In order to successfully manage business-to-business database marketing programs, marketers must have the ability to maintain updated, relevant information on their prospects and clients to develop relationships. These relationships are nurtured in stages that range from targeting and attracting interest, to connecting via business transactions and, ultimately, bonding that customer relationship for the long term. The best way to achieve a secure and lasting relationship is to establish a dialogue with that customer repeatedly over time.
Unfortunately, the bonding process in the business-to- business arena can be especially difficult. The potential customer base is small, and growing businesses tend to relocate as they evolve and seek larger facilities. Instead of taking advantage of opportunities to augment the data brought about by the dynamic nature of business-to-business relationships, marketers rely too heavily on their static database, which can rapidly become outdated. The result? Customer relationship management (CRM) initiatives have less impact and are more costly.
Put simply, businesses are subject to fluctuating market forces driven by economic and technological progress, which leads to continuous change. However, by employing a variety of tools, including the services of a business list compiler, marketers can enhance the accuracy of their databases by appending and overlaying important data elements to keep them current.
Background – Customer Segmentation
First, let’s delve into the purpose for CRM. Many data points can be used to segment the customer database, but the thrust of CRM centers on the ability marketers have to harness the data across many disparate databases within the organization in order to enable personalized communications at many touchpoints.
Data is collected not only to segment, but also to personalize the relationship with each customer. As we know, the ultimate level of CRM is one-to-one marketing where the unique characteristics of each customer help shape the relationship. Companies that are CRM-oriented are able to bond with their customers, creating strong relationships by better understanding their needs. In turn, they are able to generate opportunities for incremental new business.
Data Decays Rapidly
General consensus in the industry is that data decays at a rate of 2.5 to 3.5 percent a month. Within a year, one-third of the information in a database can easily become outdated. Data decay translates into much higher costs. Marketers begin to lose contact with customers, messages become less relevant, response rates fall and audience reach becomes limited.
Data that is obtainable on companies and their key contacts tends to change or decay faster than consumer data. This is notably the case with executives and other contacts. According to United States Secretary of Labor Elaine Chao, 52 million individuals left their jobs and found new ones in the last year. Many business-to-business marketers report that 60 to 70 percent of all business contact information changes during any given year.
When information is harvested from multiple silos within the organization, the possibility exists that records for the same customer may mistakenly be interpreted as separate businesses. This is often due to inconsistencies, typographical errors, incorrect postal coding and data entry errors.
Small Business Data Churns Even Faster
Small and mid-tier businesses often have data that decays at a very rapid pace because they are generally in the growth phase of the business life cycle where there is much more volatility. If successful, these firms tend to relocate quickly and frequently to keep pace with their rapid growth. If unsuccessful, aside from the obvious possibility of shutting down, there is often a change in executives or in their line of business as they desperately seek to identify and market their elusive core competency.
Retaining Customers is Cheaper than Acquisition
Even when a relationship with a customer is established, it still needs to be actively managed. It is generally known that it is five to ten times more expensive to recruit new customers than it is to retain existing customers. Furthermore, even satisfied customers jump ship. More than two thirds of customer relationships are lost as a result of neglect, or what we refer to as “indifference.”
Businesses tend to operate in a high-tech, low-touch world. The lifetime value of a customer is tied to satisfaction with services rendered and also to the active development of the relationship. Tactics that deepen the bonded relationship often involve personal contact complemented by a degree of direct marketing, such as note cards or postcards, newsletters and e-mail messages.
Consistent and relevant communications will increase loyalty and help maintain that bond. Without exaggeration, customers are the most important assets a business possesses, because without them, the business is not a business.
Database Management and Marketing in Difficult Economic Conditions
One of the goals of CRM and database management is the ability it gives marketers to facilitate precise targeting of the best customers and prospects. It is expensive to market to businesses that have no interest in a product or service. The current economic environment makes the process of list management more critical than ever as overall response rates dip and more businesses are in flux.
