Learn About Database Marketing and Improve the Fortunes of Your Company Today!

Learn About Database Marketing and Improve the Fortunes of Your Company

Database marketing is where a company identifies, collects and analyzes strategic information about its customers. This information is stored in a database.

The information comes from external and internal sources. Examples of these sources are sales reports, emails, promotional material, warranty documentation and social media platforms.

Database marketing is conducted so that this information can be used to establish strategies that the company can use to direct its marketing efforts. These strategies lead to increased revenue and maximized profit.

Database Marketing

For database marketing to work, the company should establish and construct a relationship with the customer. This allows it to harvest information from the customer for database marketing purposes.

Successful database marketing can help a company to boost its ability to retain customers and gain new ones. There are three major stages of this business process. These are:

    • Data collection
    • Conversion of the data into knowledge
    • Creation of business strategies

Collecting the Data

This is the first step in database marketing. In this one, a company makes efforts to collect all information about its customers. This data spans current and potential customers. After that, this data is availed to the marketing department so that they can leverage it into their activities.

Converting the Data Into Effective Knowledge

The marketing departments move forward to process the data so that they can use it to create strategies that improve the brand value of the company. They use this information to conduct market segmentation. By doing this, they are able to target each segment in the most effective way.

Creating Business Strategies

The knowledge is then used to shape the business strategies of the company. Knowledge helps the stakeholders to adjust various sectors of the company, for example, the communications systems, resource management, and even pricing.

By doing this, they leverage all the knowledge gained from big data to help improve the company's bottom line. Database marketing has a number of benefits. Read on to discover some of them.

Benefits of this Type of Marketing

Increased Profits

Database marketing helps a business to segment its market. This helps it to target each segment strategically and cost effectively. This improves the efficiency of the effort. It also increases the profit margins of the company.

Improved Sales

By using these database services, companies can identify new opportunities for sales. The information that they get from these databases helps them to find, enter and thrive in new markets. Moreover, they are able to keep their customers and attract new ones.

Better, Higher Quality Communications

When a company has more data to work with, it is able to communicate more effectively. The quality of internal and external communications increases with the rate of high quality data dissemination.

A database marketing effort helps the company to improve their communications with its customers and other stakeholders. By doing this, it is able to increase its chances of fostering beneficial relationships.

An Improvement in the Product Development Cycle

The database provides a company with information about what the customers want. This data is helpful in guiding the development of products or services.

The company is able to identify the points of improvement in their products. It is also able to identify any sectors where the needs of customers are not well met.

The company is able to use this information to perform effective development of products and satisfy consumers.

Ways in Which Customer Data is Used

Customer information is stored in databases and used to perform specific analyses and actions in the company. Some of these includes:

Coming up With the Customer Lifetime Value (CLTV)

This model is used to predict the value of an individual customer's relationship with the company during their lifetime.

The calculations involved in coming up with this model need to be highly accurate. Tools in the database systems utilized perform these calculations.

The values that are generated using this calculation are extremely valuable to a company. This is because they help the company to identify its most valuable customers and make the right investments in them.

The RFM Analysis

This is known in full as the Recency, Frequency, and Monetary Analysis. It is a technique that is used in marketing for identifying the best customers that a company has. The best customers are identified according to a trio of factors. These includes:

      • How recently the customer bought a product
      • How often they bought these products
      • How much they spent on the products

This technique bases its calculations on the theory that 80% of all business that a company experiences comes from 20% of its customers. Thanks to this theory, the company is able to concentrate its efforts on this active 20%. The database administrators utilize the software to conduct this analysis.

Improving Communications With Customers

Information that is stored in the database improves how the company relates with the customers. They are able to personalize all interactions. This helps to build stable rapport. In this way, the company is able to establish loyalty, sales and its ability to retain customers. One of the media that is used to foster this rapport is email and live chats.

Application in Analytical Software

Modern companies feel the need to monitor the behavior of their customers. Some of the platforms that they monitor include social media, the business website and the blogosphere.

Analytical software is used for this purpose. It is fed with some consumer information from the database and proceeds to synthesize behavior reports for the company. These reports are used to establish marketing strategies for the company.


Database marketing is a necessary activity for businesses today. Customer information is an asset that businesses can utilize so as to be successful. In addition to that, it can be leveraged to guarantee growth for the business over the long term.