How to Build Your Customer DatabaseYour database is the key to survival in bad times. And its the key to maximum profits in good times. The goal of your database is to maximize customer value through conversion, retention and repeat sales. And, it allows you to create new marketing opportunities. Heres what you need to know about database marketing.

Everyone is collecting data on who is, or should be, buying their products or services. This data does not just consist of names and addresses. It includes buying history: what people bought, when they bought, and how much they bought. It also includes birth dates, anniversary dates, marriage status, number and age of children, likes and dislikes. It opens up new ways to market more products and services for both consumer and business-to-business marketers.

It means: New ways to market smarter and reduce costs. New ways to market additional products or services. New ways to keep customersthrough extended product usage.

The business market today is changing rapidly. Those who properly master the understanding of how, what and why customers make purchases, and those who are able to influence buying decisions with highly targeted marketing effortsmail, video, telemarketing, etc.are going to come out on top.

A database is not just a collection of names. Its a collection of individualized, consumer behavioral information, isolated to each customer. The database concept inputs data and generates information that allows for selective targeted marketing. It provides comprehensive, up-to-date and relevant information about prospects and/or clients, and will pay for itself quickly with visible, measurable sales.

As database marketing has evolved during the last 20 years, it has become more and more cost-effective. In 1973, it cost $7.14 to access a customers name, address and purchasing information. Today, it costs about $.01-.02. This is due to advanced microchip technology that makes processing information faster and easier than ever before.

Building Your DatabaseAs you start your database, the most elementary data collected is your customers buying history: what they bought, when, how much and the source of the order. Here is an example of a typical database structure. An element of information about the customer is called an attributea fact about the individual or company. The following attributes are common to most direct marketing databases:NameService needsSource of original inquiry

Job function/titlePotential profitabilitySales materials supplied

Company nameReadiness to buyCumulative billing

Company addressPromotion medium(mail, video, etc.)Prospect/customer/friend

Company phoneDecision-maker orinfluentialSalutation

Home addressData record enteredRecord of contacts byphone

Home phoneData of last orderTotal number ofpromotions received

Market/industry code

Your goal is to ultimately develop a high-quality, long-standing relationship of repeat business. With proper analysis of the database, predictive models can be created to mail selectively and with the right frequency.The ultimate result is that you can provide your customers with what they really want, when they need it. Properly implemented, you can increase your response rate and lower your cost-per-order. The result is higher profits.

Building a Customer DatabaseThis white paper will explain how acustomer database could benefit your business and provide asimple guide towhat you need to know before you get started.A Customer Database - What is it? And how to use it!Your customer database and potential customer database is the source of your trade. You need it to generate repeat business in the future, or as a fall back when times get tough and as an assetof your company when you want to sell up.The most important thing, above all else, when compiling your database is include everyone' that shows even a minute interest in your company and what it is you do. Everyone that calls or meets you at a convention, venue or meeting is sent information - you should work toward improving and increasing entries. Without any clients your company is worth nothing - so don't neglect keeping records of the people you meet. Remember that it is the value or the information that you can collect; not the computer program you are using!The smallest and largest companies spend lots of money annually on advertising to increase the amount of business they have and often they don't always target new customers, but the existing ones they have listed in their database. Keeping contact with customers is a good way to get repeat business and promote new products to the right people. There are many different ways that you can maintain contact and interest with different customers and potential customers.Obviously, the cheapest way to create a customer database is to make your own! Products like Microsoft Excel or Access are capable of doing such tasks or you could purchase database software to install or use online such as Salesforce, an online database and support service. There are even free databases you can download, but be aware that they may not be reliable or meet your needs - especially if you have a larger company.A problem that many companies run into is creating duplicate records or being disorganised. This often happens when too many people have access to the database and are continuingly updating it. Having one person who is in charge of database records is the best way to keep information organised and easily accessible. Allowing others to read the records is fine; just make sure that they do not alter anything! If you have the same customer listed 3 or 4 times within a database, and each mailer you send out costs 5, then you could end up wasting 20 for contacting one customer.Don't have too many different databases. One database with a list of customers and potential customers takes the complications out of record management. A customer is a customer no matter how different they are from each other, so keep them listed in one file so their details are easy to access,locate and update. Customers like to think they have a one-on-one relationship with their suppliers / merchant. Keeping a record of all of your previous activities with each individual client can help you understand the way they operate and what they could expect from you in the future. Listing mistakes and errors that may have been made in previous transactions could be a business-saving strategy if you want to avoid future mishaps, especially with the same client.Make sure you can sort all of your information into categories when you need too. This means being able to arrange data into groups - i.e. based on location or relevance. If you spend money on a good database program then this should be easy. You may wish to sort your data so that you can send out mailers, or generate lists ready for phone calls etc.Always update your database. Never have old, outdated or invalid entries as this could cause confusion and be a waste of time and it could also be illegal. There is no point in sending out mailers or wasting phone calls on companies that have gone out of business or are untraceable. This not only wastes time, but can be a good way of losing money as well. Having endless lists of companies that may no longer exist or are irrelevant toyour business is wasteful, so update on a regular basis and have a spring clean of your records once or twice a year. Keep all the records you have collected and ceased to use on a seperate systemotherwiseyou could end up buying back the same information from a list broker when you decide to top up your database. Consider having an obsolete folder to retain all of these types of records.Consider giving your potential customers some insight into your company. Information is extremely valuable and can attract new business but be careful about how much you tell people, as some things must be kept secret. A little taste of what goes on within the inner workings of your company can help people to understand what you do and who you are. A good way to do this is to send out a newsletter which is another way you can communicate to people, without disrupting them with phone calls during busy working hours. This may however generate a lot of negative interest from rival companies who just want to find out as much as possible about you and your future plans or investments.Newsletters are a good way to update people with recent events, future plans and anything else you wish to convey on a regular or semi-regular basis. Some companies offer a subscription newsletter, which contains more information and a better insight into your company. Subscriptions are also a good way to gather information about other people and companies that you can add into your database.Offering a demo or trial of your products(s) is the best way for potential customers to see what it is that you are really offering, how it works, how it is useful for them. Make is simple for them to understand and give them a chance to play' or test your product, not only will this improve exposure but having people test on your behalf will give you vital feedback about your business or services.Obtaining names for potential customers is extremely easy now, with companies who specialize in selling the information of individuals who wish to be contacted by relevant businesses. This costs money though, and sometimes-extra cash to spend is not always available. That's why it is important to keep records of all the people you have contact with and develop your own database. This doesn't happen overnight, but a company with many clients and contacts is worth a lot more! Also, good clients who are satisfied with your services might be willing to introduce potential future clients from their own contact lists. This is another way you can build up your business.If you do decide to buy in data, different prices are generally set for different purposes - ie, you might pay 0.05 to mail someone, 0.10 to be allowed to mail and telephone but 1.00 if you want to own the data forever.Ideally the more you know about potential customers, the better chance you have of targeting the right people. Collecting, as much information as possible is vital, so attracting people to your company who are willing to divulge information is what you want. Offering prizes or giveaways with annual competitions through an ezine or newsletter can do this. Remember that you don't have to offer amazing prizes, cars or holidays to attract people; a case of wine or something similar in value as an alternative(not everyone drinks!) will often be more than sufficient.With your records stored and organized, implementing new strategies and campaigns should be quick and easy. Future plans can be modelled based on your results from previous projects and helping you to predict trends for sales and marketing. Loyalty is something you need to think about when compiling a database. Make a note of more loyal customers or keep them in a separate file within the database so you can differentiate between those who you may consider to be a regular customer and those who you can rely on in the future years.The more information you have about a client, the easier it will be for you to target them and get results. Often cold calls lead nowhere and the person at the end of the phone will be less than cooperative. Buying lists of companies that may be interested in your line of businesses can be obtained from various sources, and can be extremely useful. These large databases are not always cheap, but they do list people who don't mind getting called from people with relevant business.You will also need to ensure that you comply with the law. In the UK data should be kept up to date, relevant and only used for the purpose the customer intended or reasonably expect. You should also comply with government standards like the Payment Card Industry Data Security Standard (PCIDSS) to help maintain secure and legal data - information that Something 4 Ltd can help you with.something 4 Ltdcan help you organise and build your database and make sure you get the most out of building your list of potential and existing clients. We understand that the most important thing about developing a database is your relationship with clients and improve their experience with your company. Keeping data on all your and your clients' activities, complying with the law and we can aid you in the future for maintaining and increasing business.

