Beware, the 9 Deadly Mistakes of Database Marketing

Many database marketing programs lack focus, proper execution, segmentation and adequate testing. With this in mind, Arthur Middleton Hughes, vice president/solutions architect at KnowledgeBase Marketing, reeled off nine mistakes direct marketers make when it comes to database marketing during a session at the DM Days New York conference, June 10-12. He also proposed some solutions. Here follows his list:

Mistake #1: The lack of a marketing strategy. “Building a database is easy, but making money with it is hard, and most people don’t know that,” Hughes said.

Solution: Collect data on your customers’ purchases, demographics and lifestyle; build a database that permits ad hoc analysis; construct a lifetime value table; and figure out what motivates your customers.

Marketers need constructors who build databases, merge/purge, hardware and software; and creators who understand strategy, build loyalty and repeat sales, he noted.

Profitable strategies include user groups, newsletters, surveys and responses, loyalty programs, customer and technical services, and membership cards, among others.

A basic strategy rule, Hughes said, is to put yourself in your customers’ shoes.

Mistake #2: Focus on price instead of service. Database marketing builds loyalty; discounts do not.

Hughes recommends marketers not use their databases to promote price discounts because customers today seek more than low prices. They want recognition, service, information, convenience and helpfulness. “You can deliver this if you build a database and offer these things to them,” he said.

Mistake #3: Failure to use tests and controls. Database marketing is accountable, Hughes said, and everything you do can be measured. Set up control groups that don’t receive your new communications. Key measurements include response rates, return on investment, profits and lifetime value.

“Testing is essential,” he said. “Test on a small scale first, and constantly test.”

Mistake #4: Poor segmentation strategy. Divide your marketing database into segments, such as business customers, affluent/retired, young singles, families with kids, low-rate shoppers and check cashers, Hughes said. Break these out accordingly into gold, silver and bronze status levels.