Give me database or give me death - Part 1
by Andrew Shedden
If you were able to bug the phone of your arch business rival John and begin eavesdropping I’m sure you’d hear some fascinating things. You might even hear some business-related conversations that at first listen seem a bit nonsensical.
Carefully consider the effect on you the following conversations would have between John, the successful but harried business owner, and his best buddy the somewhat dim witted, but loyal, Smedley.
“Smedley, this is John calling. I’m having another nervous breakdown here. We picked up 100 new accounts in 2001. We are on track to pick up 200 more accounts in 2002. If we keep picking up new accounts at this rate I’m going to be bankrupt.”
“I understand how difficult that is John. Getting all those new accounts can be bad. Don’t worry about the money you owe me, John, I can wait a while longer. Did I tell you about the pretty crow I saw in the park yesterday? It was black and had wings.”
“Thanks Smedmeister, old buddy old pal. I knew you’d understand. Click.”
Consider how you’d react to the seemingly strange logic of this business conversation:
“Smedley my son, this is John calling. We didn’t pick up a single new account in 2001. It looks like we’ll be doing about the same in 2002. We couldn’t be happier. Things are good, I’m making more money than ever. In fact I’m thinking of trading in the Pinto and buying a new Dodge Viper.”
“I understand how great making money is, John. You use money to buy things. Speaking of money John, maybe now you can pay me the 20 bucks you owe me. Did I tell you that I found a single shoe on the shoulder of the road the other day? People usually need two shoes.”
“Smedley, I said things were good, not great. Wait, I seem to be losing the connection on the phone here, Smedley, Smedley? Click.”
How is it possible for John and his old buddy Smedley to be happy about no new customers? Are they dreamers? Are these two men known to be delusional? Are they having this discussion in a bar?
Actually, as you will see, our two heroes are having a very logical conversation.
Your biggest asset
If there was a fire at my place of work and I could only save one thing it would be my customer database. I would watch all of the files, client records, computers, software; all of the financial information-regretfully including my company tax returns- go up in smoke.
As long as I was clutching my trusty floppy with my database on it I’d have my most valuable resource. I know I could utilize the data within it to rebuild my customer relationships quickly and efficiently.
What’s a database?
A database is simply a collection of records logically arranged in meaningful fields. Large companies extensively use databases as a way of improving marketing effectiveness. As a consumer your name and a great deal of your personal information is currently in countless databases. If you use a credit card, subscribe to magazines, or have bought anything through mail order you are in a company database.
Why do I need one?
The immense power of a database is the ability to cross reference data to find meaningful and profitable areas. One term you may have heard being bandied about is called “data mining.” This is a fancy term for delving into a database and looking for patterns and commonalities across and within groups. It can help marketers predict future buying behaviour as well as craft compelling marketing communications.
The major benefit a refined customer database offers is that it allows your company to move away from mass marketing into relationship-based marketing. This one to one marketing helps you individually customize every aspect of your business experience. Once you begin to closely look at your customers in terms of their buying habits certain patterns will emerge. These patterns can form the basis for highly targeted (and profitable) offers.
New accounts are so sexy
In previous articles I have mentioned that you have an unexploited fortune sitting in your computer at work. This fortune resides with your existing customers. It is a well-known fact it is far easier to sell more to your existing customers than to find new ones.
For some bizarre reason new account acquisition seems to be sexier than servicing existing accounts. I believe that for most business owners this fact just isn’t glamorous enough. Growth at all costs has a way of becoming growth with all costs.
Don’t just sit on your assets
Your customer list constitutes the raw materials of a database for your business. Mix in product and services purchases, past sales volumes, purchase dates, purchase frequency, and other information germane to your business, and you’ll have the beginnings of a useful database.
Many businesses have extensive customer lists simply sitting on their accounting programs and basically doing nothing but showing up on the odd accounts receivable report. This is a tragic waste of your biggest asset. Get your database up to speed and watch your sales grow.
In our next newsletter you’ll learn how to structure your database to get more meaning from your data.
