segmentation, understand them better, and deliver personalized offerings. It also equips you to improve customer acquisition and retention, cross-selling, upselling, reactivation and achieving a higher ROI on your marketing spend.
However, the utility of database marketing is not only limited to personalized product recommendations across various channels. All the behavioral data that database marketing collects also helps you identify customer journey pain points. With these insights, you can create better segmentation and targeting, and make necessary improvements to your platform by adding walkthroughs, or tweaking certain features, for example.
For leads, the database marketing approach is about collecting basic information like name, gender, address, email, phone number, etc., and reaching out with personalized messaging via email marketing, SMS marketing, or social media ads. While for existing customers, basic information plus user behavior—purchase history, average order value, browsing history, and so on, is collected to personalize marketing messages and recommendations.
Types of database marketing
Database marketing branches into two categories—B2B and B2C. Information gathered varies as per your target.
1. B2C consumer database marketing
Businesses use consumer database marketing to sell directly to consumers.
Basic information such as phone numbers, email IDs, addresses, locations, gender, age, and spending capacity; and purchase information such as the number of orders, average order size, and purchase frequency are data prioritized in this type of database marketing.
You can conduct quizzes, social media giveaways, free trials, and throw in some new account registration perks to encourage potential customers to share this information with you.
2. B2B business database marketing
Businesses use business database marketing to store lead contacts of stakeholders from other businesses.
Here, it would be best to gather details of your contact persons—name, business email id, job function, phone number, reference, what exactly they are looking for, etc.
LinkedIn, whitepaper downloads, free software trials, event registrations, webinars, and demos are some ways to collect information for B2B databases.
How to build your marketing database
Building a good database can reap significant benefits. Let’s discuss the various ways you can start building your marketing database.
1. Offer discounts and useful information in a newsletter
Newsletters incentivize your audience to sign-up for your subscriber lists by sharing their basic information, such as name, email, phone number, etc., in exchange for discounts, sale information, or valuable content.
Newsletters are an excellent way to build lasting relationships with new and existing customers and keep them purchasing from your brand. Moreover, depending on user interaction, you can collect valuable data to create better segmentation and personalization strategies.
2. Offer trials of a subscription service
By offering free trials of your subscription services, you can let your prospects try out your full-featured product/service free of cost for a limited time before they are required to pay for it.
This removes any apprehensions that customers have before paying for a service they are unsure about.
You can track their service usage during the free trial and note the features they used the most. If they cancel the subscription before the first payment is due, you can use this information to re-target them using other channels.
3. Create an OTP login
Customers are often reluctant to share their phone numbers before purchasing.
Creating an OTP login will work as a two-step verification login system, which will make them trust the overall security of their accounts and get you their phone numbers, thereby building your database. Although ensure not to spam them with texts, that would break trust.
4. Collect behavioral data
Collecting behavioral data includes tracking customers’ past behavior and interaction with your products and overall platform, social media pages, and ads, including what engages them the most.
With the right marketing automation platform, you can also identify real-time friction points, recency, frequency, and monetary (RFM) value of your customer’s purchase or other events and track metrics like average session count for different user types, and more.
Remember that gathering and organizing behavioral data is a continuous process and goes on after you have added the customers to your database. You begin with focusing on acquiring customers and move on to retaining them via relevant and personalized marketing communication.
5. Launch a chatbot on the website/app
You can leverage a chatbot on your website or app to improve customer relations by quickly responding to queries and FAQs.
Chatbots collect more information about common problems, usual doubts, and pricing queries. You can utilize this data to improve your platform and personalize your offerings.
Which database sources are useful in database marketing? A checklist
Multiple internal and external sources can provide you with data. When you finally leverage database marketing, it’s critical to understand which data source you should rely on. Here are some of the most useful data sources.
1. Demographic data
Demographic data includes location, gender, age, marital status, education, etc. This is one of the most basic and significant pieces of information collected for database marketing.
2. Acquisition data
Acquisition data involves when, how, and where the customer was acquired (which channel, affiliate, or promotional campaign). Marketers can focus their efforts on that specific acquisition channel on noticing a trend or strengthen other weaker channels.
3. Purchase history
Purchase history data is continuously updated and includes the number of purchases, number of items purchased, intervals of previous purchases, and prices of purchases.
4. Campaign performance history
Marketers must also record the data of how well their campaign has performed, customer’s response (including frequency of response) to such campaigns, and the kinds of campaigns and channels that garnered maximum response. You can then compare it with previous campaigns to study trends.
5. Customer surveys
Surveys and questionnaires are one of the easiest ways to collect data about your customers’ preferences directly and precisely.
6. Interaction with brand
Recorded interactions between the customer and the brand (via website and app) is a critical behavioral data source.
7. Social media activity
Social media profile details, topics of interest, regular interaction with brands, and app ratings are some data collected from social media activity.
8. Third-party adtech
Purchase intent data, details about other sites browsed, and ads clicked are beneficial data for database marketing.
