What is Database Marketing? - Definition & Examples

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Want to deliver more customized marketing messages to your audience? Database marketing may hold the key! In this lesson, we'll study the basics of database marketing, its benefits, and how it can be used effectively.

Reaching Out

Jana owns a children's boutique in her hometown of Charlotte. In two weeks, she is having a massive end-of-season clearance sale on girls' clothing, and wants to get as much traffic as possible into her store. Jana could run a newspaper advertisement or put together a commercial for a local radio station. She could also take advantage of her customer mailing list by targeting families with only female children, so she knows she's reaching an audience that would have a genuine interest in her sale.

Which option sounds like the most effective form of marketing for Jana? If you answered, ''Using the customer mailing list!'', you're correct! Jana has a wealth of customer information at her fingertips, with an audience that is already interested in what she has to offer. Plus, it's a relatively low-cost and quick-delivery method of marketing. What we're talking about - for Jana and for this lesson - is a type of marketing known as database marketing!

What is Database Marketing?

Database marketing is a type of direct marketing that relies on a client database, which holds recorded information about customers. That data can then be used to build lists or charts for marketing purposes. A typical database for a business like Jana's might include basic details like:

  • Names
  • Addresses
  • Phone numbers
  • Email addresses

Or, it could be more detailed and include:

  • Purchase history
  • Family details (such as number of children)
  • Sizes
  • Favorites, like colors or brands

A database is a virtually limitless tool used for collecting information to maintain documentation on existing and/or prospective clients. Business owners who want to utilize this form of marketing may try implementing customer questionnaires, contest entries, applications for rewards programs or credit cards, social media sites, email newsletter subscriptions, text messaging loyalty programs or in other formats by gathering data in exchange for a free trial, download or gift.

Benefits of Database Marketing

Without a doubt, the biggest benefit of database marketing is the ability to segment the types of customers you want to reach. By segmenting, the user can break down the information from the system into specific categories. This allows them to hone-in on particular interests or key indicators to send highly personalized information when marketing. In our opening example, Jana can use her database to segment families with only female children, and in doing so, she can reach a specific audience with a marketing message that is more relevant to them. A broader message sent to the entire customer database might be less successful; after all, why would a family with all boys be interested in a sale on girls' clothing? Thanks to a more personalized approach, more efficient customer service can be offered, and an increase in revenue opportunities is also possible.

Making Database Marketing Work

So the question is: If you don't already implement database marketing, how do you go about getting started? It is actually quite simple:

  • First, you need to collect data. The more information you have, the better your targeted marketing efforts will be.
  • Second, utilize technology to analyze the data based on your target market. After you've gathered the necessary information, you need to be able to turn it into a readable format to gain knowledge on the specifics.
  • Last, take what you now know and turn it into actionable marketing strategies.

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