What Is Database Marketing? Here’s the No-Nonsense Guide

With all the new marketing tools out there, it can be easy to lose sight of the fundamentals.

Consider the humble Rolodex. They were the CRMs of the 1950s and it was often said that the salesperson with the best Rolodex had the most success.

We’ve come a long way from handwritten index cards but the idea remains the same: it’s easier for organizations with a wealth of quality information on their buyers to generate sales.

The difference between now and the 1950s is that the amount of data and its complexity require more of a proactive strategy.

That’s where database marketing comes into play.

What Is Database Marketing?

Database marketing is a form of direct marketing that focuses on growing and utilizing a database of customer or prospect information in order to provide personalized communications. The ultimate goal is to drive someone toward a certain action.

If that definition sounds like a bit of a word salad, then you might appreciate this database marketing definition broken out by the steps involved: 

1. Collect data points
2. Plan relevant communications based on the data you collect 
3. Choose your marketing channels
4. Hit send

We’ll dive into each of these steps below in more detail, but first, here’s why database marketing is increasingly important.

Why Is Database Marketing So Important?

There was a time when advertising a good product at a decent price was enough to generate sales.

Now ads are omnipresent in our lives. You can’t listen to a podcast, watch a video on YouTube, or scroll Instagram without hearing or seeing one.

It’s led to ad fatigue and banner blindness as people simply tune them out. That is if your ad makes it past their ad blocker. (Not a guarantee since over 615 million devices currently have an ad blocker installed.)

What’s becoming clear is that people will only pay attention to marketing if it gives them a compelling reason to. Database marketing can help you achieve that. 

You use the information you have to deliver value to your customers with relevant messaging. It will make your pitch stand out from the crowd and increase trust with your target audience.

What Data Should You Collect?

The information you collect in your marketing database can include:

• Names
• Email
• Mobile phone numbers
• Past purchases of your product or service
• Support requests
• Demographic data
• Website activity

Since the idea is that you use this customer data to send personalized communications at the right point in every customer’s individual journey, it’s worth considering what data is relevant to your customer base.

If you sell bikes, you might want to categorize your targeted audience by whether they’re interested in triathlon, mountain, or general cycling. You can then collect this information:

• At the point of sale
• Through a web form on your website
• By giving away something valuable in exchange for the data
• Through competitions and giveaways

Finally, it’s worth investing in a marketing automation tool or customer relationship management platform if you haven’t already. Trying to use a Google sheet as your data warehouse can quickly become inefficient and lead to inaccuracies.  

Plan Your Communication Based on the Data You Collect

Let’s imagine that you’re the owner of a language school that offers two languages, Spanish and French. You have three immediate segments:

• Current students
• Past students
• Prospective students

You can then split each into two groups based on whether they were studying Spanish and French. Now you have six segments to target.

Once you’ve decided on your segmentation strategy, it’s time to start planning out what action you want them to take and the content that will encourage them.

For prospective students you might plan on sending them:

• Testimonials
• A course prospectus
• Offer a discount

For current students you could send them:

• Weekly vocabulary or language tips
• Additional services they can avail of
• Payment reminders

How to Choose Your Database Marketing Channels

A lot of marketers have conflated database marketing with email marketing. 

While email should certainly have a place in your marketing campaigns, we’ve seen a rise in the use of database SMS marketing.

The growing use of SMS marketing campaigns is largely due to the fact that SMS messages have the highest open rate of any marketing channel.

Pulling from the example above, you could:

• Send your testimonials and course prospectus via email
• Use an SMS service to send a discount offer

Picking the right channel mix will largely depend on your audience, what you’re sharing, and the action you want someone to take. 

If you want a more detailed breakdown of the two channels, this article on the differences between text message marketing and email is worth reading.

You Can’t Make Bricks Without Clay

Sir Conan Doyle’s famous fictional detective, Sherlock Holmes, couldn’t form any theories or draw any conclusions until he had sufficient data.

Marketers would be wise to follow his lead.

Data is the basic building block of everything we do in marketing. Still, it’s becoming easier to feel overwhelmed by the sheer amount of data being collected. 

The good news is that a well-defined database marketing strategy will prevent this from happening.