Create a Customer DatabaseA customer database can be one your business most valuable marketing tools. There are many computer software packages available, but before getting started, think through how you will use the data you gather. Here are some tips:Good people and good systems = good databaseConsider what each person in your company wants to do with the information. For example, will you need a phone list of your customers? A report of which customers bought which products? A mailing list to send postcards or newsletters? Based on how you will use the database, you will create and add fields to track information. Remember, a practical, simple, and flexible database isnt a given simply because you utilize a software program; you need people who understand the importance of gathering information, think ahead about how the data will be used, and are dedicated to keeping the information up-to-date.Limit the number of databases you createThe more databases you create, the harder it is to cross-reference information. If a customer moves, you might have to change his or her information on several separate databases. Its just not time- or cost-effective. Set up just one database for tracking and marketing to your customers. Keep in mind that your accounting staff may need their own database for tracking vendors, bills, and payroll.Include everyoneThe goal is to have your database constantlygrow.Anyone who voices an interest in your business by calling, coming to a sale, requesting information, etc. should be added to the database. Keep adding new information and updates in a timely manner.Whos in chargeEveryone at your business should contribute information for the database. However, consider assigning just one person the responsibility of inputting, changing, or deleting information to the database. This cuts down on duplicate records, information conflicts, etc. If more than one person is inputting information, you need to create a category that tracks who made each entry.Universal accessWhile one person may be in charge of the database, everyone on staff should have access to looking at and using the information.What to trackWhat information do you need to know about your customers today, and what information might you need in the future? Here are some suggestions for just a few of the information categories to consider: first name last name salutation mailing address company affiliation job title day phone evening phone fax phone email address date entered into system date information was last updated referred by participation category/ies (products purchased, events attended, etc.) do not contact categorySorting your informationA good computerized database should allow you to sort and view information in a variety of ways. For instance, you might want to generate: An alphabetical list of customers who purchased a particular product Personalized letters to customers who have spent over a certain dollar amount A sheet of mailing labels for a particular city or county, sorted by zip code A phone list of people interested in a specific product or serviceDesign it in-houseYou might consider hiring an outside consultant to help you create your database. But if at all possible, have the person on your team who is going to be using it most participate in the design process. Select the simplest software package thats flexible enough for your current and future needs. Be sure to get the software training you need.SecurityConsider having security passwords for different levels of use (one for inputting information, one for designing screens, one for viewing confidential information, etc.). This ensures confidentiality as needed, and prevents staff members who dont know how to use the system from making unintentional, but costly, mistakes.Backup your informationIf your database is computerized, backup the database frequently. Keep these backup copies in a safe place, possibly an off-site location.Removing someone from the databaseSometimes a person will request to be removed from your database. Instead of deleting the name, consider creating a Do Not Contact category. This will prevent the persons name from being accidentally entered again in the future. Be sure to remove duplicate records from your database, as well as those people who have moved outside of your market area, or who have an undeliverable address.

