As a business owner we are very aware of the assets we own and the need to protect them. Our inventory is insured, our plant and equipment covered, we back up our computer systems each night and make sure there is someone else who can do a particular staff member’s job should they leave or be ill. Yet one of our most important assets is often overlooked, under-maintained and left vulnerable to the threat of competitors.
Your database can offer the best return of any asset you have on your premises. The value of a good database is open to debate and depends on the industry and how well its maintained. I know many in the online marketing space who believe a good list of 1000 names can earn them over $1 million per year in sales. Yet as brick and mortar retailers we can be guilty of under-estimating what a list can do for our business when used correctly.
So, what advantages can a good customer database provide us?
1. They can be targeted through multiple channels. Customers, even regular customers, need to hear a message several times before they can take action. The advantage of having a list is you can ensure this happens. Customers can be approached via email, post or social media all off the strength of the information you already know about them – and that’s a powerful tool
2. Adds value to your business when selling. When the day comes that you wish to sell, your buyer is going to want to know what you have to offer ahead of the competition. Your list will be an important part of the discussion, along with what you do with it. They are buying your business formula not just your tangible assets. Often the intangibles can contribute more to a business’s valuation than the tangible assets and your customer list can be at the heart of this.
3. It’s a cost saving. Its been proven that talking to existing customers is 6-8 times cheaper than finding new ones and can be considerably more profitable. You’ve earned your list, so why not use it?
4. You can target better. Marketing messages that speak specifically to customer wants and needs are far more effective than messages that are general. With the information about what your customer has purchased previously you can better suggest items that they are more likely to buy in the future.
5. You can measure results. An offer made exclusively to a database is measurable. Using your database for marketing can give you tangible results you can then use to roll out campaigns to other customers not on your list.
Maintaining a database is not a passive undertaking. A portion of your list each year will become redundant and there is a need to stay on top of your list so it is current and effective. You also need to be on top of current privacy laws to ensure that customers know how their information will be maintained and the way in which it will be used. As a business tool however, its power is unquestionable and as artificial intelligence continues to develop, and we gain the ability to understand our customers more and more, its value will only increase.
If you don’t currently have a list or need to make it more effective, then the time to start is now. It takes time to build, but the contribution it will have on your sales and overall business value is worth the time and effort it will require. It also takes effort to keep people on it. Email is a very effective and cost-effective way to communicate, but pointless emails will only encourage people to unsubscribe and the benefit of their details can be lost forever.
Make sure you build your list and have an effective strategy for communicating with them.