Compiling a Customer Database

Many businesses today will be collecting data about their customers for a variety of reasons. It could be a delivery address to send orders to, e-mail addresses for e-subscriptions, or even a history of transactions about customers to understand their buying patterns.

Database marketing is nothing new or dynamic in the world. In fact, database marketing has quite a history and can be traced as far back as the 15th century, when the first book catalogue was launched in Italy. The Venetian founder of the Aldine Press, Aldus Manutius, published his book catalogue that showed prices, in 1498. In 1667, William Lucas published the very first gardening catalogue in England. Across the Atlantic some sixty years later Benjamin Franklin had a mail order library in Philadelphia, in 1727. Back to England and, as time went on; Antonio Fattorini began a mail order watch club in 1833, in Bradford, which was the beginning of Empire stores and is still in operation today. Then in 1872 and 1874 Montgomery Ward and Sears Roebuck were both founded in USA and more recently, in 1926 Sherman and Sackheim launched the first modern book club which truly took direct and database marketing to another level. Working on the model of continuous purchases and encouraging repeat transactions, making use of the information held in the customer database.

With today’s technology, customer databases can run incredibly complex models that cater for numerous variables and facts about customers. Endless database queries can be run to provide analysis and information that can be sliced, diced, shaken and stirred in anyway the Marketeer could care for! However, sometimes the simplest of databases can work very effectively, providing the right information is collated, it is accurate and interpreted properly, which is very reassuring when all you may have is an Access database or even an Excel spreadsheet to capture your data.

By integrating a customer database into your marketing strategy, it can go on to provide invaluable information that can give direction and understanding about your customers. Information gathered effectively can demonstrate how to communicate with customers, when to communicate with customers and more importantly how to go and find more customers like them.

Essentially a customer database is a snap shot of what your customers are doing and how they are interacting with your brand. It’s important to remember that as you continue to trade, then so your customer database will continue to move, so don’t forget to re-evalute information, because this is a moving picture.

The value of your database relies upon the information that you put into it. Starting with planning the content and layout through to the vital accuracy of information entered. Incorrect information will affect results and if it’s customer contact information that is wrong, then this can look very poor when John Smith receives a letter to Jon Smythe.

Before setting up your customer database, or if you’re looking to evaluate your existing database, then ask yourself these three things:

  1. Does the database have enough quantity to it? The more information you have about individual customers, then the more you can do with it. Remember, knowledge is power.
  2. As already mentioned, is the data of sound quality and is it up to date? The more accurate and current, then the more effectively it can be used.
  3. Is your database flexible? By that I mean can you access the information how and when you want to and in a way that makes sense.

Typically a standard customer database and marketing database will fall under four categories:

  1. People data
  2. Address data
  3. Activity data
  4. Accounts data

In order to give you some direction and consideration, I would recommend the following information is recorded under each of the categories outlined above:

People data

  • A unique number / code / reference
  • Full name (including salutation – Mr, Mrs, Lady, Lord etc
  • Age and or date of birth
  • Marital status (if married then you may be able to easily acquire another customer – think of insurance companies that offer discount for insuring your spouse).
  • Income bracket – this can obviously help to decipher demographics and at what level to pitch your brand.

Address data

  • A unique number / code / reference that links to the people data
  • Contact address
  • Address type (home or business)
  • Telephone number
  • E-mail address
  • Preferred method of communication (telephone, e-mail, post). This can save on costs, certainly if you customer would prefer e-mail to post.
  • Media area – for example TV region, which can help identify customers that would be targeted for local media activity.

Activity data

  • A unique number / code / reference that links to the people data
  • Source code. Where did the customer come from? A code should be used for each piece of media activity that can directly link you to the customer. This not only helps understand the effectiveness of that media, but also shows where to get similar, high value customers from again.
  • Latest communication
  • Product / service transactions. What has the customer bought?

Accounts data

  • A unique number / code / reference that links to the people data
  • Account type
  • Start date – when the customer made their first transaction. This can help to understand how long a customer has been with you and identify your most loyal. It can also enable you to work out the lifetime value of a customer.
  • Latest transaction. This can help identify any customers that may have lapsed and can therefore trigger a communication to re-engage.
  • Average order value. Again the higher the value, then the more important they are to your brand and the more they should be looked after.
  • Customer segment code. Customers should be segmented into groups based on recency of purchase, frequency of purchase and value of purchase to show which customers are most loyal and which ones you should avoid wasting money on.

Not all of this information may be relevant to certain businesses and others may need more specific data. What is important to understand here, is how vital it is to plan your customer database to ensure you’re collecting the right data, at the right time and for the right reasons. Without careful planning, time can be wasted on unnecessary data, or worse still missing out on data that could prove very effective for future campaigns.

Using the data collected in the customer database can determine which people you will target with a new product or service and how you can reach them with targeted media and communication campaigns. This targeted approach can save a lot of money and time and avoid spending on those customers who are unlikely to be interested.

The other great ability of a database is that you learn about your customers and can respond to their needs accordingly. If a once loyal customer (or group of customers) hasn’t made a transaction for a while, then the information attained can prompt a communication to either stimulate another transaction, or to communicate with them and find out if they’re still happy with your service.

Your database should also help you save money in the long run. By using codes to illustrate which customers came from which campaigns you can understand which activities work well and which ones should you avoid, or at least improve to increase response rates.

When you’re collecting information about customers and prospects, remember The Data Protection Act. It is in place to protect both the public and businesses alike and fundamentally has eight key principles which require that data should be:

  1. Fairly and lawfully processed
  2. Adequate, relevant and not excessive
  3. Accurate
  4. Processed for limited purpose
  5. Not kept any longer than necessary
  6. Secure
  7. Not transferred to countries without adequate protection
  8. Processed in accordance with the data subject’s rights.

There are many books written on how to develop a customer database and make the most of the information within it and I’ve just given a very brief overview, but I think the three main things I would suggest you take from this would be; Firstly, the more quantity, quality and flexibility your database has, then the more effective you will be in using it in your marketing activity. Secondly, knowledge is power. The customer database can be analysed and segmented to provide a greater understanding of your customers, so make sure you access this information and use it in your campaigns. Don’t just collect information for the sake of it.

Finally, don’t forget the data protection act. Your customers will respect you for asking them if they are happy to receive or not to receive. The last idea you want to convey about your business is that you don’t know what you’re doing, because where does that stop? Customers can be very cynical and critical and if you fail them on one aspect of business then questions arise if other aspects are capable also.

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