How to Create a Customer DatabaseA Programmer's View on Database SoftwareYou have kept your customer information on paper, in spreadsheets, in your accounting program and now you want to set up a central database for all your customer information. As you evaluate your options, you face questions like: What information to track? How to organize the information? Which database software to use? How will it work with my other software? How much will it cost?I am a programmer of twenty years helping businesses to set up their customer databases. Having answered these questions many times, I wrote this article to help small business operators navigate around available options in the database world.The first question about the database you should consider is:What Information to Track?This varies dramatically, but there are several frequently used types of business information: Contact details Customer preferences Communications history Sales history Actions PaymentsThen there is business-specific customer information. For example, family-oriented organizations track family members, real estate companies - properties, engineering firms - equipment they maintain on behalf of the customers and so on.How to Organize the Information?How all this information can be organized for an easy access and use? Should it fit into a single system or multiple systems? How can I fit my data into the database structure?Single vs Multiple SystemsUsing a single database minimizes the hassle of synchronizing multiple sources of data and improves data accuracy.However, if your business software must incorporate industry-specific logic, you are unlikely to find an integrated system that includes both that logic and a full-featured customer database. In that case, the best option is to use your industry-specific software as a primary source of information and copy the customer records from that software into the customer database, where you add more information to them.As much as possible avoid synchronizing the two systems both ways - there should be just one master customer database.Customizing databases to fit your informationNow that you decided what information goes into your database and where it comes from, consider how this data can fit into the database.The simplest method of customising a database is creating extra fields in the customer record. Many database programs make it easy and so you can accommodate business-specific information by adding more and more fields.When you have hundreds of fields, the system becomes difficult to manage. This is probably because you have put together information about different objects. Re-structuring your data makes it easier to access and manipulate. There are two methods of re-structuring such data: Splitting customer records into related record types Storing some information in external filesSplitting customer records into related record types:Suppose we need to record basic family information: Family name Husband's name and birthday Wife's name and birthday Child 1 name and birthday Child 2 name and birthday Child 3 name and birthdayIf you were to add all these details to your customer record, they will occupy eleven fields. Finding a John Smith will be difficult - you need to search four times - for John as the husband, Child 1, Child 2 and Child 3. And the system won't accommodate families with four or more children.To handle this information, the databases can store it in different record types and relate these records to one another. Because of these ability these databases are called relational (as opposed to flat) databases. In a relational database, you would have family and person information in different records and link persons' records to their family record.In our example, each personal record will then have three fields: name, birthday and the link to the family record. John Smith can be easily found with one search, no matter who he is in the family. The difference in ease of use is even more apparent when you need to store more information, like insurance policies with number, name of the insurer, montly premium, expiration date etc.To see if a piece of customer information should be tracked in a separate record type check whether a customer can have more than one of it. Can a customer have multiple policies? family members? air conditioners? Can a customer be included into multiple lists? If the answer is yes, then those objects should be tracked separately and linked to the customer records. If no, they can be incorporated into the customer record.Storing some information in external files.There is a natural desire to track all customer information on the database, but is it really required? There are some data types that databases don't handle well, for example, spreadsheets. The databases are designed to work with large number of similar records, while in a spreadsheet each row could be different from the previous one. Spreadsheets' formulas can be easily modified, while in a databases they are programmed.So if you are used to tracking some customers information in spreadsheets or some other external files (photos, text documents etc), perhaps it is worthwhile to continue doing so, linking those files to the customer records. You will keep your database simple and agile and retain the familiar ways of working with these files, but can still easily access all customer information from a central location.The down side is that you cannot easily search on or otherwise process the information that is stored externally. If you store customer borrowing power calculations in Excel spreadsheets, you can easily access this data on any customer, but cannot find customers who can borrow in a specified range without going through each and every record.Back to topWhich Database Software to Use?Many people consider one or more of the following choices: Microsoft Access Popular contact managers, such as ACT or Goldmine Accounting program Employing a software developer A package that is both simple and easily customizable, such asSimply Contacts Database.Microsoft AccessPerhaps one of the first programs people turn to when it comes to building customer database is Microsoft Access, probably the single most popular database program. Most already have it as part of Microsoft Office Professional or Premium, making it an easy choice. The system comes with Wizards assisting in setting up new databases, creating tables and basic forms.However, beyond the basic setup, you are on your own. To add a field, you need to add it first to the database, then to all the forms and reports where you need it. Maintaining lists of values for drop-down lists is not a trivial task. As the number of fields grows, maintaining forms layout quickly becomes a chore.Access is a great system in the hands of a professional, but developing a functional customer database in it usually requires more expertise and time than a business person can afford.Popular Contact ManagersMany people have heard about ACT and Goldmine. Unlike Access, which is a generic database tool, these programs are business applications designed with customer management in mind. They offer rich contact management functionality out of the box and can be extended by adding extra fields, reports or buying add-on modules.These are capable systems, but their primary target audience is salespeople. According to the vendor's site, ACT is designed for "individuals and organizations involved in selling and other functions where management of contact details, activities and communications is critical." From customizability point of view, ACT is similar to Access. Yes, you can add a field to the program, but you have to do it at least twice - in the database and on-screen - and in any reports if you wish to see it.The program's functionality suits a busy salesperson whose day is filled with appointments, pursuing leads, writing proposals, closing sales and so on. But for many other users it is simply excessive.Accounting ProgramThe main purpose of a customer database is to improve service and relationships with your customers. The main purpose of accounting software is to balance your books. Customer database deals with the client side of your business and does not go beyond order fulfillment. Accounting software deals equally with the sale and supply sides. You should track prospects on your customer database, but a prospect is of no interest to accounting. Customer database software includes information specific to your business; accounting software incorporates national tax laws. Even though some accounting programs include CRM modules, they lack the flexibility to record the business-specific information.In my view, customer database and accounting are different areas and don't mix well in one package.Employing a Software DeveloperUse a software developer if your needs are radically different from other companies. Developers can build a system highly tailored to your business but you need to know very well what you want to accomplish and relate this to a developer in a clear and concise brief.Very often business people describe what they need as a "simple program". But as the project unfolds, it turns out the software should do more or handle special cases that were not initially planned. This causes disputes, cost increases and frustration on both sides.When you are just starting and don't have the full knowledge of what you need, a better way is to experiment and fine-tune the database over time. Starting with a simple, easily customizable package, such as Simply Contacts Database, where you can add extra information in minutes, gives you an opportunity to learn and test your system before investing more time and money.Simply Contacts DatabaseThen there are programs likeSimply Contacts Database. Out of the box, it includes basic contact information, customer history, notes and can attach external files, such as text documents, spreadsheets or pictures to the customer records or history. It can print mailing labels and do mail merge and e-mail merge.But the best thing about this software is its flexibility and expandability. There is a simple function to add extra or remove unwanted fields that automatically adjusts all standard screens and reports. On top of this, users can define their own screens and reports. For example, if you want to track both customers and suppliers on your database you can create "customer view" and "supplier view" with different fields to view the respective records, yet display full information in the "contact view".With a program like Simply Contacts Database, you can start with the data that you already have and easily add more fields as the need arises, perfecting the understanding of the business requirements for your customer database. Once you outgrow the basic system, you can upgrade using the extensive modules library offered by the vendor, or go for an industry-specific or a custom system.Back to topHow Will it Work with Other Software We Use?Most modern software packages can exchange data in standard formats, so there is no need to re-enter the data if you already have it in an accounting or a point-of-sale system. There are two main ways to keep the systems synchronized: Export+Import: Periodically export the data from one system and import it into another. Interface Module: a special program or a module that transfers the information automatically. Open Database Connectivity: programmatic access by one program into the database of another.Export+Importis the most universal and popular method of copying the data, but may require some effort to set up properly. There are two types of problems you may experience: Fields in one system may not correspond to the other one.For example, address in the accounting program may have separate fields for line 1 and line 2, while the customer database may have one long field instead. The easiest method to get around it is to have two address fields on the customer database as well. Duplication of recordsIn order to be able to change data in one system and automatically propagate these changes to the other, you need to export the entire customer database, not just the new records. When you load the data into your customer database programs, this may create duplicates. Maintaining link between customers and sales records.To link a customer to multiple purchases, most systems extract customers and sales information in two different files. When the data is imported into the customer database system, this link breaks down. Some customer databases can import both files while maintaining the link between them. For example, in Simply Contacts Database the user can nominate a group of fields as "unique identifier" of a customer record. This allows the program to automatically find the appropriate customer record when loading sales data and correctly link sales to customers.Interface Modulebetween the system is easier to set up but is only available between the limited number of programs. It already knows about the database structures of the two systems and ensures correct data transfer. Most mainstream contact managers such as ACT or Goldmine offer interface modules to Outlook and popular accounting programs like Quickbooks or MYOB. Simply Contacts Database includes interface module for Outlook.Open Database Connectivity(ODBC) is a technical standard that allows one system programmatically access and/or modify the database of another one.Accounting software Quicken and MYOB make their databases accessible via ODBC. Microsoft Access and systems based on it can both make their database available via ODBC and import data from other ODBC-compliant systems. Operation of ODBC-based connections is fairly easy as they eliminate extra steps required to export and then import a file.The downside is that setting up an ODBC-based link between two systems typically requires programmer's expertise. Thus Open Database Connectivity is often used in the pre-programmed interface modules.Back to topHow Much Will it Cost? Most custom-built database programs for small businesses cost between $1,000 and $5,000. Apart from functionality, the factors that affect the cost include: clarity and completeness of your requirements whether the system is web-based or desktop whether it is a multi-user or a single-user system the number of records it must manage, ie hundreds vs hundreds of thousands If you want to build a customer database program yourself in Microsoft Access, you would either need to have a retail copy of Access (around $200) or Office Professional on each computer or purchase Microsoft Visual Studio Tools for Office (around $800) for your development machine. Your time costs will be probably much more than the software. ACT for individuals and small teams retails for around $230 a copy Simply Contacts Database retails for around $140 a copy for a basic version. With all the add-ons, it can cost up to $1000 per copy, but you can pick and choose only the modules that you want. The cost of industry-specific software including customer databases very dramatically from industry to industry. Sometimes these packages are cheaper, and sometimes they are more expensive than a custom-built program.

7 Ways To Build Your Customer Database1. Give away some valuable informationInstead of providing 100% of your valuable information to all and sundry who visit your website, hold a little something back. Ask people for a few details about themselves and their interests. Those willing to provide you with their details in return for a white paper or research report will be the most qualified leads. Make sure the information is something valuable that they can't easily get elsewhere for free.2. Run a competitionEveryone likes to be a winner. If your products and services are highly desirable, offer a regular giveaway. For larger promotions, offer something that everyone loves to win - like a holiday or a shopping spree.3. Start an informative newsletterNo one wants to receive a newsletter that is just filled with advertising, so deliver some valuable information in your newsletter. If your newsletter regularly contains up-to-date relevant information for your prospects and customers, they'll want to stay on your list, allowing you to remain fresh in their minds. If your newsletter is geared to sell products, try to include handy hints related to your products to improve the chances of your newsletter being read.4. Offer subscriber only special offersIn conjunction with your regular newsletter, or as a regular promotion, offer subscriber only special offers. If your specials are good enough, word will get around and your mailing list will grow quickly.5. Offer a trial of your product or serviceIf your product or service is difficult to understand, or is in a very saturated market, offer a limited time trial. Have your prospects provide you with information on why they require your product or service and you will be in a much better position to convert the trial into a sale.6. Create a viral marketing campaignUse your existing customers and subscribers to help you find new ones. Send an offer or a competition entry to your database and provide them with the facility to easily forward the offer to friends or colleagues. Remember to provide an incentive so that your list will forward your offer with enthusiasm.7. Use website forms instead of email addressesLast but not least, the easiest way to gather information about your prospects is to encourage them to use website forms to contact you. Provide them with the convenience of being able to quickly and easily tell you what information they require by using drop-lists and checkboxes rather than text fields. They will be grateful for the time savings, and you will benefit from better defined information.

