Turn you Data into Cash
by Dick Barnes, Principal, The Freeland Group A database is just information...what you do with it will decide its true value! You’ve probably heard them all by now; terms like “Customer Relations Management” and “Mining the Database.” You may have heard talk of “Database Marketing” and “Sales Force Automation.” You’ve likely seen business journal articles or advertisements extolling the virtues of database marketing. The tone of many of these may well lead one to associate the whole idea of database marketing with the “spam,” or junk email, that seems to dominate all of our inboxes these days. And indeed such a perception would be partially correct. The use of email address lists for “marketing” everything from junk bonds to pyramid schemes has become an epidemic. Despite all of this hype, you might have found yourself intrigued and curious, and eventually in a meeting with a database consultant. If so, your reaction may have been similar to that of many business owners and managers…even more confusion topped off with a generous helping of sticker shock. All as a result of the salesperson piling on new terms, recommending new hardware and new software, and then showing you a price tag running forty or fifty thousand dollars…sometimes more! It’s little wonder, with so much hype surrounding electronic database marketing, that so many firms put off building a database or, if they have one already, don’t fully utilize it to their advantage. But if you toss aside the idea of using a database to increase your sales, you’re literally throwing out the baby with the bath water. Bad examples of database marketing are all around us. Many of these are so bad they don’t even deserve to be labeled as “marketing” at all. This doesn’t mean you can’t do real database marketing and do it right. And you can do it right for a lot less than the tens of thousands of dollars you may have been led to believe were necessary. To put these claims into perspective we have to first define what a database really is. Salespeople for those database-consulting firms want you to think that only an electronic wonder of programming, using a complex operating system, can be considered a database. It’s simply not true. In fact firms have always had databases. Until a few years ago they weren’t electronic. They were stored in the brains of sales people and in the sales orders that filled the company files. A simple example was the use of “tickler” files. Salespeople used such tools to remind them of client’s birthdays or of upcoming appointments. These methods of storing and recalling information comprised the company database of old. The time and effort necessary to put together those old databases, and then to use them, forced us to focus on our most valuable customers and leads. This was good in some respects. It was also difficult to make time to go out and find new customers and leads. This, of course, was bad. Today we deal with so much information that we can easily become overtaxed. As a result we sometimes find ourselves neither focused on our important customers nor actively in the marketplace working to build our customer base. A database should directly aid us in completing those two vital marketing functions; concentration on building and maintaining relationships with current customers and expanding our business by beating the bushes for new ones. If you’ve already built an electronic customer database for your firm, you may already have discovered the information overload phenomenon can actually get in the way of reaching these business goals. Some managers surrender to this conclusion and end up using the database for simple record keeping or to create a corporate memory. Others simply don’t take the time to really learn how to use their database…which may be so complicated one can hardly blame them. Just as often, no one in the company has really put their minds to defining how the database can be worked into the fabric of their marketing plan…or even to alter their current plan. Corporate memory, being the repository of information that would normally be lost when personnel leave the firm, is a basic, but important, use for any database. And solving this problem of survivability and transferability of information is one reason even the smallest of firms put customer information into a computer as an electronic database. But that should only be the beginning…there’s got to be more, or why would anyone consider setting up a database in the first place? To really take advantage of that huge pile of information in your database, you need to change it from a storage depot of figures and facts into a means of understanding customers and managing your day-to-day contacts with those customers. The database should become a “customer contact management system.” Done correctly, this will enable you to use the database as an integral part of your strategic marketing plan. Fortunately you don’t have to be a large, well-heeled company to build, and then use, an electronic database. These days there are tremendous “off-the-shelf” software packages that are easily customized to fit the individual needs of any firm. In many ways, these ready-to-go database systems are superior to the expensive custom packages, mainly in that they are in an advanced stage of development and are time-tested. Not only have the bugs been worked out, but users have made additional suggestions which developers often incorporate. In addition, new employees are more likely to be familiar with such software and will need little or no training in its use. Easily the most widely used, presently in over one million firms, are the “Goldmine” software packages by FrontRange Solutions. Touted as a contact management system, Goldmine meets that claim far more so than any other database software on the market today. Users can learn to do hundreds of functions using the company’s internal customer information, and they don’t have to be a computer genius to do so. The software solution is so complete, and installers can customize it to such a degree, that managers are able to focus on how to best use the resulting database to make money for their firms. So what are some of the things you need to keep in mind when it comes to making money with your database? Firstly, you should spell out the strategic goals that the database can contribute to. For example, let’s assume your goals will be; 1) building one-to-one relationships with customers so as to increase customer retention and sales frequency and volume, and 2) “farming” the marketplace to produce new customers to retain. Now let’s look at how we might use an electronic database to get started on each of these. Building the one-to-one relationship entails knowing as much as possible about