In order to achieve customer intimacy in a down market, firms in the business-to-business sector are finding the need to reel in costs to offset the drop in sales coming from other businesses. Particularly now, when much of the business world is still on life support as the U.S. economy lingers in the recovery room and marketing budgets are being slashed, business-to-business marketers need to take full advantage of every conceivable way to mine their customer and prospect databases. This certainly includes applying the latest data append theories and techniques in order to maintain some level of communication with prospects and clients.
With less spending on brand-awareness campaigns, more emphasis needs to be placed on channels that allow for targeted, measurable efforts. This is crucial because as the economy eventually recovers those prospects and clients will stay connected to those names and brands they have become familiar with over time. There is synergy between direct marketing and CRM and, as campaigns increase familiarity, ultimately breeds trust. Those brands that demonstrate long-term visibility also communicate a perceived message of trust, quality and viability.
Data Enhancement Reverses the Effects of Data Decay
Often a company’s own internal database becomes so stale and ridden with mistakes and inaccuracies that the United States Postal Service (USPS) can’t deliver the marketing piece, resulting in unnecessary postage costs and lost sales opportunities. Great collateral and a great offer sent to customers and prospects based on a bad or stale list will not do as well as bad collateral and a weak offer sent to a great list. Consequently, 60 percent or more of the positive results of a business’ direct marketing efforts are due to the segmentation processes and list selection.
Data decay serves as a strong impetus for the need to utilize third-party sources to append and overlay records in the database to keep them current and ensure data quality. Nationwide business list compilers assemble and maintain comprehensive and current databases containing businesses in all industries and geographic regions of the United States. These databases contain broad demographic and credit information, thus helping to alleviate the daunting challenge of keeping data updated and accurate as well as obtaining information on companies and the individuals within those companies. Utilizing the enhancement services of a nationwide business list compiler makes the data both easier and more affordable to obtain.
Just how clean is your data? Identify where your data requires attention, allowing you to choose which areas to improve.
Get Free Email Append Test from AverickMedia
New developments in data enhancement include the use of credit information to mail more smartly. If a company’s ability to pay is suspect, using advanced credit analytics will fine-tune customers and prospects by looking at the level of risk associated with doing business with them. Determining the relative creditworthiness of those businesses allows the marketing manager to work more closely with the credit manager to refine the marketing list within allowable credit parameters. This credit screen can identify businesses with questionable credit histories in order to give the credit manager the ability to flag higher risk customers.
Finally, a database can be augmented with an extract of additional similar prospects that possess characteristics similar to the profile of the desirable customers.
Merge/Purge and Data Hygiene Services Save Money
The process of combining several databases can be simplified and made more effective. Lists from multiple sources such as point of purchase, Web, call centers, purchased lists, etc., can be joined by using the merge/purge services of one of the handful of USPS-licensed vendors who can perform National Change Of Address (NCOA) hygiene services. The business names, address, contact name, title, etc. on each of the records are routinely cleaned, standardized and matched against the NCOA file to ensure they are current and accurate.
Thousands of wasted direct marketing dollars can be saved via the use of thorough, accurate and flexible merge/purge services offered by nationwide business list compilers. Using their powerful matching logic system allows marketers to more accurately identify duplicates without over-combining customers who have already received a similar mailing. What's more, postal discounts are awarded to companies with standardized and coded data.
A Case Study – Impact of Data Enhancement and Hygiene
A marketer from an entertainment software development firm recently shared his experience of sending out approximately 300,000 four-color mailers each quarter. They believed they were doing the right thing to grow their business by using a list compiled from both their house list alongside purchased lists. All the lists including the house list were merged/purged to eliminate duplicates. However, the list was never put through the NCOA hygiene process. Mailers were sent out third class, so deliverability could not be measured.
Eventually, a subsequent list was processed through NCOA, and the company learned that approximately $40,000 had been “trashed” every quarter (taking into account postage, labor and printing). After NCOA, the list was leaner, variable costs were lower, the number of respondents remained steady, revenue levels were maintained and their overall return on investment had increased.
Article From: www.information-management.com