5 Ways to Make a Database For Your CustomersStandard marketing CRM type practice suggests that you should create and supplement a database of customers and prospects with the idea that you build more and more information to use to help build deeper relationships and create additional selling opportunities.What if you look at database building as a service you provided for your customers? Now, in some cases that might be a good service offering as a profit center, but Im talking about providing a service that simply allows you to differentiate your business by adding value in ways that your competitors arent even thinking about.1.The knowledge databaseCreate a custom RSS subscription database of blogs and news sites your customers would find interesting, either by virtue of information they provided you or based on an industry they should follow. You can set-up an RSS reader or upload andOPMLfile to the reader of their choice and magically create a hand crafted set of blogs they should follow. OPML files may sound a little techie, but essentially its a list of RSS feeds that can be imported to an RSS reader to create lots of subscriptions at one time.2.The best of class databaseBuild a list of best of class service providers that can deliver all the products and services you know your customers may need that are unrelated to your actual offerings. Create a database with all of the contact information and notes about each provider. Offer this to your customers as a service to help them find great companies for everything they buy. This strategic partner kind of database is something you should be building and maintaining for your referral and lead generation activities anyway, but take it a step further and make it a formal offering using a tool likeCentral Desktopto invite your partners to build and maintain their listings, including monthly specials.3.The real time roundup databaseCreate custom social media and reputation monitoring databases for your customers that include all brand and competitive mentions in real time streams like Twitter, Facebook, and Media distribution sites and teach your customers how to monitor this database. This may be totally unrelated to your services, but its such an essential bit of marketing wisdom that you can create incredible brand loyalty by being the organization that shows them how to do it. Use a tool likeTrackurto create your own white label social media monitoring service.4.The cutting edge B2B databaseCreate a database of web apps that can help your business customers do more with less using free and low cost tools for things like design, file backup, file storage, file streaming, collaboration, online meetings, CRM, finance and HR. This is another play that can allow your organization to be seen as an online thought leader and go to person for emerging tools. Simply gaining this reputation can open some doors to many other teaching and exposure opportunities in your industry regardless of what you actually sell. Heres a nice example The Freelancers Toolset: 100 Web Apps for Everything You Will Possibly Need5.The reminder databaseWhat if you offered a service that could help remind each customer of important dates? Give them the opportunity to put all the birthdays, anniversaries and other important dates in their lives into a database with the promise to remind them to take action when the date was coming up. Obviously, this is a no brainer if you also have a product or service to offer as something for that date, such as flowers or gifts, but it also works for just about any business as a way to stay top of mind. The heating and cooling service could offer a monthly home maintenance reminder tied to the season and featuring a different partner each month. The key is to provide value and personalization. You might also get some inspiration from LIfeHackersTop 10 Reminder Tools for Forgetful Minds

The 24 Essential Database Marketing TechniquesWe have learned a great deal from database marketing in the last two decades. The following is a list of the 24 essential techniques used in database marketing. Anyone who works in marketing today has to be familiar with and be able to use all of these methods. Test your knowledge with this list.1) LTV. Customer Lifetime Value can be calculated in any industry, business to business or business to consumer. It is used to direct marketing strategy. In the early days of database marketing few knew how to calculate it or how to use it. Today it is widely practiced. It is powerful and it works.2) RFM (Recency, Frequency, Monetary Analysis) is a highly successful way of predicting which customers will respond to promotions. It has been around for fifty years, but even today many marketers do not understand it or use it properly. It is a versatile tool that has helped to make database marketing successful.3) Customer Communications. Personalized customer communications, based on data in a database, can be shown (using tests and controls) to increase customer retention, loyalty, cross sales, up sales and referrals. They are effective and they work. They are the principal reason why you build a marketing database.4) Appended Data. It is possible today to append data to any name and address file to learn age, income, home value, home ownership, presence of children, length of residence, and about forty other valuable pieces of information about any household. This information can be used to create customer segments, and guide strategy designed to create powerful customer communications. Similar information can be appended to business to business files: SIC code, number of employees and annual sales.5) Predictive Models. Using appended demographic and behavioral data, it is possible to create models that predict, accurately, which customers are most likely to defect, and which customers are most likely to respond to new initiatives. Modeling, combined with customer communications, can be very powerful technique that can increase response and reduce your attrition rate.6) Relational Databases. Putting customer databases in a relational form makes it possible to store an unlimited amount of information about any customer or prospect, and retrieve it in an instant in a hundred different ways. Relational databases are essential to modern database marketing. Marketers need to understand the principles involved.7) Caller ID. Set up originally as a call routing device, Caller ID linked to a customer marketing database permits customer service to get a customers complete record up on the screen before taking a call. As a result, the CSR can speak to the customer as if she knew her, bonding with her and building close rapport. This helps deliver on the promise of database marketing.8) Websites. The web has revolutionized database marketing. A modern website, with cookies can do almost everything that a live operator can do, and much more, showing and enabling customers to print pictures of the product, maps, instructions, background information and details. Web sites are not wonderful at selling. They are a tremendous research tool and customer bonding and ordering tool. No database marketer can be really successful without a personalized website with cookies.9) Email. Despite the SPAM, emails have emerged as a powerful database marketing tool. The ability to contact customers immediately Your product was shipped today. Here is the tracking number makes for vastly improved customer relationships leading to retention and increased sales.10) Tests and Controls. Since 1980 marketers were sending out direct mail, and measuring the response to each campaign. Today, we can use our database to measure much more. Setting aside customers in a control group, we can measure with pin point accuracy the short and long term effect of any marketing initiative.11) Loyalty Programs. Most customers are delighted to participate in well designed loyalty programs. Airlines have been outstandingly successful in these programs. Their use has spread to supermarkets, hotels, retail stores, and a variety of industries. They are part of the mix of retention building services that database marketing has made possible.12) Analytical Software. It used to be that after a campaign, you got canned printed reports showing what happened. Today, marketers have very sophisticated analytical software linked to their database so that each analyst can do any type of standard or ad hoc report before, during and after a campaign, with the results printed on his PC printer. We have hands on marketing which has made database marketing very powerful.13) Web Access to the database. Today the marketing database is in a relational format on a server which is accessed online over the web by anyone in the company, from any location. Instead of a couple of analysts working with the data, it is available to management, sales, customer service, marketing, and market research. Web access has made marketing databases a useful tool throughout the enterprise.14) Rented Lists. In the past, most companies kept their customer lists strictly private. Today, most lists are shared, exchanged or rented. As a result there are more than 40,000 lists on the market, including data on more than 240 million American consumers and millions of businesses. Sharing of lists created the catalog industry, and has spurred the growth of hundreds of other direct response industries.15) Campaign Management Software. Direct marketing campaigns used to be generated by memoranda to a service bureau: Select these groups, divide them into these segments with these codes, and fax me the counts. The process of getting the mail out the door took three to six weeks. Today, marketers have campaign management software linked to their database so that they can do the planning and the actual selections themselves in an afternoon. It cuts weeks off of the direct mail time, resulting in higher response rates.16) Address Hygiene. Modern service bureaus can take any large or small file of customers or prospects, reformat them to a common format, correct the addresses to USPS standards, consolidate the duplicates, apply National Change of Address (to determine the new address if people have moved) and get the records ready for mailing or storage in your marketing database in one or two days after receipt of the data. This service has made modern database marketing possible.17) Profitability Analysis. We used to know that some customers were more profitable to us than others, but it was hard to measure. Today banks, supermarkets, insurance firms, business to business enterprises, and many others can compute the monthly profitability of each customer. They have discovered that many customers are unprofitable. As a result they have changed their marketing and pricing strategy to increase their profits.18) Customer Segmentation. There used to be so few customers that sales and marketers could keep needed information about them in their heads. Today, companies have many more customers some in the millions. A database is needed to store the information. To develop marketing strategies for all these customers, you have to divide them into segments usually based on demographics and behavior. Success comes from creating useful segments, and developing customer marketing strategies for each segment.19) Multi-channel marketing. Customers buy through multiple channels: retail, catalog, and web. We have learned that multi-channel customers buy more than single channel buyers. To be successful, you need a database that provides a 360 degree picture of your customer, coupled with strategies that recognize and communicate personally with the customer when she shows up in any of the three channels.20) Treating customers differently. All businesses have Gold customers a small percentage that provides 80% of your revenue and profit. With a marketing database, you can identify these Gold customers. Then you develop programs designed to retain them. You use resources that you could not afford to spend on all of your customers. Profits come from working to retain the best, and encouraging others to move up to higher status levels.21) Next Best Product. The database is used to determine what customers in each segment normally buy. From this, you can determine anomalies: customers who are not buying what the others are buying (usually because they are buying this product from somewhere else). This is their Next Best Product. The NBP is put into the customer database record and used by customer service and sales in communicating with customers. It can be a powerful tool.22) Penetration Analysis. Using a database and on line analytical software, marketers can do their own penetration analysis. What percent of sales do we have in each zip code, or SIC code, or income level, or age group? This is a versatile tool that can help you to locate retail stores, place advertising, and direct your sales force.23) Cluster Coding. Claritas and others have divided US (and Canadian) consumers into 66 different clusters with catchy names and similar spending habits. In many industries, using clusters with penetration analysis can help you identify who is buying your products, and who isnt. It can be a creative tool to use in improving your marketing and sales.24) Status Levels. The airlines started it: Platinum, Gold, and Silver. It has spread to other industries. Customers now understand their status, and work to move up to a higher level. Companies provide special benefits, rewards and services for higher status customers. In a democracy, it is an egalitarian method of customer differentiation which assists in building customer loyalty and company profits.If you are not familiar with and using all 24 techniques in your work, you may not be getting the level of customer retention, cross sales, up sales, referrals and profits that others are getting. To learn more, attend the National Center for Database Marketing or consult your service bureau.

