A good database is one that contains up-to-date contact information of existing or potential customers (including those who have made enquiries to the company) and business associates, as well as their detailed buying history, including what they bought, when and from which location they purchased it and how much they spent.
A database plays a significant part in direct marketing for businesses of all sizes, because it helps them to get in touch with their clients. Once your database has helped you to establish who your target market is, you can then begin to tailor appropriate marketing campaigns, be it personalised emails, calling them, or sending them brochures and catalogues.
A recent survey conducted by information technology research, advisory and analyst firm Gartner, Inc has found that companies spend an average of 2.5% of their revenue on direct marketing budgets and that this figure is bound to rise in the coming years. The findings, which are in a report called 'Gartner's Digital Marketing Spending', are based on the responses of more than 250 companies with over US$500 million in annual revenue. Last year, those firms spent 10.4% of their annual revenue on overall marketing activities.
Yvonne Genovese, Gartner's managing VP for marketing leaders was quoted as saying that, while digital marketing has been a growing area of investment in many organisations for a decade, the scope is increasing and the techniques are maturing.
A good example of a company that changed its direct marketing technique and overhauled its database management in order to stay ahead of the game, is US based publisher, Hearst Magazines. Over the years, its twenty publications expanded to 300 global editions and reach an estimated 87 million readers.
Hearst is reportedly in possession of a database that is as large as its readership, which, at that size, can become quite unwieldy. What complicated matters even more for the publishing house, is that the industry has evolved beyond print and their titles are now being consumed online, via e-readers and on tablets and smartphones. These new ways in which readers are increasingly dealing with them began to affect their database as well and errors began cropping up, such as redundancy.
Its marketers were sending emails to readers asking them to subscribe to a particular publication, and used the post to mail those same subscribers direct mailers urging them to subscribe to the same publication that they had been asked to subscribe to over email. Such redundancies were wasting time and money and the company decided to overhaul its database to communicate more effectively with their subscribers.
During this process, the publisher actually pared down its database, reducing it by 8% and, in the process increasing direct mail response by 25% and managed to achieve an impressive 200% return on investment.
This case study is a great example of how quality is far better than quantity when it comes to databases. Especially these days, when we are inundated with data from all sides, it is easy to feel overwhelmed and collect too much information. It is essential that people delete old information. People mistake a large database with a large lead list and often it only offers them false security because much of that information is outdated and can't be used.
To guard against creating a too large database, ask yourself what you would like to achieve with your database. What are your company's business goals and needs? Hone in on the specific data that would actually help your team. What would help you as marketer to connect to a prospect? Contact data? Social data?
Once those points have been identified, start creating your database from there. You can always expand later, but if you start off with something that is too large, it can actually paralyse your entire campaign.
