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Get More Out of Your Customer Database

“Get More Out of Your Customer Database”

Knowing your customers well will aid retention, acquisition.

Small companies often create their first customer database by tracking two or three types of information — and haphazardly tacking on other categories as they grow. By the time they reach the $1 million sales mark, the database is a disaster.

If this sounds familiar, perhaps it’s time to start over. First, make sure your database exists for the right reasons:

Acquiring new customers. New customers come in two flavors: those who are new to your product or category and those who previously belonged to a competitor. But they require different approaches.

Customer retention. Frequent-flyer programs are excellent examples of proactive retention programs. Using a database of all flights, the travel industry can design programs based on past behavior. The Tylenol drug-tampering incident exemplifies a reactive retention program, which could have been stunning had a database of Tylenol users been available. Imagine a letter explaining the extent of tampering, describing action steps and enclosing a coupon to bolster loyalty.

Getting more money from existing customers. Continuity programs leverage individual buying information. It’s hard work; it’s one customer at a time, matching programs and incentives to individual customer behavior and potential.

Components of a Sound Database

Most companies can benefit from a database, but only if it’s thoughtfully outlined and soundly structured. Use the questionnaire below to formulate a plan.

  1. The big picture.
    • What are our goals?
    • Whom will we track?
    • What kind of info do we track?
    • How much will it cost?
    • How will we use the information?
    • Who will use it?
  2. Structuring the database.
    • What are the technical requirements?
    • What kind of access is necessary?
    • How much capacity do we need?
    • How quickly do we need information?
    • How often will the records be updated?
    • How easy will it be to add large numbers of new customers?
    • What other info might we want later?
    • What tests will assure each phase is working before we proceed/launch?
  3. Where will the data come from?
    • Which internal sources (billing, customer service) will provide info?
    • Which external sources (promos, events, ads, lists) will provide info?
  4. How will we keep the data clean?
    • How will we standardize the format of all data, regardless of its source?
    • How can we use postal software (like NCOA) to standardize addresses?
    • How often will we merge/purge duplicate or old records?

The ‘Workhorse Quotient’

Use the checklist below to maximize your database’s "workhorse quotient."

Are you using your database to …

  • Create profiles of your top customers, so you can seek out similar prospects?
  • Segment customer groups based on sales potential?
  • Add demographic and psychographic information to every customer record?
  • Customize price offers?
  • Identify customers geographically?
  • Customize payment terms?
  • Target customers by the time of the month/year/season they buy?
  • Cross-sell products to customers?
  • Customize mailings?
  • Personalize customer correspondence?
  • Offer gold-customer awards, student programs, etc., based on buying habits?
  • Determine the lifetime value of a customer?
  • Target only customers who have a real interest in your products?
  • Identify profitable vs. unprofitable customers?

Writer: LeAnn Zotta is a strategic-marketing consultant in Yarmouthport, Mass.