Let’s do some Contact Database Marketing

Contact Database Marketing

You’ve been in business for some time now. Over the years you’ve accumulated a good size database. The time has come to put those relationships to use!

3 Steps

Where do we start? Same place we always do, we measure.

What do we measure? How much business currently comes from the customer database? Where is that information? How hard is it to get that measurement on a monthly/weekly basis?

When putting that measurement together, the trick is to not get distracted.

Distracted by what, you ask? Distracted by ancillary questions like “I can’t remember, did they call in or did we call them?”; “Were we competing for the biz or the only bidder?” or “What happened to XYZ company? When did they stop buying? I need to call Jane and fix this.”

The trick is to simply see where things are today.

From there, we can figure out where we want that measure to be tomorrow. And we can assign a value to the difference.

Why do this? Because taking action is easier when you’ve taken the time to quantify what a 20% increase in business from current customers really looks like. It helps with a few other things too:

Establishes an impact on revenue and net income.
Helps identify any return on investment. (because there will need to be an investment)
Tells us what success looks like when we trip over it.

You know where you’re at, where you want to be and the value of the difference.

Once we have those measurements in mind, we need to turn the customer database into a customer marketing database.

I know what you’re thinking, “what’s the difference?”

Most companies stick their customers into a system that is set up to help with accounting – you know, billing, receivables, order fulfillment – all those activities that make a customer happy because they efficiently take delivery of what was ordered.

I’m not talking about that system.

Some questions to ask at this point: Are you using a CRM? What information do you have on your customers? Does your current customer system allow exporting? Does you have anyone who knows what a pivot table is? And how to use it?

If you want to know who to approach in your customer database and what to approach them with, the answers to those questions are there – in the database.

So let’s get it out. Let’s figure out who is buying what and when they’re buying it. Let’s compare those results to our best customers.

That brings us to step 3. (you thought I’d forget!?!)

Set up a customer modeling system. We need to segment our customers as best we can.

How exactly should we segment?

It depends.

We need to start somewhere . . . then change the measurement to something better when we have more information.

Yes, it’s going to be a lot of work. Yes, it’s worth it.

Here’s the key. Set up a grid to lay over your customers and then look for movement between grid squares. (but we’re only going to look every once in a while. . . like once a month)

What kind of grid? Like this one: a Recency, Frequency, Monetary grid.

Let’s define these terms so we’re on the same page: Recency is how long ago they bought from you. Frequency is how many times they have had a buying event in the database and Monetary is how much has been spent. Obviously, you’ll need to adjust these definitions to fit your database.

Start by splitting recency into 3-6 parts, Frequency into 3-6 parts and Monetary into 3-6 parts. The exact markers depend on your biz. Again, it’s nothing too fancy. Just a way of coding your customers with a code that tells you where they are at in any one point in time.

It can look like “1, 2, 1” which would mean something like in the top 3rd of Recency, the middle third of Frequency and the top third of Monetary.

Once you have it in place, here’s the magic: take a snapshot each month. Look for the changes. Clients moving up into better grids and clients moving down into the lesser value grids are what we want to find.

What do we do with that information when we have it? We ask a bunch of questions! Why are they moving? Where are they going? What can we do to move those numbers?

If you’re still reading, and you have questions, send a note!

That’s how to start. 3 steps. You’ll know how much business comes from the database, how to value an change in business from the database and by giving your clients a rank, you will see which clients to focus on first.

Good stuff.