That’s a lot of data that you can collect using various data sources. However, that’s not the only way. You can also purchase a database for marketing.
Should you purchase a database for marketing?
Building your database from scratch requires extensive resources—time, effort, and costs. Purchasing a database from reliable providers can save that. In addition, reliable providers regularly update the database to maintain accuracy and manage and segment the database, which you would have to spend significant time doing otherwise.
Ecommerce companies can significantly benefit from buying data and optimizing marketing to those data points. They can leverage data for shopper analysis, price-changing, improving customer service, personalizing the customer experience, and more.
However, ensure that your providers offer permission-based contacts as you want to foster positive relationships with your potential customers from Day 0.
3 database marketing examples
Here are three examples of successful brands implementing database marketing by collecting exhaustive customer information correctly.
Netflix surpassed Disney to become the most valued media company and boasts a stellar retention rate of 93%. Among other things it’s doing right, database marketing easily makes it to the top.
Netflix collects geo-location, browser type, email address, payment information, device identifiers, web beacons (in case of browser), and more. It also collects data on customer interaction and response to a show.
Did you pause the show? Didn’t resume after pausing? Did you finish a show you started? Do you watch shows with female leads? Do you binge-watch thrillers but don’t resume comedy shows?
Netflix knows it all.
All this data adds up to create a detailed user profile post which Netflix recommends shows based on your specific preferences. A staggering 75% of viewership is based on personalized recommendations. That’s how it’s acing database marketing.
Amazon heavily focuses on data-driven marketing. It implements an elaborate procedure during user registration—collecting the user’s name, email id, and phone number, and deploying OTP verification to ensure that users share their correct email id and phone number.
After registration, Amazon leverages users’ wishlists, search history, user behavior, purchase history, and more to deliver relevant and personalized marketing messages and recommendations on-site and off-site (via email, and push notifications). Collected data points also enable Amazon to deploy effective upselling and cross-selling strategies.
3. Bank of Tennessee
Bank of Tennessee collects product interest and preference data from customers to create more effective and personalized acquisition and retargeting campaigns. The bank uses quizzes on its website to engage customers in a fun way to plan their finances.
Consumers are asked questions about their wants, needs, lifestyle, and more to understand how they plan to achieve the said goals. Critical information such as spending behaviors, financial plans, product interest, etc., are then extracted from the data and used to deliver personalized messaging.
Benefits of database marketing
Putting database marketing into action helps you improve your marketing by making your messaging relevant and personalized. You shift from generalized targeting to precise targeting based on proven data.
1. Identify the best channels to contact customers
One of the first steps to database marketing is to gain contact information and establish multiple channels of connection with your customers—phone, SMS, email, WhatsApp, etc.
Reaching out to customers on these multiple channels and recording which channel they use/engage with the most to connect with you, will help you identify the best channels.
2. Segment customers based on interaction and loyalty
A data repository around customer behavior enables your data analytics team to develop better segmentation tactics. You can segment your existing customers based on their interaction with your brand, behavior, buying history and loyalty, and deliver relevant and hyper-personalized messaging. For example, you can reward loyal customers for their continued support and offer lucrative discounts and relevant updates to bring back dormant customers.
3. Engage across different touchpoints
Database marketing also fuels omnichannel marketing strategies. When you have gathered customer data from different channels, you can offer a seamless marketing experience across multiple touchpoints. This will help you engage customers across touchpoints and drive them down the sales funnel by leveraging personalized messaging and recommendations.
4. Personalize marketing for individuals
Let’s discuss this with an example. The customer database for eCommerce brands will contain details like age, gender, location, contact information, buying history, user behavior, preferences, product and overall website/app interaction, and more. Similarly, fintech companies will store information like credit score, EMI payment history, Pan card information, and income details. Using all this information, you can easily tailor your marketing messaging to individuals (current and prospective customers) instead of having a one-size-fits-all, guesswork approach (without any data).
5. Efficiently use marketing budget by sending targeted campaigns
You’ll be able to target your campaigns better when you know who to target, where to target, and when to target. So you’ll not be shooting in the dark targeting customers who are unlikely to respond, at the wrong time, or on the wrong channels. Doing this will ensure you spend your marketing budgets optimally and gain maximum ROI.
Database marketing with Netcore Cloud
You can avoid going through all of the above by using an intelligent martech platform.
- For each contact in the database, apart from basic information, you can also record behavioral information by adding them to lists.
2. From your database, lists can be created for different purposes like newsletters, surveys, offers, and so on.
3. These lists are then used in campaigns to engage with your customers.
Having a rich database enhances the impact of your marketing campaign and increases your marketing ROI. Effective database marketing positively influences customer engagement and retention as you reach out with personalized messaging, making your customers feel deeply heard and understood. However, managing the customer database is not a one-time process and requires continual effort. The better you handle your data, the better it will supplement your future marketing campaigns. And finally, for desired results, it would be best to collect data and maintain a database, which can be combined with an acquired database.
To know more about how Netcore Cloud can help you maintain customer data and market to them better, visit our customer engagement page.