The Ultimate Guide to Database Marketing: Examples & Benefits
There seems to be a lot of confusion these days as to what database marketing really is.
In this guide, we will cover:
- The definition of database marketing
- Types of database marketing
- Importance of database marketing
- Database marketing companies
- Real-life database marketing examples
- Database marketing strategies
- How to build a marketing database
- A case for acquiring a database; and
- Pros and cons of database marketing
(HINT: use links above to go directly to a specific topic)
What is Database Marketing?
Database marketing, also called customer relationship management, refers to the collection of your customers or potential customers data in order to understand their needs and offer personalized communications that address those needs. Simply put, database marketing involves understanding and managing your customer database.
A marketing database contains data elements such as name, email, phone number, job title, company revenue, purchase history, lifetime value, website cookies and so on.
What Database Marketing is Not
Unseasoned marketers might assume database marketing simply involves compiling a list of contacts and sending unsolicited promotional offers to them. This is simply not the case.
True database marketing is about understanding consumer behaviors and providing solutions to their problems regardless of whether it ends in a sale or not. Solutions can be in the form of a piece of content, tutorials, instructional videos, good user experience and yes, through a product or service.
Types of Database Marketing
There are 2 types of database marketing: consumer database marketing and business database marketing.
Consumer Database Marketing
This type of database marketing is geared towards companies that sell directly to consumers (i.e. D2C or B2C). Sophisticated B2C marketers always focus on growing their consumer database by implementing strategies such as contests, giveaways, free plus shipping offers, discounts codes for first-time buyers and account registration during checkouts. The main information they seek to acquire includes first and last name, email address, phone number, gender, postal address, and location data. Through third-party data sources, other attributes like household size and income can be appended to the customer file.
Once the consumer database is built, personalized promotions and offers can be sent to individuals in the database through email, social media and direct mail (postcards).
As with any database marketing initiative, segmentation is key to personalization. For example, segmenting a consumer database by gender can help clothing and shoe companies better tailor their products to the right individuals in their email list.
Business Database Marketing
This form of database marketing is geared towards companies that sell directly to businesses (i.e. B2B). The main data collection methods for B2B marketers include event registrations, whitepaper downloads, industry reports, demos, webinar registrations, free marketing tools, and free trial offers.
A business database is typically smaller than a consumer database. This is because B2B marketers tend to focus on high-value “target accounts” and not masses of people. This is often referred to as account-based marketing. B2B marketers seek to acquire firmographic information of their prospects such as company email addresses, job titles, company/employee size, estimated annual revenue, SIC and NAICS codes, technology stack, and LinkedIn profiles. This information can be easily acquired through a data provider.
The primary goal of B2B database marketers is to reach key decision makers in organizations at scale through benefit-driven emails, industry-focused social media ads and targeted direct mail pieces.
Importance of Database Marketing
Database marketing is important because it enables marketers and advertisers to create relevant messages to their current and potential customers.
When done right, there are many benefits of database marketing. Here are a few:
- Helps customer segmentation by separating existing customers from new leads.
- Prioritizes your most valuable accounts.
- Gives you the ability to predict customer behavior.
- Allow you to test new ideas and products. For example, Facebook first rolls out new features to a few countries (or advertisers) before launching it to everyone.
- Can be used to gather feedback and better understand your customers’ needs.
- Your brand stays relevant and top of mind.
- Increased customer retention by building relationships.
- Establishes thought leadership credibility and builds brand affinity.
- Can be used for future promotional campaigns.
As previously stated, the primary goal of database marketing is to use data to create relevant messages and meaningful experiences with your audience. But after that is done, the next step is measuring the success of your campaign.
After a marketing campaign is launched to a targeted audience, what was the result? How many customers were acquired? How engaged were your contacts? Did they visit your website? How long did they spend? How many pages did they visit? Did they talk with live chat? Did they download a white paper?
If there was little to no engagement, you might want to go back to ensure you had the correct contact information in your database. If you have incorrect contact information, a data validation solution may be the answer.
Database marketing companies like Eloqua, Adestra, HubSpot, and Marketo, allows you to personalize your messages and can track how well your campaigns are performing. You can check engagement metrics, such as when people from specific companies open your emails or visit your website. Then you can tag or “score” those accounts in order of importance.