How to Create a Customer DatabaseHow to Create a Customer DatabaseCreating a customer database to be able to use for sending direct mail and email marketing is essential for any small business. Learn simple and fast ways to get this set up, costs and who can help you with this important task if you don't want to do it yourself.The direct mail industry also calls a customer database a "house list" or "house file"

From our experience:If you are doing a lot of direct mailing and/or have a nationwide on ecommerce business, your customer database is one of your most valuable assets. It may be worthwhile to hire a marketing freelancer who specializes in customer databases and/or a customer data analyst to set up your customer database correctly.Best sources for marketing freelancers

Why its a good idea to establish and maintain a customer databaseYou'll be able to... contact existing customers to alert them about sales, new services or products identify customers who have not purchased in a while to reactivate target customers with relevant offers/promotions that will compliment what they've already bought from you (cross-sell). You can only do this if you track purchases in your database. conduct customer research and customer satisfaction surveys identify prospective and new customers to tailor direct mail offers to them rent or trade your direct mail list with other approved companies analyze who are your best customers to offer them premium services and offers

How to set up and store customer information on your database

1. First, you'll need to decide what you are going to collect, save and update Typical data collected for a consumer database Typical data collected for a business database

As you are deciding what data to collect and manage: Plan to be able to segment and sort your list. Keep a master file of your list. And then analyze your list to break it into smaller more targeted lists. For example, if you have a list of businesses that have purchased from you in the past, segment them by the number of employees they have. Different size businesses have different needs and should be contacted with different offers.. Customer Segmentation

To understand how you will use the datafor tailoring messages and offers to different customers and prospects, you'll want to create a customer contact plan which outlines what events (like a purchase, request for a brochures, timing for a reorder) and time of year should trigger something to be sent to the customers and prospects.. How to Create a Customer Contact Plan How to Collect and Store Customer Information

How to Enhance the Customer Information You Have

2. Next youll need to decide how you want to store the customer data You can do this using Microsoft Excelif you just want to create and maintain a mailing list. Here's a template to use and add to.. Microsoft Excel spreadsheet for consumer database. Microsoft Excel spreadsheet for business database Or use one of the popular contact managers, such as Microsoft Outlook, ACT or Goldmine Or you can use an online service like salesforce.com Top Suppliers of Customer Databases

Costs for Customer Databases

3. Establish data-entry standardsSo that you avoid duplicates,you'll want to decide upfront how to: Input things like "IBM" or "International Business Machines". How to handle customer files with almost similar addresses like 945 Arbor Road and 945 Arbor Drive that are both attached to the same person. Youll want to establish written rules that can be used to train anyone doing data-entry for the database.4. Establish a system to make sure each individual (and each business) has a unique customer identifier number in your databaseThen attach all information about that customer to their specific record. This is essential for monitoring direct mail success in knowing who responded to what direct mail piece, offer, etc.5. Enter data To create labels, direct mail lists need to be saved as Comma Separated Value (.CSV) or Tab Delimited (.txt) files with consistent column headers. Be sure to backup your customer database!You can do this with an online service or an external hard drive. Set up a way to protect the privacy of your customer database. You are responsible for maintaining your customers privacy.6. Add new data to your database for customers and prospects

How to Collect and Store Customer Information

How to Enhance the Customer Information You Have

7. Keep your database up-to-date Train and reward customer-facing staff to update dataas part of their daily routine. Allow customers access to their records on your web site so they can make changes(corrections and updates). Invest in cleaning and maintaining your list. Be sure to back-up your database daily and weekly. Its a very valuable.

Targeting different types of clientsSegmenting your database is one of the big strategic advantages of using direct mail.Segmentation is the process of identifying, targeting and splitting groups of individuals who are similar to one another in certain ways. It allows you to personalise your communications and deliver a message that resonates with your client's personal circumstances and life stage. What people in direct marketing call delivering the right message at the right time'. You can segment by: age income assets debt occupation geographic area products they have how long they've been a client marital status number of children client segment (see below for suggestions) and a whole host of other options.Segmenting your client database can seem like a daunting task, but it's actually very straightforward. You just need to add more of the information fields we talked about in How to create a client database'. With extra data you already know about your clients (from their tax returns for example) - clients can be segmented based on several variables, using the data sorting facility in whatever program the data is held.Here's an example of the fields you can add to the basic database:IncomeInvestable assetsDebtValue of homeMartial StatusDate became customerNumber of childrenOccupationClient Segment**Marketing OK?

$90,000$20,000$100,000$460,000Single15.06.19870EngineerWealth AcceleratorYes

$150,000$300,000$50,000$600,000Married12.03.19963LawyerPre-retireeYes

$100,000$500,000$300,000$1MDivorced07.11.20001Account ManagerBusiness OwnerNo

* Investable assets include shares, investment property and superannuation. The value of the client's home is not included.** Clients segments are outlined below.For this particular direct marketing campaign, the letters and brochures available have been separated into four main segments based on the following broad customer types and life-stages. To find out how to determine which of your clients fit into each segment, click on the links below. Wealth accelerators Imminent retirees Retirees Business ownersCreate a mailing filePerpetual Private Clients advice and services are provided by Perpetual Trustee Company Limited (PTCo), ABN 42 000 001 007, AFSL 236643. This information has been prepared by PTCo. It contains general information and is not intended to provide you with advice or take into account your objectives, financial situation or needs.

Using your website to build a customer databaseWith everyone fighting for customers nowadays, direct marketing is now becoming more and more of a necessity in todays climate. There are many methods of direct marketing, both cheap and expensive, however which method is best for you? More importantly, which method is affordable!

