Marketers must know their customers and inorder to know the customer; the company must collect information and store it in a database from which it can conduct database marketing. In general, companies can use their database in five ways:
To identify prospects:
Many companies generate sales lead by advertising their product or service. It sorts through the database to identify the best prospects, and then contacts them by mail, phone, or personal call to try to convert them into customers.
To decide which customers should receive a particular offer:
Companies are interested in selling, up-selling and cross- selling their products and services. Following a sale, it can set up an automatic sequence of activities. One week later, send a thank-you note; five week later, send a new offer; ten weeks later (if customer has not responded), phone the customer and offer a special discount.
To deepen customer loyalty:
Companies can build interest and enthusiasm by remembering customer preferences and by sending appropriate gifts, discount coupons and interesting reading material.
To reactivate customer purchases:
Companies can install automatic mailing program (automatic marketing) that sends out birthday card or anniversary cards, Christmas shopping reminders, or off-season promotions. The database can help the company make attractive or timely offers.
To avoid serious customer mistakes:
A major bank confessed to a number of mistakes it had made by not using its customer database well. In one case, the bank charged a customer a penalty for late payment on his mortgage, failing to note he headed a company that was a major depositor in this bank. He quit the bank. In the second case, two different staff members of the bank phoned the same mortgage customer offering a home equity loan at different prices. Neither knew that the other had made the call.