Why you need a database

Watch: Why you need a database

Key takeaways

• Acquiring new customers is expensive. It's thought to be five to 25 times more costly than retaining existing customers.
• Transactional vs relational marketing. In a transactional model, customer behaviour is rewarded (such as with a coffee loyalty card), yet the service provider doesn't know anything about them. In a relational model, two-way 'dialogue' can occur between the customer and the service provider (such as with a digital loyalty program). A database is the enabler for the latter.
• Do you need a database if you have social media followers? Yes, you do. Social media is an essential marketing channel, but you don’t own the database or have opt-in permission for direct marketing.
• How do you build relationships with customers you don’t know?
  1. Understand legislation like the Privacy Act, Spam Act, the Australian Privacy Principle and the Do Not Call Register.
  2. Identify your ideal customers. Know who they are and understand communications they’ll respond to.
  3. Start building your database. In many cases, asking people for less information (a name and contact details) leads to a better response. Once they trust you, more information can often be asked for. Consider online methods (“subscribe here” pop-up links) with free content as an incentive, along with offline methods (in-store competitions or a 'join our database' form on your counter).
  4. Know how to store and use your data. Numerous options are available from simple spreadsheets, to email and SMS platforms, to sophisticated customer relationship management (CRM) applications with inbuilt analytics and privacy functions.
  5. Use it! Be imaginative with how you use your data. Not everything has to be online. For instance, some people might respond better to SMS or direct mail.