Database marketing is defined as the “practice of leveraging customer data to deliver more personalized, relevant, and effective marketing messages to customers”, and will help brands to improve their customer experiences. By using database marketing, marketers can use the information that they have collected on their customers, including their purchasing history, website and email behavior, and social network activity, to improve customer engagement, increase loyalty, and better their customer retention rates.
The importance of database marketing is growing faster than ever and will be a crucial tactic for marketers to adopt as they, and their customers, start to think about life post-pandemic. Efficient customer data management will be central to this, as database marketing will only ever be as good as the data available. Our recent Customer Data Excellence report showed that 41% of Customer Data Platform (CDP) equipped organizations strongly agree that they have full view of their customers across digital and offline interactions with their brand, versus just 5% of businesses without a CDP.
To help brands prepare for the expected changes, we are going to run through four database marketing strategies that marketers will need to implement in 2021.
1. Using Identity Resolution to create a Single Customer View
Identity resolution enables you to create an accurate profile of your customers by matching all online and offline databases and using identifiers to match every piece of data to a known or unknown customer profile. This allows you to build a unified, complete, and trustworthy Single Customer View (SCV) of your customers and remove potential duplicates from your database. With this SCV, you can better understand your customers’ touchpoints, what products they are most interested in, and how they are interacting with your brand and across which channels, ultimately leading to the creation of a Golden Record to improve your understanding of their customer journey. This information can be leveraged in your marketing campaigns to help you provide your customers with a relevant offer or message, on their preferred channel, at a time which is convenient for them.
Identity resolution will be an important database marketing strategy in the coming months as countries ease their lockdown restrictions and will help marketers communicate effectively with their customers. For example, the roadmap out of lockdown will vary from one country to another. In the United Kingdom, each of the four nations will follow different rules, with non-essential retail in England opening on a different date to stores in Scotland. This means that, as a marketer, you can use identity resolution to identify customers who previously preferred in-store shopping, by geographic region, and target them with accurate and relevant messages regarding when their local store is reopening, and perhaps offer them a special discount on in-store purchases to entice them to visit.
2. Unified channels
As traditional brick-and-mortar stores prepare to re-open, you need to keep up with changing customer behavior. Over the last twelve months, we have seen a shift towards the ‘hybrid consumer’, a customer happy to buy in-store or online, which has caused problems for brands trying to adapt to the shift in buying journeys. The hybrid consumer isn’t expected to be going anywhere in 2021, so as a marketer, you will need to determine which customers have made a permanent shift to digital and how many are expecting to gradually return to in-store shopping when possible.
Our research shows that 53% of customers plan to maintain their status as hybrid shoppers and will increasingly mix both online and offline shopping in 2021. This means that, if you want to secure a share of the money that will be spent once the high-street reopens, you will first need to understand where, and how, your customers will be buying.
Unifying data from channels will give you a clear picture of your customer’s interactions and engagements with your brand, both online and offline, in one central system. Armed with this information, you can deliver a personalized customer experience, display relevant messages, and ultimately capture their business.
Say your customer purchases a jacket in-store. With unified channels, this purchase will be visible to all of your teams on a central system. This will allow your email marketing team to remove the customer from any emails relating to the jacket. Instead, they can send your customer an email promoting a pair of trousers that would match their jacket, thus providing a seamless customer experience and increasing your chances of cross-selling.
However, if your channels are fragmented, the outcome might be different. In this instance, your customer purchases a jacket instore, however this information is not visible to your email marketing team due to siloed systems. Therefore, the email marketing team sends the customer an email promoting a jacket they have already purchased. Even worse, the email may include a special offer which would have saved your customer money, which is likely to annoy them and impact their loyalty towards your brand.
So, being able to monitor and understand the behavior of hybrid customers, and act on that knowledge to create personalized experiences, will be critical to driving sales, now and in the future.
3. Customer segmentation
As a marketer, you need to form a perceived one-on-one relationship with your customers, but this is only possible through segmentation and personalization. We have already established that you have access to an extensive amount of data on your customers, which can be used to power the segmentation process.
For example, Recency, Frequency, Monetary (RFM), an advanced method of segmentation, scores customers based on the three traits, and will use the data you have collected, including purchase history and brand engagement, to better predict your customer’s future behavior, forecast customer lifetime value, and calculate the likelihood of customer churn.
Using RFM segmentation, you can identify your best customers (those with the highest score) or your worst customers (those with the lowest score) and use this information to understand the common characteristics and behaviors within these groups. These insights will help you to create a more vivid picture of your target market, meaning that you can allocate your marketing budget more effectively and sharpen your communication with existing and potential customers.
4. Capitalizing on the benefits of first party data
First party data is defined as “the data that your company has collected directly from your audience – made up of customers, site visitors, and social media followers”, and it is often used for predicting and forecasting customer behaviors.
Over the last 12 months, competition has been fiercer than ever, and the battle is set to continue in 2021. Despite this, we know that marketers are wasting effort and budget to create mis-targeted ads. With first party data, you can create an Ideal Customer Profile (ICP) and improve your understanding of your customers. An ICP can help dynamically power ad audiences and remove the customers for whom the ad is irrelevant, thus avoiding wasted budget and misplaced adverts. As a result, you can generate improved engagement across multiple online channels and optimize your campaign results.
Furthermore, the insights derived from first-party data analysis can significantly improve your ability to deliver personalized customer experiences, as you’ll be able to dive deeper into their preferences and purchasing motivations which you can use in your communications. This is particularly useful for brands when trying to mitigate cart abandonment.
With first-party data, you can see exactly where in the customer journey your customer drops off, thus enabling you to identify the problem. For some customers, they might drop off at the checkout stage, hinting that the total price could have been too high. For others, they might leave at the create an account stage, suggesting that they don’t want to go through the effort of filling in their personal details. In these cases, you can use this information and focus your efforts on resolving the problem. To solve this, you could email them a discount code or offer them free shipping as a small gesture or add a ‘checkout as guest’ feature. Either way, being able to act on the knowledge derived from first-party data will be key to gaining competitive advantage and rebuilding brand loyalty post-pandemic.
There’s no denying that effective database marketing will be vital for brands this year, however your database marketing strategy will only be as good as the data you hold. If your data is fragmented, inaccurate and held on siloed systems, you won’t be able to capitalize on the benefits it has the potential to deliver.
BlueVenn’s unique Customer Data Platform and Omnichannel Marketing Hub unifies your data and offers a range of features, including identity resolution and RFM segmentation, to help you get the most out of your marketing database. Furthermore, with our Facebook and Google integrations, you can use your first-party data to power your ad audiences and optimize your marketing campaigns.
To see how BlueVenn can support your database marketing strategies in 2021, download our Retail Study report for more information on the rise of the hybrid consumer.