Use of Database Marketing for Acquisition

Database marketing is also highly useful for acquiring new customers. The first step is to apply lifetime value analysis to existing customers to determine the characteristics of the most profitable and the least profitable customers. This analysis can be used to steer the sales force toward recruiting the right sort of people in the first place. Frederick Reichheld, in his path-breaking book The Loyalty Effect, showed us that some people are inherently loyal, whereas others tend to be disloyal. If companies concentrate on recruiting loyal customers to begin with, they will have a much easier time retaining their customers once they are acquired.

In business-to-business customer acquisition, customers can be scored using Dun & Bradstreet data, such as Standard Industrial Classification (SIC) codes, annual sales, number of employees, and other such data. By using this type of appended data, enterprises can learn which types of companies are most likely to buy which of their products. Their acquisitions can be accurately targeted.

In consumer acquisition, cluster coding has proved useful in many cases. Cluster coding systems, marketed by Claritas and other providers, segment the U.S. population into 62 different clusters based on lifestyle, with catchy names like Shotguns & Pickups, Money & Brains, Furs & Station Wagons, Pools & Patios, and Hard Scrabble. If you apply these clusters to your existing customer base, you may discover that your services appeal primarily to 30 percent or so of the 62 possible clusters. Marketing to the remaining 70 percent may be a losing proposition. By concentrating your acquisition resources on the prospects that are most likely to buy, you can increase your success and your profits. Cluster coding works for only a few products and services, but where it works, it is well worth the money.