Data-Requirements of Database-Marketing

To successfully work with Database-Marketing, you actually only need 2 things:

• Data and
• Tools

But beware! Before you think about the tools you would like to use within Database-Marketing, consider that all of the tools rely on the quality (and quantity) of your DATA. So before you really can start to use Database-Marketing, you have to make sure, that:

You have any data about your customers available
This should not be the most complicated thing, since at least from your accounting and your finance department you should be able to gather some relevant information about your customers, like:

• total number of sales
• total sales-volume
• total net income
• frequency of sales
• seasonality of sales

That you have enough data

Most likely the first answer to this statement will be, "There is never enough data!", which to some extend is certainly true. But you also have to consider that any data you store on your files that you finally do NOT use, is some sort of waste of resources (both, storage and data-gathering).

The very best filter for which data you should gather and store is:

• Can you get this information?
• Can you keep it up-to-date?
• Will you use it?

If the answer to all this questions was a YES then you should consider storing the data. If there is only 1 NO, you should better think of either a work-around or forget this data!

That you have relevant data

Deciding which of the data is relevant and which is not requires a lot of either experience, intuition or as a possible alternative some statistical research.

If you are very familiar of the market in which you're working, then to a certain extend your experience might be enough to distinguish the relevance of data. At least for the very beginning.

If you're rather new you might gather this knowledge from either talking with some experts within your company or find an external consultant with experience in your market.

That otherwise you can enrich your data from external sources

Sometimes it is not possible to collect all the information that you would like to know about your customers. This is especially true with businesses where optimization of the sales-process has taken place. Since reduction to only the very most relevant information to service your customer was the main task to speed up processes, this often happens on behalf of the marketing-information gatherable from a customer.

So the "marketing-guys" are often confronted with the fact that all of a sudden a lot less information is available than they had before. The main task then has to be to either :

• find techniques to gather additional data directly from your customers like
  • internally available know-how and knowledge
  • customer surveys
  • primary or secondary market-research
  • club-management
  • direct-response marketing
  • etc.
• enrich your data from external sources - which might become a rather difficult task especially in countries where there is a heavy data-protection law constituted.

That you can convert (pure) data into the information that you require

Most important in Database-Marketing is the distinction of data and information (which is something totally different!). Data is really pure figures and facts, whereas information is what you really want to know.

Example:
It might be nice to know that you have:
1 customer with US$ 5104 sales-volume
1 customer with US$ 4890
1 customer with ...

The real information that you might be looking for from these figures is some sort of abstract:

how many customers in the range of US$ 1000-2500
how many customers in the range of US$ 2501-4000
how many customers in the range of US$ 4001-6000 etc.

By building groups and segments of sales-ranges you can start to categorize your customers. If you also apply ranges to i.e.:

• profitability
• repeat buyers
• time customer remains in the portfolio
• responsiveness to marketing-acitivities
• ...

you got into the beginning of scoring your customers how attractive to your business they might be. The most basic but still very informative method used is the so-called RFMR (Recency-Frequency-Monetary-Rating) which was first used in the mail-order business..