How to double your Customer database for next to nothing
By Angelina Mammone – August 2007
Many businesses are unaware of how to harness the potential wealth from their existing customer database. Some decide to build and grow their database by paying for lists. Although a valid option, this can prove expensive with questionable returns. Nevertheless, there is a way to double your database and increase sales for a fraction of the cost.
So why do you need a customer database in the first place? If operate within the service industry, like tourism, the restaurant trade, or any business that relies on return business and referrals, then you should know your customers. The potential value in a well-managed customer database is the subject of another article. However, you cannot build your relationships, increase your profile and market your business effectively without one.
This article will outline different methods you can employ to grow your customer database and increase your sales figures. The following steps will help you:
- Grow your customer database
- Identifying the right customers to contact, thereby increasing your success rate
- Run a marketing campaign for as little as $200.00
- Sending the right marketing message to engage your customers
- Start your campaign in 30 minutes (yes, in only 30 minutes).
Why can't all businesses do this?
The main factors that keep most businesses from effectively communicating with their customers are:
- Their customer database is too small to achieve any real sales
- They cannot find the right way to engage their target market
- The prohibitive costs associated with conducting a targeted marketing campaign
- They give the wrong message to the wrong people
- They're unable to react quickly to trends and circumstances – bushfires, unseasonable snowfalls etc.
The final reason why most businesses fail is due to knowledge gaps and perceived lack of intention.
Before we begin
Firstly, we will make the following assumptions about you and your business:
- Generating more sales is a priority to you
- You have a database of some sort – this could be in a spreadsheet or some other software
- The database holds some basic information about your customers – contact details, sales purpose etc.
- You have a small marketing budget, say $200.00.
If this describes you, read on to discover how this article can help you to grow your business.
Small database syndrome
Most businesses poorly manage their customer data. More often than not, businesses of this kind rely on their accounting system to keep track of their customers.
Although some accounting packages offer basic customer management features, you must remember that processing finances is the primary function of this software. If it doesn't allow you to automatically dissect and segment your customer data, then you're in for an onerous task ahead.
But why segment customer data anyway? Well, ultimately, it's the people who you have the relationship with and the people who decide to choose you over your competitors that determine your business' success business. Badly managed customer data is as bad as no data at all. As the old saying goes, it's not what you know but who you know that counts. So, if you "know" more customers than your competitors, you're already ahead of the game.
Who do you target?
Another problem businesses encounter is not knowing who to target, or worse, targeting everyone. If you send every man, woman and child (assuming you can tell the difference) in your database a newsletter or special offer, you waste a significant slab of your marketing budget. This scatter-gun approach to communication demonstrates how little you know and understand your customers' needs. For example, don't send marketing material to both a husband and wife within the same family. Not only does this waste your money, but it will have them talking about your company - and not in a positive way.
How much does it cost?
There are a countless list vendors in the marketplace, each willing to separate you from your hard-earned cash. Building a database can be an expensive and time-consuming proposition. For a $100, you may be able to acquire a list of all the butchers in your area, or for tens of thousands you may get access to the CEOs of the Fortune 500. The more specialised a list you require the more you have to pay for it, and as with most things in life, you get what you pay for. But all is not lost, there are cheaper and easier ways to compile your own database, which we'll get to later in this article.
Send the right message via the right channel
Imagine you just bought a brand new car. The following week you receive an email from the dealer congratulating you on your new purchase along with an offer for a special deal on servicing. Nice warm, fuzzy feeling isn't it? However, what if the week after you get another email informing you of their end-of-year sale and discover your new purchase is a few thousand dollars off?
Managing customer relationships through a one-way communication channel such as email is difficult. For that reason, most businesses fail to deliver the right the message to their customers. They fall into a trap of sending out newsletters, emails and brochures every month or quarter, as though their customers have asked for this information. Remember, "Dear Ms. Smith" is not a personalised marketing tactic, and sending people information on topics they have no interest in is also not marketing - it's annoying.
Secure those last minute deals
How often have you wished you could get in touch with your customers to tell them of some new product, or to take advantage of some special offer? Sending the right message is important but, telling people about a special Christmas offer during February is clearly missing the mark.
Let's ponder a more realistic example – say you run a hotel. You receive a late cancellation from a tour group, leaving you with almost 50 percent vacancy. At short notice, you decide to offer a "This weekend only" special deal to your valued customers. But, how do you get in touch with all these people quickly?
Activities like this may take weeks develop, but with the aid of specialised computer software, you could do this in under an hour.
Grow your database
To secure more business, you need to contact more people by supplementing your database with additional contacts. Although, a number of strategies can achieve this, by far the easiest and cheapest is to target existing partners and suppliers.
