Ask the experts: Building customer databases

Friday, July 22, 2011

Why is it so important to build a customer database?

Dana Hukel

Dana Hukel, president and CEO of BOLD Marketing
Developing a customer database is one of the most worthwhile projects you can take on to help build your business from a marketing standpoint. There are any number of databases available -- from custom designed in-house or by an outside agency, to purchased software. The right database will help you retain existing customers by building loyalty through more personalized communication, expand sales with existing customers, generate referrals and track prospective customers.

A database is only as useful as the information you collect. Here are a few basic steps to get you started. Ultimately, the data you collect should be tailored to your business -- that's the information that will prove most beneficial.

1. Basic customer contact information (name, mailing address, phone, email)

2. Date the information was added to the system (make this an automated field)

3. Ethnicity and birth date (for statistical purposes only)

4. Affiliation/agency/company

5. Referred by (advertising? friend?)

6. Services or products purchased (how did this customer use your business?)

7. Experience rating (allow customers to give direct feedback on service, products, etc.)

Update your database frequently, giving portions to staff members to review or check with repeat customers to make sure the information is still accurate.

Don't just collect -- utilize. And to do that, your database should allow you to sort and view information in a variety of ways, such as alphabetically, as mailing label sheets or by date. You database should always be growing; if you're a small business, anyone who calls, visits your business or requests information should be added to the database. Those people are a great target audience because they've already expressed an interest in your business.

Will creating a customer database mean more work? If you're doing it correctly, probably. We didn't say it would be easy. We said it would be worth it.

John Cherry, professor in the Harrison College of Business at Southeast Missouri State University
Actually, it's not important to build a customer database. Not if your approach to marketing is to passively wait for customers to come to you. But if you want to promote and sell your business, you have to take the bull by the horns, so to speak, and actively go out and engage your customer. So ask yourself: Can you keep growing your business without knowing your customers? Do you know your customers better than your competitor does? Do you believe you will never lose customers to your competitor? Do you believe you won't -- or don't need to -- gain new customers? If the answer to any of these is no, then yes, it's important to build a customer database.

John Cherry

But remember, a database is just a tool. Far more important is your strategic commitment to knowing your customer. A shopping list doesn't make a great chef, and a database doesn't by itself make a great marketer. It's how you use it. Many marketers use their database for direct marketing, which the Direct Marketing Association of America defines as "an interactive system of one or more advertising media to effect a measurable response or action."

Even if you don't see yourself in the direct marketing business, a database still may help you realize a number of terrific outcomes: You can quickly see the result of promotional outlays in terms of such things as website hits, store visits, telephone inquiries, coupons redeemed and purchases. Now you may be thinking, "That's neat, but what am I going to do after lunch?" And the answer is to continue deepening and strengthening your relationship with your customers, both current and future customers! This is what it means to know your customer. Knowing who your best customers are, how you reward them, which ones you lose money on, what you're going to promote and to whom. The database is the starting point for all this marketing activity, the natural home of all the resulting information.

So some tips about the care and feeding of your database (and I am indebted here to Jay Conrad Levinson's marvelous book, "Guerrilla Marketing"): Keep your database up-to-date. Add to it people who have moved into the area, people who have married, divorced, graduated, gotten a new job, families that have added a child, etc. Think of building your database as research -- free research that you can do yourself. Or perhaps you can get an intern from the university to help with this. Can you gather information about your customers' hobbies, interests, church, high school, college, preferred sports teams? You should go to trade shows and look at everything that competitors are doing. Generate qualified leads, collect business cards, bulk up that mail list. And send out literature a week or 10 days after the trade show (it's more likely to be read). And finally, Levinson advises: Do everything that's free and everything you have time for.

That ought to keep you occupied for the rest of the afternoon. And it will help to ensure that you're still marketing tomorrow.

Drew Janes

Drew Janes, owner/producer of Relentless Media Productions
We have all been in the place where we have wanted to contact a client or certain demographic of people and have searched high and low for their information. Being completely outfitted with every tech gadget out there, we are now controlling information on an iPhone, Blackberry, iPad, laptop or digital Rolodex, which makes managing your customer database information a chore at best. The importance of managing your customer's information is crucial when you have key contacts that need to be used to target the direction of your next marketing efforts. Missing just one great contact could be the deal-breaker for your business. Here are five great resources to help you keep a great customer database.

If meeting for the first time, ask for a business card. Write down something interesting about the person that you think is worth remembering. This could be a great opportunity for you to reconnect in the future. Make sure that information gets entered into your database immediately.

Organize your contacts. We have found the best way to keep track of our customers or contacts is to use software that was specifically created to help you organize. We use products like Highrise or Basecamp that are highly effective and easy to use.

Don't let your contacts collect dust. Use products like to create a customized message to send to your database. Keeping them informed of your products or services puts you one step closer to a transaction.

Find interesting ways to get your clients' information or simply make it easy for them to fill it out. We have used the simplicity of an iPad using Google documents for new clients to fill out a simple form that automatically adds their information into our system without us having to touch it.

Find what works and stay with it. Don't have multiple places for your contacts to hide. Collaborate and use one process to label and store your database so you always have one place to come back to when it's needed.

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