the customer, making that information accessible to everyone in the firm, and using that information to make the customer feel more important and more satisfied. To do these things the database must be instantly accessible and must be filled with the correct data and updated regularly. Relationship building is a perfect example of how an electronic database can really shine. Let’s create a scenario: A customer calls firm A and reaches a receptionist. The caller complains that he sent in an order two weeks before and has not seen it, now heard from the seller with a confirmation. The receptionist puts him on hold and forwards him to customer service. The customer service person listens to the story once again, and this time takes down some information. The sales department is across the hall so the caller is put on hold again while the customer service rep goes to speak with a salesperson. The salesperson has never heard of the company and the other salesperson is at lunch. They are discussing what to tell the customer when the other salesperson fortuitously returns. He pulls out his files and finds the order, then calls down to shipping. The guy in shipping goes to his file cabinet and starts to look for the shipping order. Meanwhile the customer service rep returns to the customer, who has been on hold for fifteen minutes, and let’s him know they almost have an answer. Five minutes later, shipping calls back and tells them the order went out yesterday. After two phone calls and nearly twenty minutes on hold, the customer is told to expect the item in the next few days. He is not very satisfied, perhaps even to the point of tearing out his hair in frustration. This is not an uncommon scenario, and I’m pretty certain we have all experienced similar, or worse, ones in our own work lives. Now let’s look at a firm with a properly built and functioning electronic database. The same customer calls firm B and reaches a receptionist. He again complains that he sent an order in two weeks before and it has not shown up. The receptionist punches the name of his firm into the computer on her desk and sees his personal history, along with the company info, pop up before her. She addresses him by his first name and tells him she is transferring his call to customer service. The customer service person picks up the phone at the same moment the customer’s question, his history, and his company information pops up on the computer screen. He greets the customer by name as he clicks on “order history” and sees the order went out yesterday. The notes from the shipping department tell him the order did not go out earlier because a tool on the production line was broken and that particular line got backed up. The customer service rep explains this to the customer and apologies for the lateness of the delivery. He notes that the database does not have an entry for the customer’s email address, so he asks for that and guarantees the customer that all future orders will be confirmed by email when shipped so that there will be no surprises in the future. He then types in the email address and clicks the box for automated email confirmation from the shipping department. The customer hangs up after spending only about three minutes on the phone. The two people he spoke with were in control of their information and were informative, relaxed, and friendly as a result. They inspired in him confidence that their company was being run efficiently and in a business-like manner. They are just the type of folks the customer wants to continue to have a relationship with! There are two real keys to making such a system actually work. The first is the technology itself…you must make certain the system is customized correctly in the first place and is kept in tip-top shape. The second is that the people in the company need to buy-in to what the database can do for them…and they have to do so completely and with enthusiasm. This means they’ll keep on their toes when communicating with customers and will take every advantage to update the database information. The customer service rep, in the last example, asking for an email address is a fine example. Salespeople have traditionally kept track of personal information on their best clients. With an electronic database you can have personal info for all of your company contacts at your fingertips. There is a lot of talk today about “mining” your database to increase market. I like to say we “farm” our databases…the term helps people keep in mind that the database must constantly be tended. When we think of mining we think just of extracting information, but with a database we first have to plant that information and maintain it. More importantly we have to organize it in such a way that we can study and understand our customers and prospects. A database should allow us to filter customers by such measures as frequency of purchase, volume per order, percentage of orders returned or cancelled, and how long it has been since they purchased last. We should be able to sort them by the products they use and the things they do. When we can sort through our contacts by different characteristics we can begin to group them for more efficient use of our marketing dollars. In essence, we can pinpoint target a selection of contacts for specific promotions. We gain tremendous efficiencies in the costs of mailings, phone calls, and sales interviews when we do this correctly. At the same time we can generate higher volumes because we concentrate the most effective efforts on the most receptive buyers. To be able to do all of these things our database program must be flexible and easy to understand and use. If we don’t use it…we’ll lose it! A dormant database becomes more stagnant with time. Once they reach that point they rarely recover. Just a year ago I helped a small firm begin their customer database program. They began by planting about nine hundred contacts into the database. Then they trained their staff to use the database. Today they have nearly seven thousand contacts in their database. Sales on one of their three product lines is up more than 25%. The second product line is up 400% and the third is up by nearly 700%. Even with the increase in volume the same people are carrying the workload, thanks to the database helping them keep it all organized. Just as amazing, they are actually spending less on mailings this year then they did last year…the mailings are just targeted better. Not every firm can have such dramatic results in one year, but properly used, a customer database can have a positive affect on your bottom line as well. Just keep in mind that information about your customers is one of your most valuable assets, but one that is only valuable if you take it out and use it regularly. |