For example, if there is a winery near your business, why don't you join forces (and databases) and run a cross-promotional activity. Hotels, motels, resorts, health spas, golf clubs, wineries, restaurants, art studios, craft shops, fun parks, fishing charters, scenic flights, and scenic boat trips are among the businesses that complement each other. Then there are local enterprises like gyms, florists, pizza shops, car hire, caravan hire, and boat hire companies who would also benefit from more business. Don't be afraid to share because there's enough to go around. Consider how grateful your customers would be if they visited your business and got a discount from the local winery.
Identify the right people to contact
Why is this important? Well you're a busy person and you don't want to market to the wrong people. Aside from wasting your time and money, it also wastes your customers' time - something you never want to do. So, to maximise your chances of success, identify and target the right people. If your database contains enough information about your customers, then you can use this to determine who to target.
For example, say you run a restaurant. Maybe through conversation or otherwise, you find out some of patrons are staying at the local health spa, make a note of this. The next time the health spa has a promotion, get in touch with your customers and tell them about it – maybe offer a free glass of wine with their meal (from the deal you've done with the local winery, of course). The key is to engage your customers without being overtly pushy – you're sending them some useful information about the spa, which hopefully will translate to increased business for you as well. Remember, there are many ways to learn about your customers, and they would happily volunteer a lot of this information.
Run the cheap campaign
As you know organising and running a campaign can be time-consuming and expensive. One way to reduce time and costs is to share the burden. Divide and conquer!
Take a few minutes to decide which businesses complement your own. Then work on a plan that delivers special deals and benefits for your customers whether it's via straight discounts or through vouchers. The latter would be better because even if your customers don't want to use them, they may pass them on to their friends. There's nothing better than a referral from an existing customer.
Of course, not all campaigns work the same way, but if possible, make use of current technologies like email and SMS – they may seem complicated at first, however they are more economical. These channels also provide you with tools to determine the success of your marketing activity. For example, they can provide details on how many people responded to your campaign, thereby allowing you to measure the Return On Investment (ROI). However, if you thing such technologies are not appropriate for your campaign, you can still reduce marketing costs by half – remember what was said earlier about using your partners and suppliers?
Your message – what's in it for me?
Nowadays, consumers are more discriminating in what marketing they respond to. If a customer is kind enough to let you contact them, don't waste the privilege and opportunity.
So what do you say? Well, we will start by looking at what you don't say - "Buy me! Buy me!" Messages like these are tiring and only work if the customer is actively seeking the product or service you are selling. Marketing techniques of this kind have their place and will be covered in another article.
It's important to craft your message on the delivery channel. For example, if you're distributing a brochure or postcard, you can afford to be creative. Likewise, if deliver your message via email, you can be as equally creative with the bonus of enticing your customers to click on links to get more information. Alternatively, if you're using SMS, then you have an extremely personal link to your customers and must treat it accordingly. So, cover the following three points when compiling a message of this kind:
- Explain why you are contacting them – you have a special deal that may be of interest
- Explain what else is going on in the area, any other deals – sure people need to eat and have somewhere to stay, but unless there's anything else exciting going on, why would they came back to you?
- Explain why they should receive your marketing - put yourself in their position.
The 30 minute campaign to double your database
Now, the part you've been waiting for. Here's the scenario – you have $200.00, a this-weekend-only special deal, a customer database of around 500 people including their mobile telephone numbers. You use this information to develop an SMS campaign. It would not be practical to send 500 SMS's manually, so you would need some software to assist you. Good Customer Relationship Management (CRM) software should allow you to do all the things discussed in this article. OK, here's what to do:
- Compile a list of all the customers you want to receive this message
- Put together a very attractive deal – one that's almost too good to refuse
- Send the SMS message (for example) "Hi, 50% off this weekend only at XYZ Spa. Fwd to a friend to get same deal. Hope you can make it this w/e."
There you have it. If you've done the right thing by your customers and they like you, then they'd be happy to recommend and pass your offer along to their friends – what better testimonial could you receive? You now have an army of people doing marketing for you at absolutely no cost. When their friends come in for the special deal, get them to show you the message on their mobile phone, and add them to your database!
Now think about this, if your customers send it to four people, who pass it on to two people each, you've virtually sent the same message to 13 people for the cost of one single SMS. Depending on conversion rates, you could almost quadruple your customer database for under $200.00.
Conclusion
Having a good database of customers is paramount in securing more business. Communicating to your customers in the way they prefer is also important. If you want to grow your database you need to keep your customers happy. Remember these points to start the ball rolling:
- Make marketing and creating new sales a priority
- Be innovative – try something different
- Leverage your partners and suppliers
- Look at your message from the customer's perspective.
Whether it's through your own efforts or in partnership, you can grow your business and increase awareness by taking a slightly different approach. Then when you're turning over millions, you can approach a marketing company and show them how it's done.