Low-tech database marketing for the holidays

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Holiday time is nigh, which has business owners and marketers everywhere scratching their heads, trying to decide how to extract the maximum cash from their holiday marketing efforts this season.

The key is to begin early and develop a sound plan with easy-to-follow steps you can carry out when holiday-mania kicks in.

Most marketers wait, end up under the gun and then get lazy and sloppy and promote an offering to their entire list with a single shotgun blast, devoid of any planning or forethought. This can result in a message to market mismatch, leading to lackluster response that can potentially endanger your relationship with your existing customers.

This year, the answer is database marketing - meaning a sophisticated analysis of your database considering buying history, demographics and sometimes even buying prediction models. But it can be costly, time consuming and very confusing. Many businesses lack the time or expertise to do this effectively and smaller databases often lack the data required to make the effort worthwhile.

But database marketing still offers tremendous opportunity for most marketers. For those who think there's not enough time to get it done for this holiday season, here's a simple and easy solution that can boost your results this season. We call it, "database marketing for non-database marketers."

A basic premise of standard database marketing is something called an RFM analysis, which takes into consideration the r ecency , frequency and monetary value of customer transactions. Typically, each factor is broken into several categories. For instance, recency = 90 days, 80 days or 365+ days or frequency = 1 time, 2 times, etc.

If each attribute has 3 categories, 27 (3 x 3 x 3) possible combinations exist. Some RFM models can wind up with hundreds or even thousands of combinations. Each of these combinations represents a customer profile and each may receive a different kind of promotion or a different number of marketing messages or a different offer altogether.

Now, let's simplify it. This low-tech holiday RFM model has only four possible combinations and is much easier to create and use for the non-database marketers in the room.

Here's how it works. There are the same three attributes: recency, frequency, and monetary value. But each only has two possible categories, as follows.

º Recency: Has the customer done business with you in the past 90 days? Yes equals 1, no equals 0.

º Frequency: Did the customer buy something from you during the last holiday season? Yes equals 1, no equals 0.

º Monetary: Has the customer spent more than the average customer has spent with you? Yes equals 1, no equals 0.

Of course, you'll want to vary the criteria based on your own business; if 90 days is too short for your repeat sales cycle, change it to be more appropriate.

Now, add up the total of the three attributes, which will be 3, 2, 1 or 0, with 3 representing the best prospects and 0 representing the worst prospects. You'll want to spend the most money and effort marketing to the 3s and the 2s and less money and effort marketing to the 1s and 0s.

Is it simple? Yes. Is it rudimentary? Yes. Will it be criticized by sophisticated database marketers? We hope so. But it's more than most marketers are doing and it is enough to help you get an edge in your marketing efforts this holiday season and squeeze more sales from your promotions.

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