First Steps in Database

The first steps towards turning lists into databases, and data into information…

The most used and abused word in Direct Marketing is database. Those who have it, think of it as their most prized asset. “Once we know about our customers, we will able to turn this knowledge into cash, profits and loyalty,” they feel. They are not wrong, and in most case the expectations are fair.

However, in majority of the cases, databases actually yield nothing for their proud owners, leaving them skeptical, sometimes confused, and often clueless. Why?

There are several reasons, and most of these relate to the quality and the use the database is put. But, far more importantly, there is limited or no knowledge of what a good database is all about.

List vs. database

Let me start with the most frequent mix-up, that between a list and a database. What’s the difference?

Invariably, a list is a name and address, sometimes accompanied by a telephone number, with little else known. A telephone directory and yellow pages are two best examples of a huge list of names, residential and corporate, respectively. A list is only a notch above the mass-market method of defining your target audience, as SEC A, B, C, and so on.

There are hundreds of lists floating in the market, though their vendors prefer to call these databases. Some popular ones are luxury car owners, computer owners, income tax payers, and credit card members. Majority of these lists have found their way into the market through the data-entry vendors.

In my experience, they’re an absolute waste of money, not even worth 50 paise a name.

How does a list become a database?

Only when we have the profile, or can guess the profile with fair a degree of accuracy, can you say you have graduated from list to database.

Information on age, gender, and occupation are mandatory for any reasonably good quality database. By adding these three, you can target your communication quite accurately, saving yourself unnecessary spill over and huge costs. To illustrate, we used a list of luxury car owners for one of our mailings. 40% turned out to be names and addresses of organizations, and the communication went to the ‘Director’. What a waste!

But just having data doesn’t make the database powerful on its own. Date of birth, a frequently asked question in database capture forms, is pretty irrelevant unless you offer a product or service which can benefit from such information. Example: items that are frequently used as birthday gifts, like perfumes, books, and clothes.

In fact, even the phone number is irrelevant, unless you plan to call these people over during the next 12 months. After that, high churn sees to it that all telemarketing activity becomes grossly inefficient.

Remember, every bit of information you seek, increases the size of your questionnaire, your cost of inputting (data entry), and data-management. Besides, the length of the questionnaire is inversely proportional to the response you get! It’s very important to get your database strategy in place before you actually get down to capturing information.

Basic information goes a long way

Let’s take the case of a bicycle manufacturer, planning to introduce an extremely snazzy, premium priced 16″ bicycle, aimed at 12 to 16 year age group. Being an expensive product, the manufacturer expects its demand to be limited. How can he use a database to both create awareness and drive traffic to his dealers to buy the cycle?

This is what I’ll recommend:

To begin, take out names from cities where you don’t plan to sell. In a world where everything is so expensive, every saving helps. (I’m not saying people can’t go from one city to another and buy bikes. I’m saying we must prioritize.)

• Take out three groups:

a)      Men and women over 40 years

b)      All boys and girls between 12 and 16, and

c)       Young people in the 16-20 age groups.

• To the first group, I’ll market it as a bike for their child, niece, or nephew. To the second group, I’ll try to sell it directly, as something they can enjoy. And the third group, I’ll request to recommend to their younger relatives and friends. I may even throw in a little gift for recommending.

Without age information, this exercise will be just a shot in the dark, as bad as to mass media in mail.

But what about gender information? That’s important too. Because addressing a teenager as ‘Ms Shefali’ instead of ‘Shefali’ makes a world of difference to the response you can expect from her.

For your database to be actually classified as an asset, turning a list into a database is the first step. Let’s talk about the next step in my next column.

Who is Raj? = What can I sell him?

You know my name, my address, how old I am, whether I’m a man or a woman, and you know what I do for living. Is this sufficient information to practice one-to-one marketing with me?

Yes, and no. Why yes? Because you have some idea about me, and what I may buy.

To begin with, since you know I’m a man in my mid-forties, you can target me for men’s products like deodorants, shirts, shoes, men’s magazines, etc.

Since you know that I’m an entrepreneur, I could be a good bet for certain products and services, like seminars, entrepreneurial development programmers, books, magazines, car loans, credit cards and banking and investment services.

My address in Bangalore gives you an indication of my economic status and income. (Even the fact that it’s a fifth floor flat and not a bungalow may mean something.) This could further help you classify me as ‘very likely’, ‘likely’, ‘unlikely’, or ‘very unlikely’ for your products.

Educated guesses

You don’t yet know my marital status or if I have children. But in our country, you don’t find too many childless, single men of my age. So you can take a chance, and add at least two prospects to me. First, my wife, who’s likely to be my age and profile. Second, a child, who’s probably between 16 and 13. (Actually, my son Rahul is 10, but you were guessing, so it’s OK.)

Actually, when you think about me, you’ll realise you know a lot about me. And by doing some simple analysis, you can do fairly precise targeting.

The power of investigative dialogues

But most important, you can begin a dialogue with me. Which means, you can get to know me better.

For example, knowing that I live in my own apartment, not a rented one, can change your plans for me significantly, as will confirming your guesses about my marital status, and children.

If you could find out my wife’s birthday, I’ll suddenly find scores of gift suggestions in my mailbox, sarees, salwar kurta, jewellery, perfume, watches, and what not.

If you knew I have a Maruti 800, and that it’s five years old, you might be able to sell me both a car and a car loan. And if you knew that I love non-fiction and my favorite food is raan kabab, you sure can make yourself rich.

If you are wondering that’s far too much information for anyone to give, or for you to seek, STOP. Go back and re-read the paragraph. Because, you actually got to know ONLY six bits of information about me – marital status, my wife’s birthday, status on my car and house ownership, and about two of my favorite indulgences – books and the cuisine I relish the most. Yet this information can be of great use to hundreds of marketers.

The best part is that you don’t have to make me answer all these questions in one go. Most people will be happy to share little tit-bits of information about themselves, provided someone asked them honestly, and in simple, unambiguous language, explaining the reason the information is desired.

No incentive is necessary. It’s important to make me appreciate that this information will not be misused and that it is of mutual benefit.

In fact, one of the classic error committed by most over-enthusiastic marketers is to load the questionnaire with tens of unnecessary questions, the answers to which they are never likely to use. A little well planned information is all one needs to enrich one’s data.

A few examples

Let me take a few more examples to explain: If you produce and sell cosmetics, it will help you if you know the tone of the skin, length and type of hair, frequency of using cosmetics and frequency of visit to the parlors for personal grooming.

If you are selling music CDs, knowing my taste of music, whether I own a CD player or not, the amount of money spent on purchasing annually, last five CDs bought, and when, will suffice.

If you market consumer white goods, then the information that can help you could be current ownership of such products, with their years of purchase, intent to purchase in future, and if I’ve ever bought anything on installments.

To build a great database, my advice is, before you ask, ask yourself why you need to know something, how will you employ the information for mutual profit? It sure will make you data-wealthy, and your competition poorer!