Direct marketing entails contacting consumers, and encouraging a response of some sort, whether it be a phone call or filling in a questionnaire. Some of the most effective marketing methods include TV and radio advertising; however these methods often incur premiums that the average small company cannot afford. This article sets out to explain how you can use your website to build a customer database, so you can cheaply and effectively run your own marketing campaigns through other means, such as email and sms mailers. This article does not cover other advertising mediums such as magazine adverts etc.Popular low cost marketing methods Email Marketing SMS Messaging Direct Postal MarketingThese methods are all effective when used in the correct context, for example if your target demographic market were people over the age of 65, SMS marketing may not be the most suitable, likewise email may also prove ineffective.For smaller companies, these methods are an excellent solution to get themselves known. Whereas these techniques offer affordable advertising solutions, the problem lies with the question: How do I obtain customer information.Obtaining customer information through your websiteIf you are looking to make your own customer database, your website is the best place to start as it does not cost anything, unless you have to pay a developer to upgrade your system.If you setup a method for a visitor to enter their details through your website then you can enable your website to automatically save the information into an online database quickly and easily. To obtain the most data possible, it will probably mean you will have to entice your customers with an incentive. For example, theBombay Loungeoffer visitors 10% off their entire food bill if they put forward their details.Problems occur if your website itself does not generate much Internet traffic, it will be much less likely that a consumer will find your contact form, let alone be motivated to fill it in.Start your own databaseAdding a page to your website with a simple form to fill in is often enough to gather the necessary information. If you have a system which allows you to manage your own content (often referred to as a CMS) then you can freely start your own customer database.If you are a client of Opal Creations (and even if you are not) please contact us if you would like our team to set you up a customer database.Recommendations1. When building your database for the first time, it is worth noting that it may take a long time to build a substantial data set that is suitable for your needs, therefore if you are looking to market your product/services soon, you should consult a marketing specialist to obtain a pre-gathered database. Opal Creations offers such services. As a customer looking to purchase a database, you can specify the exact type of data you require, including the specific demographics and data set sizes.2. Only obtain the information that you really need do you really need to know their name?3. Incentivize Give your customers a reason to part with their data.4. Validate your form submissions, this should be done when the customer submits their data automatically, but should also be moderated to check for false or duplicate submissions.ConclusionTo conclude, make sure there is somewhere on your website (no matter how big your company may be) so that a visitor can enter information. Information from your website costs nothing, however the results are highly valuable. Contact us today if you would like more information on how this method of direct marketing can help you.

How to Use Third Party Data to Build Customer RelationshipsLeveraging Sales Intelligence

Just a little more familiarity with the customer can go a long way to building a valuable relationship. Case in point: less than 15 percent of customers believe a typical salesperson truly understands their business issues and can present a solution to their problems. Additionally, more than half of sales representatives believe they dont have all the information they need about the customer before they pick up the phone, according to Forrester.The vast majority of companies see the need to develop deeper, more valuable relationships with their customers. Knowledge about the customer is crucial to informing meaningful discussions with key stakeholders inside client companies.Data-Driven Decision Making

Data-as-a-Service (DaaS) involves the aggregation, integration, automation, and dissemination of third party business information from suppliers such as Experian, Dun & Bradstreet, and Data.com, among others. Companies that employ DaaS tools use the resulting data to inform day-to-day decision making in areas such as marketing, strategy, production and/or operations, sales, and customer care.According to the results from a recent Big Data Priorities 2013 survey conducted by CBS Interactive (CBSi), almost two-thirds of organizations are using data to generate higher revenues, and more than half say creating a deeper understanding of clients and markets is also high up the priorities list.Benefitting from DaaS

Sales and marketing professionals can use DaaS in a variety of ways to gain insight and foster customer relationships. Two important applications include preparing for customer calls and targeting messages to specific market segments.Industry reports from organizations such as First Research (accessed through Dun & Bradstreets D&B Direct API), for example, contain a list of Call Prep Questions that include conversation starters designed to help sales people confidently engage in customer conversations. The conversations ultimately help sales reps gain vital knowledge about a customers needs and can ultimately drive future sales.Digging further into how a customer operates within a market segment is an additional way a sales rep can gain a better understanding of a customers business needs. Sales professionals can use D&B Direct to access research on specific market segments and get bigger picture of how a company fits within an industry. This knowledge can help a sales rep establish credibility as she uses it to create a more meaningful level of dialogue with clients.A Case Study: Jasons Deli

Like a lot of companies, Jasons Deli once had a rather old-school way of obtaining customer information. As part of its data collection efforts, local sales managers used to scribble down names, contact info, and delivery transaction data on notebook paper via pen and ink, and would later transfer the data to spreadsheets.The manual process provided insufficient data on customers and sales. It also neglected to help the company gain an understanding of behavioral and purchase patterns, and failed to give sales people talking-points about specific events related to customers and their exact buying needs.As outlined in a February 2013 report by Justin Kern from Information Management, Jasons Deli eventually decided to modernize and adopt a data-based approach to customers and sales for its corporate-owned stores, which account for 60 percent of its locations. By 2011 the companys in-house data analysts and IT team worked with its chief strategy officer to identify business goals with respect to customer data. It then tried out software and software-as-a-service options to address data quality and integration issues.Data quality and integration issues were a high concern going in, according to the Jasons Deli IT team, but budget constraints prevented the firm from bringing in outside data consultants. Instead, the team extracted data from store point of sale figures, aggregated it within the salesforce.com CRM, and enriched the customer side of the sales information with D&B Direct and other applications.Real World Results

According to CBSis Big Data Priorities 2013 report, about 90 percent of businesses achieve measurable financial benefits from data initiatives. More than three-quarters see data as important to their organization.Jasons Deli was one such organization that benefitted from using data. After the company engaged in information architecture construction and data cleansing, it gained a more accurate view of its customers, which translated to real world results. New, unified streams of information led to sales teams reaching a goal of more than $10 million in new sales months ahead of schedule. The company also reported a five percent bump in delivery sales. On the data side, ten percent of its data set was de-duplicated through ongoing use of the system.What contributed to the success? Executives used the new system to discover customers that they had no idea were contributing to sales. The data especially called to attention those who were responsible for smaller individual transactions at a more constant pace customers who had previously been flying under the radar. The Jasons Deli case study proves that enhanced data can give businesses a unified, single view of their most valuable customers. As a result, sales folks can be more efficient when they focus on these customer relationships to achieve their end goal: superior sales performance.Third-Party Data Integration

CBSis Big Data Priorities 2013 report states that more than a quarter of businesses use data supplied by commercial third-party suppliers such D&B, Experian, and Strikelron. D&B is used by 18 percent of organizations, and its D&B Direct service provides access to information on 210 million companies and 100 million business contacts, as well as social media and news sources. It integrates this information into a companys CRM or other applications.Information within D&B Direct includes Hoovers company data and analysis, along with industry insight from First Research. Proprietary content from D&Bs editorial team is combined with news and social media updates, and consists of intelligence on products and operations, business strategy, financials, ownership and family tree information, and competitive landscape, among other topics and datasets. For most businesses, this data is key to gaining a deeper understanding of clients and their markets, as well as informing every day decision-making. This in turn fosters better customer relationships, ultimately leading to higher revenues.

How to Build & Maintain Customer DataOne of our biggest talents here at Bluewater is helping our clients use their customer databases to drive revenue and grow their business. No matter what the size of your business, if you are e-commerce or have a bricks-and-mortar store, an independent entrepreneur or franchisee, your customer information is important to the livelihood of your business!You need to know where your customers live, the best way to contact them, and their purchasing patterns, so you can better serve them. Here are some simple steps to ensure you build an accurate customer database and perform the proper maintenance necessary to leverage that customer data, now and in the future:

Get it Right the First TimeAs soon as you receive a new customer or lead, make doublyeven triplysure that you have their correct information, and train your staff to do the same. If something doesnt sound right, ask for confirmation, or repeat the spelling back to the customer

EVERYTHING is ImportantWhen filling out a form or providing personal contact information can be a hassle, which is why youll see skipped questions, unfilled blanks, and customers asking Do you really need that? Of course you dont want to annoy your customers, but the answer to that question is a polite Yes, actually we do! Its important to know an e-mail address, or multiple phone numbersand NOT because you want to flood them with spam. Be sure to ask what their preferred method of contact is, so you express concern for their convenience.

