The high cost of database neglect

I’m constantly amazed at the level of database neglect I see in businesses today. With all the tools and information readily available to us, we could all have powerful customer databases that could build our business every single day. An up-to-date database can provide clues into valuable insight, like buying patterns and behaviors. How often does your customer buy? Has their normal pattern changed? Do you know why? What does your customer buy? Is there an opportunity to up-sell or cross-sell? Do they have a service contract? If so, when is it up for renewal?

Yes, it takes time to maintain a database, but look at the return on that investment. Let’s say you have 100 customers, each with a $1,200 annual service contract, which means $120,000 income for your business. How many will automatically renew? Do you know who might be unhappy? You could use your database to segment those customers and send them a satisfaction survey three months before renewal, which gives you time to mend fences if they have problems with your service. It also gives you the opportunity to reach out and communicate with a customer to whom you could sell additional products or services. So, not only could you protect $120,000 worth of revenue, but you could possibly increase it—all by committing to maintaining and using your database.

Maybe a vendor launches a significant product or software upgrade. You look at your shiny new database and see the number of customers who are eligible for this upgrade. You can then figure how many will trade up. Multiply that by the cost of the product and calculate your margin for those sales. A database makes it easy for you to get the sales history and make the calls to generate sales. It also aids in forecasting and in identifying sales opportunities.

A database is simple to start. Enter your customers and their contact information. Include the purchasing agent as well as the key decision maker and any influencers in those buying choices. Then add in purchasing history. Make sure you have separate fields so you can segment by industry code, product and version number, purchase date, purchase amount, service renewal date, et cetera.

When I hear someone say that they don’t have the time or money to invest in a database, it takes only a few quick calculations to show that they can’t afford not to have one. Do the math. And also remember that your competition is probably using this tool to their advantage.

How are you using your database to build customer relationships? Please share your successes and ideas here.


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