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Turn Old Customers into New Business - The Importance of Good Database Management

Written by: Greg Pipe

Article Overview: "Water, water everywhere and not a drop to drink." or to paraphrase Samuel Taylor Coleridge, sometimes it can feel like "Customers, customers everywhere, but how do I talk to them?" In this article I've looked at how one of your best resources can often be found in your old sales records.

Turn Old Customers into New Business - The Importance of Good Database Management

Customers, enquiries and referrals are the foundation of sound marketing. Creating a database from these contacts requires not only the effective management of information, but also an understanding of what constitutes good quality data.

Once created, a customer database will become a dynamic entity, as in a sense, it is always ‘work in progress’. Managing this profit-making tool can sometimes seem tedious, but it is an essential part of any successful business plan. By regarding your reservoir of information this way, you can utilise its many benefits by forging new sales and opportunities. After all, isn’t this why you went into business in the first place? As your sales grow, so too will the amount of useful data. Your embedded contact base will grow in importance, as part of your overall marketing strategy, by allowing you to provide the best service to your existing customers, as well as helping you to increase the number of new clients.

Are there any drawbacks to database management?
Well, if you consider it is far cheaper to keep an existing customer than it is to go out and acquire a new one, there are really only benefits to be had from keeping your databases up to date.

Let’s consider what might be included in your customer records. On a very basic level, companies need to store the names, postal address, purchasing history and crucially nowadays, the email address of their current customers. By analysing this information it allows them to understand basic tendencies to prefer brands, price points, products and services etc. However, by adding more detail it becomes possible to categorise how regularly customers return for more business, the types of products they prefer and the list goes on. This means you can start to group your customers together and target them with more specific messages. This use of sub-groups is crucial to getting the best return from your database as by changing your message to fit each type of customer, increases their likelihood to respond favourably. You’re no longer saying the same thing to everyone, you’re using what you know about someone, to tell them something they want to hear.

The analogy would be if you have three people in a room and you want to go and see a horror film with one of them. One of those people you know likes horror films (a sub-group of your database), one of them you know likes films in general (basic data on a previous customer) and one of them you’ve never met before (a potential new customer). Obviously, in this situation, in order to achieve your goal, you ask the person you know likes horror films. The potential new customer may or may not like horror films, but you have to spend more time discussing it with them to find out. This simple analogy shows clearly why good information about your customers, is so important.

Despite this, you might still feel that managing a database is too involved and time consuming and the thought of having to go over your existing records sends chills down your back. In these situations many small businesses look to outsource the work to specialised consultants or firms. These companies can put in place methods to easily create and maintain these lists, as well as help you cleanse your old records. Delegating responsibility like this enables you to benefit from the expertise of others and saves you precious time and money.

Reliable systems for managing the database from capturing information, categorising and updating it, are critical to its value. It is truly worth the effort to create this resource, because from this tool, the scope of your business will grow.

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Article Tags: database management, new business



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