One of the primary strengths of a database is its ability to sort customers into particular groups – or segments – so that you can target them with specific messages. This allows you to calculate the likely return on your expenditure with accuracy. Your database can sort customer using any criteria, from the numeric order of postcode to the date of order of product purchase.

Some specific use of a database:

With a database you can:

  • identify the most profitable customers
  • obtain more business form them
  • identify and qualify the best prospective customers
  • convert prospects to actual customers
  • identify past customers who are still prospects
  • identify your most profitable products and services
  • develop appropriate promotional and pricing policies
  • identify new market opportunities
  • develop strategies for tapping those markets
  • measure the effectiveness of advertising and promotion
  • evaluate the effectiveness of different distribution channels
  • decrease costs and increase sales volume
  • restrict your offers to particular customers.

It does this by segmenting and clustering customers into specific categories such as:

  • Demographic: age, sex, household structure
  • Transaction: what they have purchased/used, when, for how much
  • Geographic: where they live, shop, and travel
  • Psychographic: what their preferences, lifestyle and tastes are.

Segmenting allows you to create profiles and models of your customer’s characteristics, which you can use in both marketing to existing customers and in new customer acquisition. Your database information will then support not only direct mail and telemarketing, but also help you in the selection of print, outdoor and other media advertising. When you combine geo-demographic data with transactional date, for example, you can be sure that you are placing your advertising in the right place.