Change Equals More ChangeAs you know, life gets all too entirely busy. Depending on your industry, the amount of customer updates your receive on changed names, addresses, and other information will vary. If you have a customer submit a change of one piece of information, dont forget to ask them if anything else has changed, because change of a name often accompanies a change of address, etc.

Keep NotesIts extremely important to keep extra notes and side information in your clients profile. Hopefully your database or POS software allows a space for you to do so. Otherwise, it may be crucial for you to keep your own database through a spreadsheet or physical files. This can be especially helpful for the above step as wellif a customer mentions that they are moving the first part of the year, you can set a reminder for yourself to ask for their new address as the time draws nearer

Customer data analysis/customer analytics (customer data analytics)Customer analytics, also called customerdata analytics, is the systematic examination of a company's customer information to identify, attract and retain the most profitable customers.Customer analytics is often managed by an interdisciplinary group made up of business owners from different departments within the company, including marketing, sales, customer service, IT and business analysts. In order to be effective, the group must first agree upon whichbusiness metricsthey need to achieve a single view of the customer experience. Multiple instances of customer relationship management (CRM) applications, disparate enterprise resource planning (ERP) systems and poor customer data integration (CDI) can leave group members with a fragmented view of the customer.The goal of customer analytics is to create a single, accurate view of the customer for the group to work with and make decisions about how best to acquire and retain customers, identify high-value customers and proactively interact with them. Failure to have enough accurate data can make any insight derived from analysis wildly inaccurate.See also:CRM analytics,customer experience managementWhen should you outsource customer analytics?Last month, IBM rolled out a new service called Voice of the Customer Analytics (VOCA), a subscription-based service that combines analytics, data mining and text analytics to give organizations an integrated view of customer sentiment.It was a natural step for IBM, which has built out its business intelligence and data management capabilities significantly in the last several years thanks to a number of acquisitions, includingAscential for data integration,Cognos for BIandSPSS for predictive analytics.But while Big Blue would seem well qualified to do the heavy lifting for a company, does it make sense for companies to outsource their customer analytics?"There's a place for it; I don't think as big a place as [IBM] may be hoping," said Jill Dyche, partner and co-founder of Baseline Consulting Inc. "What I fear is this is going to lull executives into a sense of complacency that they'll outsource what should be very strategic work."IBM's VOCA offering promises to mine diverse customer interactions like audio recordings, call transcripts, email and survey results to provide a view of customer sentiment. IBM can combine the unstructured data with structured data from databases and CRM systems to deliver actionable insight, according to Kevin English, global offering lead for CRM analytics. The Voice of the Customer program is delivered as a managed services offering and can be purchased standalone or as part of IBM's business process outsourcing. It will focus primarily on the call center market, English said, with users looking to improve customer satisfaction, up-sell and cross-sell.Outsourced analytics is certainly not a new development."Companies such as Axiom, Experian, Dun & Bradstreet, Epsilon, Info USA -- all of these service providers have teams of statisticians and consultants that do just that. They provide it on a flexible basis -- either project-based or as retained services," said Leslie Ament, managing partner of Hypatia Research and Consulting. "The difference is, its mostly structured analysis. They havent yet integrated online with offline or structured and unstructured."Although IBM -- with its vast consulting resources and the technology of SPSS, DB2, Cognos and IBM Content Analyzer to support it -- is probably better equipped to handle a company's customer analytics than the organization itself, buyers should proceed carefully. A voice of the customer program, when done right, needs to encompass the entire organization and be viewed strategically, Dyche said."It's very tempting to use them as these little survey factories when that data can be so much more meaningful and strategic to a company," she said.Companies which do that often end up marginalizing the voice of the customer.When is it right to outsource customer analytics?Yet there are instances where outsourcing customer analytics makes sense, Dyche added notably, in call centers and business processes that themselves have already been outsourced."The threat of this is that it's not so much the analytics but the data that will stay siloed," she said. "Then it's not the tool that gets slapped on that's the hard part. It's the data coming from these new systems that's really the hard part."Alternatively, businesses that don't require much in the way of creativity when conducting analysis of customer data may be well served by outsourcing. Repetitive queries that don't require ad hoc reporting can be good candidates for outsourcing -- for example, sales reporting off point of sales systems, Dyche said.The sheer amount of data and complexity of systems is something that organizations should consider when debating whether or not to outsource their customer analytics, according to Ament."Some organizations have up to 10 transactional and/or database systems due to multiple business units or offerings," she said. "To try to create algorithms or do data mining and content mining is incredibly challenging and almost impossible within the confines and inconsistent database structures, along with the infrastructure that they have in house."Another consideration is whether outsourcing means potentially losing out on competitive advantage."If I were IBM and I were sifting through all that information, I would certainly want to take my findings and best practices and bake them into algorithms that I could package and resell," Ament said.It's not necessarily an all-or-nothing equation either. Organizations have been happily outsourcing analytics for years, accessing some slice of expertise from an outsider."Marketing services providers have been doing that for ages," Ament said. "Experian and Dun & Bradstreet have done this type of work for Staples, even thoughStaples has [its] own internal analytics team. It's not necessarily that expertise is lacking but the infrastructure is lacking, and the only way to manage and integrate and create consistency in how information is managed and utilized is to outsource it."Beware the pitfalls of outsourcing customer analyticsYet beware of outsourcing customer analytics as "analytics with training wheels" or as a way of developing skills within an organization, Dyche warned. Because once it starts getting done outside the organization, it's tougher to bring back in."You may have an exec who has a mini epiphany and says, 'We don't know what customers are saying; we need a project,'" Dyche said. "It may be a way to kick-start [a voice of the customer program], but it will take a really disciplined organization to bring those capabilities in-house -- not just gathering and measuring it, but bringing that data to broader places. Marketing needs that information; sales needs that information."So what should companies consider if they do outsource their customer analytics?Ament said organizations with significant regulatory and compliance requirements should be very careful about what they outsource. In addition, she said, consider short-term jobs, like monthly or quarterly projects when the price is right. Finally, she suggests that outsourcing can bring some order to what can be a chaotic process."Organizations are working harder than ever to capture and manage their information. They're doing reporting very dutifully, but they're not always using best practices in doing their reporting," Ament said. "So standardizing metrics is something most organization don't do well but a consultancy or an outsourced provider should."The best practices in customer intelligenceIf your organization is struggling with customer intelligence management (CIM), you're not alone.CIM is a set of business intelligence tools and practices applied specifically to customer data. An independent study by the Aberdeen Group, a Boston-based research firm, finds that only 48% of the 125 companies it surveyed have actively managed customer intelligence for 12 months or more. That puts effective CIM in the early adopter stage. Study author Leslie Ament, director of customer intelligence research with Aberdeen, initially thought companies would be further along with CIM by now. Still, she's not entirely surprised at what she's learned.CIM can be a challenge, she said, "because it's cross functional, because information is siloed and because it's difficult and you need to do it while running your day-to-day businesses."The study, released in December 2005, focused on what "best-in-class" CIM leaders are doing differently than the average company or "laggards" in the market. Best-in-class leaders reported using CIM to attain greater than "25% year-after-year performance improvement in customer retention and customer acquisition rates, and revenues," according to the report.A major factor that sets the leaders apart is an enterprise-wide commitment to customer centricity, Ament said. Best-in-class companies also stated a desire to provide a 360-degree view to all customer-facing functions, the study reported."[CIM leaders] are creating a cross-functional ownership team. They understand that it's not one department's problem or goal; it's an enterprise-wide endeavor," Ament said.CIM combines technology, people, process and data, but technology is a key enabler of successful initiatives, the study noted. Best-in-class companies are more likely to usecustomer data integration (CDI)tools prior to analysis, according to the study. These leaders are also more likely to use operational andpredictive analyticsto better understand their high-value customers. However, for the majority of companies, the study found that just getting the right data to the right place is challenging enough.The results from "all participants" (not just best in class) find that siloed data and lack of effective CDI is the biggest CIM technology challenge for most companies and maintainingdata qualityis the second greatest challenge. This is an area where the majority might be able to take a tip from the leaders.Selectively outsourcing CIM processes, which may include data management, and analysis andapplication of customer intelligence, was more prevalent in best-in-class companies than Ament had expected. Of the best-in-class companies, 50% used outsourcing for some part of their CIM process."I did expect companies to selectively outsource, but I didn't quite expect it to be at the range it came in at. It's a very healthy sign," Ament explained. "Companies recognize that they need to bring in experts and service providers with expertise."Best-in-class companies reported turning to outsourcers for persistent managed services or for CIM system and process development. That frees up employees to focus on more specialized analysis and application of customer intelligence.The issue of metrics development is also a major challenge. Of all respondents, 30% "did not know or did not have" the data to provide "more than basic" performance metrics of CIM initiatives, the study found. They may be overcomplicating the issue.As the industry matures, more detailed and holistic metrics will likely be determined, the study predicted. But for now, best-in-class companies reported that they generally base their metrics on customer retention rates, return on marketing investment and revenue growth. The study recommends that metrics-challenged companies follow suit, and measure the success of CIM initiatives with basic performance indicators like customer retention and customer acquisition rates combined with annual revenue growth.Related Topics:Customer data integration software,Business intelligence technology platform,VIEW ALL TOPICSBest practices in managing customer dataEffective customer data management doesn't require a massive master data management platform, according to a recent study.Companies that achieve a return on investment (ROI) from customer data management (CDM) come from different industries but have notable similarities, according to thereportfrom Aberdeen Group Inc.CDM is a subset of master data management (MDM) that refers to the practice of synchronizing and standardizing customer data. Boston-based analyst firm Aberdeen Group surveyed 225 companies to determine what CDM leaders do differently from average performers. Effective CDM is not just about having integrated, clean customer data, it's about leveraging data to increase revenue and profitability, according to study author Leslie Ament, director of customer intelligence research with Aberdeen. Above-average and best-in-class companies, or "leaders," attain greater than 20% annual improvement in retention rates, revenues, data accuracy and partner/customer satisfaction rates, the study found. The study revealed those actions that helped leaders get ROI from CDM.Automate CDM (and don't worry about MDM)All survey respondents agreed that the biggest challenge with CDM is extracting and normalizing customer data from multiple sources -- but leaders use different technologies to solve the problem, Ament said. According to the study, 48% of the leaders using customer relationship management (CRM) systems plan to extend their use for CDM initiatives. Of the leaders using ERP systems, 32% reported plans to extend their usage. Above-average and average performers were twice as likely as below-average performers to use CDI and data quality tools, and leaders were nearly twice as likely to use a service-oriented architecture or Web services platform to facilitate data integration. Notably, none of the companies in the top tiers reported using enterprise MDM platforms."The takeaway for companies contemplating MDM is to do a pilot program with customer data or product data first, refine it -- then roll it out," Ament said.Measure both IT and business performance metricsCDM leaders were divided when it came to metrics, the study found. Approximately half measured data effectiveness, including accuracy rates, role-based access statistics, and data retrieval speeds. The others measured downstream benefits, such as customer retention, service levels and satisfaction. Less than 15% measured both kinds of metrics, Ament said, but ultimately, CDM efforts should address both.Increase organizational visibility and role-based accessThe study found that 60% of best-in-class companies wanted CDM to give employees greater visibility to customers, channels, distributors and stakeholders. Leaders cited role-based access, which enables functionally appropriate views into customer data, as an important way to optimize customer interactions and operational decision making.Cheaper isn't betterLeaders valued technology flexibility, the ease of configuring business processes, role-based access for different operational groups, and rapid integration. In contrast, average and below-average performers were more concerned with total cost of ownership and compatibility with existing architecture."Best-in-class companies have gone beyond just thinking about operational use of customer data," Ament said, "and they're starting to leverage this customer data for more strategic uses."