For an in-depth breakdown of the functionalities of each company mentioned above, see our post: Top 5 Database Marketing Companies (Capabilities & Pricing)
Real-Life Database Marketing Examples
An example of database marketing is how Facebook segments their user data according to first name, last name, email, phone number, date of birth, gender, location, and interests. This allows Facebook to create personalized experiences for their users which is very valuable to advertisers and marketers.
Currently, Facebook founder Mark Zuckerberg is worth $58.4 billion dollars.
Facebook has data on over 2 billion people (and counting).
Their goal was to create a great platform where their users can connect with friends, family, and the world. In exchange, they share users data to their 5 million+ advertisers. The rest like they say is history. Facebook is a perfect example of database marketing done right on a large scale.
Another database marketing example is LinkedIn. LinkedIn has a customer database of over 500 million business professionals with monetization strategies such as LinkedIn Premium, Sales Navigator, Talent Solutions, and most notably LinkedIn Ads.
In fact, all social media networks are huge marketing database platforms. This shows you how big this topic really is.
Database Marketing Strategies
Most companies use newsletter subscriptions, whitepaper downloads, and contest giveaways as a way of growing their marketing database. However, one of the most effective database marketing strategies is giving access to products for free.
The goal of this strategy is to acquire verified users at scale and amaze them with the quality of the free version of your product; thus increasing the likelihood of an upgrade to a paid version.
Here are some businesses currently utilizing this strategy to grow their marketing database:
By giving free access to their products, they are building a database of potential customers for future marketing opportunities.
With this information, they can create email marketing campaigns to nurture these contacts. This can include video tutorials, how-tos, and webinars — all while tracking their prospects’ email engagement.
A member of the company’s sales team can then follow up with a phone call.
Additionally, their marketing team can create online ad campaigns to serve ads to those contacts. This is a growing digital marketing trend called data onboarding. Essentially, their marketing team can take their users’ information, upload it on platforms like Facebook and use it for retargeting campaigns.
But the question is: How can businesses create a profitable database like Facebook or LinkedIn on a small scale to achieve business goals?
How to Build a Marketing Database
Here are 7 proven ways to build a marketing database:
- Develop thought leadership articles around industry topics and offer gated content (i.e. content that can only be accessed by providing your contact information).
- Offer free trials to access the full features of your products, then promote it with ads.
- Create a free tool that will be useful to your target audience. This is how Google, Facebook, and other social networks became the behemoth they are today. The only difference is that their target audience is the entire world!
- Collect customer information during checkout (applies mostly to offline retail and eCommerce businesses).
- Acquire a business contact database of your idea prospects from a data provider.
- Collect website visitor data via online cookies.
- Create a Facebook Chatbot on your business page to build Messenger subscriber lists (FYI, each person that messages your business page instantly becomes a subscriber). Then, you can run a “click to messenger ads” Facebook ad campaign to grow subscribers at a faster pace.
A Case for Acquiring a Database of Prospects
Acquiring an already existing database of prospects is a good idea.
Here’s why: Not every company has the resources to build a database of potential prospects from scratch. Also, not every company needs to.
For example, let’s assume you have been awarded a contract to find manufacturers of raw honey in the United States. Surely, it is possible to build thought leadership pieces around the subject of honey and generate inbound leads. But wouldn’t it be nice to just have a list of honey manufacturers in the entire United States at your fingertips?
As you can see, this becomes extremely valuable for a business. However, the ability to turn those contacts into revenue is where the true value lies.
Pros and Cons of Database Marketing
We have shared the positive side of an effective marketing database; but, here are some challenges you may encounter along the way:
Cost of management: Maintaining a database can become expensive when a business lacks the ability to extract value from it. For example, check out MailChimp pricing calculator. The more subscribers you get, the higher your monthly bill. So, collecting too much data without an implementation strategy may end up costing more money than it brings in.
Outdated, missing or incorrect data: This is a serious challenge for B2B businesses. Employees change job titles, positions or companies all the time. This means your data needs to be cleaned and updated with current information on a regular basis. This requires the expertise (and investment) in data hygiene companies to get the job done.
Negative brand impact: In an attempt to raise brand awareness, marketing to the wrong contacts can lead to the opposite result. A “one size fits all” strategy never works and can make people associate your brand with spammers. Personalization and customer segmentation is the correct go-to strategy. Your communication will be focused on the exact needs of the customer.
With thousands of advertisers fighting for customers’ attention every day, the need for a database marketing strategy is critical. The businesses that place their customer’s needs, experiences and preferences will always come out on top!
Contact us to learn how Stirista’s award-winning services can help fuel your company’s database marketing strategy.