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you offer your neighbor a cup of coffee or a beer and 15 minutes of chat around the kitchen table. That is the kind of relationship that database marketing creates. Discounts send the wrong message: We are cheap guys whose basic product is overpriced. We want to buy your loyalty. We don t care about you. We care about your money. Customers should not all be treated alike. Some of your customers are Gold. They deliver huge amounts of sales and pro ts. Many customers of many companies are actually unpro table. Why should you work to retain the loyalty and sales of an unpro table customer What should you do First, create customer segments and learn who your Gold customers are. Create special programs and services just for them in order to retain them. Study the segment just below Gold. Create programs that will get them to move up. Study your bottom segment the worthless people. Figure out how to either reprice the services you are giving them so that they are pro table or get rid of them altogether. If you treat all customers alike, your service budget will be stretched so thin that you will be unable to use it to modify customer behavior. Most successful database marketers outsource the construction of their database. Why Because it is cheaper and faster, and the product is better. To take a ridiculous example, it would be possible to go to auto parts suppliers and assemble a company truck from spare parts. Since no one in your company has ever done this before, it would take a year or more and be quite expensive, and the result certainly would not perform as well as a production model bought from GM, Ford, or Chrysler. But it would have the advantage that, as a result, your staff would now know how to build a truck from spare parts. The problem with this approach is that most companies are not in the truck manufacturing business. They are in some other line of work. Building a truck would be a costly diversion from their core business. And, during that year, the company could not use the truck to make deliveries. The same principle applies to building a marketing database from spare parts. No one in most companies (including the IT department) has done this before. It takes a long time, since there is a learning curve associated with each process. It takes time to study the
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available software packages (there are scores of them) and to install and learn to use the ones chosen. When the database is nished, it will not work as well as one that was built by an experienced service bureau that has already built dozens of them and has a trained technical staff whose only job is building and maintaining marketing databases. Finally, you cannot get any bene t from the home-grown database during the year or more that is needed to build it. You get the bene t only after it is up and running. Once your database is up and running, it can be migrated to inhouse maintenance at any time. In fact, however, if the database is built correctly, your marketers will be so happy with the results of using it that they will forget about wanting to maintain it. When you are driving a new BMW down the interstate at 75 mph, who wants to stop and become a garage mechanic Caller ID and cookies have become essential database marketing tools. Caller ID is used by customer service reps to recognize customers, call them by name, and see their history with the company on the screen before they even answer the phone. This type of recognition builds relationships and loyalty. Cookies are used the same way on the Web. Web sites are con gured differently for each repeat visitor, based on that visitor s expressed preferences on the previous visit. Cookies build relationships and loyalty. Many customers will gladly give you their pro les over the Web. What is a nuisance on paper or over the phone becomes a fun exercise over the Web. The marketer can use the pro les to learn more about customers and provide them with what they want (as opposed to what the company wants to sell them). Pro les open up an entirely new and productive channel for customer contact. Marketing databases today are stored in a relational format on a server accessed by marketers over the Web. Many different marketers can access the company customer database simultaneously, using IDs and passwords so that they see only the data that they need. Because of the Web, the database can be used by remote of ces, salespeople on the road, and even overseas branches of the company. Another advantage of the Web as an access tool for marketers is that all the marketer needs to have is a browser. She does not need to have any database software on her PC.
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