For more on customer data

See whyCDI needs more than CRM

Learn the threerequirements of a data consolidationproject

Centralize CDM by location or divisionThe complexity of managing CDM business processes and usage requirements, and the high returns leaders have found so far with the location-centric approach, favor that approach over an enterprise-wide one, Ament said. Centralizing CDM by location enables leaders to test processes, fix problems and develop best practices, before rolling it out to the larger organization.Develop data stewardship programsCross-functional data stewardship and establishing ultimate accountability for customer data is just as important as technology for CDM, according to Ament. Best-in-class companies reported that clearly defined roles and responsibilities and internal cross-functional teams were critical success factors.Evaluate outsourced providers or consultantsAbove-average performers are consistently outsourcing parts of CDM projects, the study found. More than 85% of respondents plan to use service providers for specific projects, ongoing processes or best practice expertise. Companies are pursuing persistent outsourcing arrangements through software-as-a-service providers or other technology enablers, the study said, and they are looking for assistance with activities such as data profiling, business process workflow and data synchronization.Get organizational and executive supportLeaders have found that it's critical to get executive support, consider the impact of effective CDM on various departments, prioritize accordingly, and tie the project to overall corporate goals, Ament said."The biggest difference between average performers and best-in-class companies was executive support and operational commitment to execution," she said. "Companies that are performing better seem to take a very serious and phased approach, and you can see it in their performance metrics."

A guide to using customer data and analytics tools for customer loyaltyDuring the recent recession, marketing teams at many organizations have been forced to revisit customer retention tactics and define a clear strategy for customer loyalty. Yet many organizations lack the strong understanding of customer data that is the foundation of a successful customer loyalty program.In this guide, hear from analysts and experts about recent trends in customer data and learn how winning organizations are truly taking action on analytics. Find out about the challenges that many organizations face when establishing and maintaining customer data management and retention programs and how to meet those challenges head on. Read research and insight from Leslie Ament of Hypatia Research, LLC, who provides tried and true tactics for using analytical tools to take action on customer data and read case studies from organizations who have done this successfully.

Don't miss the other installments in this customer data and analytics guide: Leveraging customer data to maintain customer loyalty obvious, not easy Marketers missing the boat on customer data Tips for using analytical tools to take action on customer data Leveraging customer loyalty in a down economy

Marketers who, just a few years ago, were focused squarely on customer acquisition have been forced by the recession to reverse course and ensure that the company is retaining customers.It's not an easy undertaking."Many of these firms are ill-prepared for retention programs," said Suresh Vittal, principal analyst with Forrester Research. "Retention versus acquisition and engendering loyalty requires a far better understanding of your customer than your prospects when acquiring them."Understanding customers requires an understanding of the data describing them, and that can be particularly difficult.For most marketers, Vittal said, the discussion starts with customer churn, but even that can be difficult to define. The challenge is determining why customers leave, or in some cases, when it's OK for them to leave one brand but key to retain them for another. It's not a specific answer for many companies.FOR MORE ON CUSTOMER DATA AND CUSTOMER LOYALTYListen to a podcast with Don Peppers on how to useWeb 2.0 technology to create customer loyalty

Learn why many are still focused oncustomer experience not costin the recession"Say they get past that hurdle and into loyalty and retention programs, there's another level of challenge here, both with programs themselves and the data -- and that is understanding who is the most valuable," Vittal said. "We want loyalty but we want loyalty from those we determine are most valuable. Customer lifetime value, customer margin, net incremental revenue, products per customer, high margin products per customer. There are all kinds of refined metrics marketers are starting to think about."For many marketers, according to Vittal, it's not just a matter of accessing and accumulating the data but agreeing on a definition. Many organizations cannot agree on what defines a customer or how to determine what each customer means to the organization, particularly for companies with multiple brands and product lines.Step 1: Find and define customer dataCompanies should begin their evaluation