Why you need a good customer database for marketing

Cotswold Web • 9 September 2022

With online sales continuing to grow, companies of all sizes and in all industries need an effective customer database for marketing. A good customer database will help you keep track of who your customers are and what they are buying – so you can target them with the right offers at the right time.

The amount of data created by consumers, whether from shopping online or using loyalty cards in store, is growing fast. The insight from this data continues to grow, giving businesses a real insight into their customers. An effective customer database will allow marketing teams to really put this data to work for you.

Businesses that don’t have a customer database, or which don’t have an effective database marketing strategy, are failing to reap the benefits of database marketing.

Database marketing isn’t a free solution, as you will need to implement and maintain a customer relationship management (CRM) system. But you should be able to offset those costs with the increased profits generated from your effective customer database.

So, what are the advantages of a good customer database, how can you use it and what are the benefits to your customers?

First things first, what is a customer database?

A customer database is an interactive and intelligent contact list. It stores valuable information about your customers, such as email addresses, demographics (age, gender, geographical location, profession etc) and purchasing history.

Using the database, you can see who is buying your products or services, so you can work to retain these existing customers and acquire more similar customers to further develop your customer base and increase sales.

A good customer database will help you to make more informed selling decisions, as the most likely customers for you in the future are those who have already bought from you in the past.

Why do I need a customer database?

As online sales increase, making the most of online traffic – both sales and non-sales visitors – is crucial for driving your business forward.

With a good customer database, you can:

• Identify and prioritise your most loyal customers
• Separate your audience into relevant segments
• Analyse insights in real-time to track customers throughout the decision-making process
• Use customer feedback and behavior to update your marketing strategies
• Improve your level of brand awareness and identification

Focusing on building a customer database will give you valuable insights into your customers, which will help you to make sales decisions. The database insights will give you a clearer plan for upselling to a particular audience and improving your business performance.

For example, by analysing your customer database, you might find that one of your products is particularly appealing to the 18 to 29-year-old age group. You could then look to promote this product with links to buy it on social media, where younger consumers are more likely to visit.

A good customer database also gives a valuable opportunity to build rapport with your customers. Using information from your database, you can keep them informed about new products and services.

Analysing your database will help you identify your most loyal and most profitable customers. This will help you to single them out for special treatment, which shows how much you appreciate them. Rewarding them with personalised offers will help build a stronger relationship and encourage them to become long-term, repeat customers.

Using your customer database also offers an opportunity to show the human side of your business. Interacting with your customers in a way that appeals to them – whether by email or social media - shows them that you care. Effective and honest communication with customers leads to brand loyalty. Just be careful not to say too much too often and spam your customers!

With a customer database, you ‘own’ your contacts, which is very different from your followers on social media. While social media is valuable, your posts will only reach a very small fraction of your followers. If a platform ever shuts down, you will instantly lose all of those contacts.

How do I build a customer database?

There are a number of different ways to collect customer information. One of the most common is to ask customers to set up an account when they buy from you online. For them, this has the advantage of making future purchases quicker, as they won’t need to input their information next time they buy from you. You could also ask for customer details on your website in return for a special offer or lead magnet, using sign-up forms and pop-ups.

There are many apps and tools which can sync customer data when they make an online purchase and help you build your customer database. Do some research, ask for recommendations and find one that suits your business best. Once you’ve chosen a solution, give your employees the training they need so that they can make the very best of it.

Once you have your customer information on your database, you can use it for future engagement. Offer discount codes, free shipping or free gifts with an order at key times, such as the customer’s birthday or as a new customer welcome.

What information should I include in a customer database?

A customer database is essential whether you work in the business to business (B2B) or business to consumer (B2C) markets. The data you capture will vary slightly depending on whether you operate in B2B or B2C.

B2B marketers should capture:

• Name, job title and length of time at current company
• Details of the company, including name, size, employee numbers and industry
• Profiles and information of key decisionmakers at the company
• Estimated annual sales figures and other important financial information about the company
• Details of any current or previous marketing partnerships

B2C marketers should capture:

• Customer name
• Contact information including email and phone number
• Gender and other demographic information
• Location-based data
• Transaction history and customer behaviour information

Managing your database

You will need a reliable and easy-to-use system for your customer database. There are plenty to choose from.

Your customer details need to be secure (don’t forget GDPR!), manageable and accessible. Customer relationship management (CRM) will track new leads and you can use this to create an email marketing campaign, and then send relevant communications through to a segmented customer list. This can drive repeat sales and begin positive, human engagement with your customers.

Data accuracy

For a customer or prospective customer, there are few things more likely to turn them away from your company than inaccurate emails, such as emailing after they’ve unsubscribed or giving them the wrong name, location or birthday.

So it’s important to clean up your customer database frequently, getting rid of contacts with out-of-date or inaccurate information and merging contacts which have multiple profiles. This allows you to focus all your attention on reaching the people who could be your next customer and continue nurturing those who already are.

Abandoned baskets

One area where a customer database can come in very handy is with abandoned online shopping baskets (or carts). We’ve all done it – put an item in our online basket and then not gone through with the purchase. Either we have found something we like better or for a better price elsewhere, or we have simply got distracted and forgotten all about it.

The latest UK statistics from Statista put the abandoned basket rate at 72% for shoppers using a computer, 74% when using a tablet and 80% for those shopping on mobile. That is a huge number of potential sales to miss out on. How can you convert some of these into paying customers using your database?

If a customer has already registered with you (eg for faster checkout for future purchases), you have their data.

So when they put an item in their basket and forget about it, you can send them a quick reminder to revisit the transaction. Online shopping platforms, such as Shopify, can integrate with CRM software to send reminder emails to the customer, so they will hopefully go ahead and complete their purchase.

Privacy

Maintaining the privacy of your customers’ information is a critical consideration when setting up a customer database. When deciding which system to use, it is essential to work with companies that have strong data policies, to ensure your customers’ information remains private right from the start.

When talking to customers about adding their details to a database, it is essential to initially ask for consent to store their data and let them know what you’ll use it for. This will not only be reassuring to customers, but will also mean you stay within the law. The General Data Protection Regulations (GDPR) has clear guidelines on handling customer data. Breaching them could mean a fine, as well as a loss of reputation. In a competitive market, that is something no company can afford to do.

Understandably, customers may not want to stay on your database forever. So it is important to provide an unsubscribe option at the bottom of your emails. Being able to unsubscribe is not only good for your customers and potential customers, it will also ensure that you continue to reach the most relevant audience for your brand.

If you haven’t already got a good customer database for your business, it’s time to get started. Your database will allow you to reach a large audience and help solve their problems by targeting them with your products or services.

If you already have a database, it is important to regularly check your data, to ensure it is accurate and up to date, so that it works effectively for you.
Although setting up a database requires some initial, and ongoing, investment of time and money, this will almost certainly be outweighed by an increase in both sales and customer loyalty.

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