This video provides a clear definition of modern database marketing, which explains how it evolved and what the latest trends are.
- [Instructor] Database marketing is the process of direct marketing to large numbers of consumers in such a way that the communication is personalized and relevant to the individual. As opposed to undifferentiated mass marketing. It is at the heart of modern CRM systems, which seeks to integrate all of the data we have in order to serve the customer better, to increase their lifetime value, and to reduce attrition rates. Over time, large numbers of customer data is analyzed statistically to determine which customers are more likely to exhibit certain buying behavior and funnel progression.
This enables us to serve these clients with specific communication which gives the perception of a one-on-one relationship to masses of people. Some businesses and intermediaries see data as the new gold. They use large amounts of customer data to create profiles and segments, and then either sell the data to third parties or sell targeted advertising to third parties that will be served selectively to various customer segments.
Database marketing always relied on two different sources, namely internal and external data. Internal data is held by a company. It relates to its own clients. External data relates to individuals who are not yet clients, whose data is held by a third party who engage in the selling or the renting of that data. What has changed a lot over time is technological capabilities and cost structures.
When data was scarce, it was very expensive to acquire external data, and it was cheaper to generate your own leads to grow internal data since pay-per-click was cheaper, and there were fewer freebie offers competing to capture new customers through sign-up forms. Today, it is becoming cheaper to buy external data. For example, a list of CEOs may have cost $15 per lead, but now, you can use LinkedIn sponsored email to target those CEOs for as little as $1.
Including the delivery of a priority message. So in some ways, it became way more expensive to generate your own leads. For example, pay-per-click costs have skyrocketed, and the competition for eyeballs resulted in lower sign-up rates to freebie offers that can grow your lead list. The change in consumer behavior to complete more transactions online really accelerated the development of better tools to track customers, to segment them, and to deliver a more personalized experience, often delivered in real time.
The availability of data science tools and explosion of knowledge in this field enabled businesses of all size to better predict the behavioral patterns of consumers. Personalization can now be achieved firstly through building a rule-based customer list based on how the customers behave on your site, or through more advance machine learning, some statistical and predictive analysis, both in real time or retrospectively.
It is now also possible to use internal data that we have on customers in conjunction with external sources, such as Google, Facebook, in order to identify look-alike audiences. This way, we use our internal data to define the ideal customer and then tap into external data sources to target similar profiles as a means of expanding our customer base, and to reach out to more relevant individuals.
- What is database marketing?
- Email marketing tools
- Using a data management platform (DMP)
- Database analysis and customer insights
- Segmentation and personalization
- Laws, regulations, and issues in the US and in the EU
- Maintaining data quality