Why Do You Need a Customer Database?

When you hear the word “marketing,” what springs to mind?

Most of the time, a business’ marketing efforts focus on generating leads and seeking out potential customers. While no business should ever turn away new patrons, a singular focus on expanding your market can lead to a broad but shallow customer pool.

Here’s the thing: businesses can’t survive with customers that only buy once. Working to pull in a constant stream of new buyers certainly helps, but you’ll often rack up expenses with no guarantee of getting the numbers you need. Relying on a constant turnover of new customers can put undue strain on your resources and end up running you into the ground.

A sustainable business runs on reliable traffic. For that, your best bet is to tap a valuable segment of your audience: the customers you already have.

Snowballing Success

What’s your goal for your business? Are you aiming to break a certain revenue benchmark, or do you aspire to make a living off your online venture? Whatever the details, you’re no doubt aiming to succeed, just like any entrepreneur. However, the best entrepreneurs don’t look at success as a target — a far-off, inert mark that they need to reach. Instead, success is a process.

Think of it like wall climbing. Success isn’t the top of the climbing wall; it’s every rock and crevice that lets you pull yourself up.

Every new level you reach, every milestone you mark, comes with momentum. You might get access to more resources, gain the goodwill of valuable partners, earn the trust of a hundred new customers, the list goes on. A great entrepreneur finds ways to turn that success into the boost that carries them further forward.

That’s the kind of thinking that powers the idea of a customer database. Your existing customers already like you. You’ve already cleared that hurdle; you no longer need to expend resources to introduce them to your brand or convince them to try your product. A customer database lets you turn that success into a resource that boosts your business to greater heights.

What is a Customer Database?

A customer database refers to any collection of information from and about your business clients. It can be as simple as a spreadsheet and an info request form or as complex as dedicated software programs that record information about the customer’s interactions with you. Ideally, you’ll have all relevant information about your customers collated into a single database that’s easy to access, search, and manage.

How a Customer Database Helps You

What can you do with a customer database? Here are the top four ways you can put it to good use:

1. Personalize customer experiences

When you remember a customer’s purchases, it’s easier to streamline their future transactions based on the products they buy often. You could provide them quick links to the items they buy frequently, offer them coupons or loyalty rewards for repeat purchases, send updates on new stock, and so on. Generally speaking, if you know what customers are coming in for, then you can make it easier for them to keep coming back for that product.

You can also identify your highest-spending customers and offer incentives or rewards for their patronage. If you collect the right information, you can also figure out what factors influence their purchases, and see if you can use that to boost other customers’ purchasing habits as well.

2. Communicate better with customers

Your customers’ contact details are an important component of any client database. You can announce sales or other promos, keep your customers updated on your products and activities, and more.

That’s just scratching the surface, though: if you keep a record of how they respond to your messages and what content elicits the strongest responses, you can figure out what each customer wants to hear about and how they want to hear about it from you. Does Susan always use the coupons in your marketing emails? Do Jim and Pam ignore your emails but respond to your text message promos? With that information in hand, you can reach each customer with the message and medium that generates the biggest impact.

Your customer database will also help you contextualize customer feedback. Whether you get complaints or praises, your customer database gives you the lowdown on where your reviewers are coming from. That can lead to more insightful responses on your part, and it can make any product tweaks or service adjustments easier.

3. Save time

A searchable database can do wonders for your marketing campaign, since you can call up any customer-related info you need with a few keystrokes. Similarly, customer databases allow for better coordination between your business’ different departments. If one of your sales reps closes a deal, for example, handing off those details to the right service staff gets much, much easier with a central database.

4. Expand sales

Customer databases can be a valuable tool for long-term business growth. Armed with a data-enriched profile for each customer, you can pinpoint what other products and services (existing or in-development) you can steer them towards. Seen in aggregate, customer searches and purchasing data can help you spot growing trends that you can then prepare for.

Don’t underestimate the impact of getting your client base to work for you, either. With an organized database, it will be easy to roll out an affiliate or referral program that can turn your current customers into an effective marketing arm in their own right. Even if you skip that option, cultivating good relationships with your customers can still result in concrete revenue boosts through good reviews and word-of-mouth.

 The Bottom Line

Attracting new customers costs five times as much as retaining existing ones. What’s more, compared to their first 6 months, repeat customers spend twice as much in the six months after they hit the two-year mark as business clients. Clearly, retaining customers can dramatically boost your profits.

Here’s the kicker, though: researchers from the Harvard Business School found that customer loyalty translated to greater returns for online businesses compared to physical stores. Not only is it easier to cultivate customer relationships with the web — you’ll reap greater benefits, too.

A customer database is just one step, but it’s a crucial one. With a well-organized, accessible, and up-to-date database, you’ll have the information you need to build a loyal following and sustain your online business.