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Do You Really Need A Customer Database?

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For over 20 years I have worked as an independent IT/Business consultant for some of the most prestigious organizations in the world including companies like Telstra, BHP, BMA Coal, Suncorp Metway and many many more. But it still astounds me, that there are still companies out in the market place, even to this day, that still don't value the need for a Customer Database. In some cases, they don't even know what it is.

Let me answer the question of whether you need a customer database - YES! But more importantly - Why?

Many large companies and even small ones will pour millions of dollars into advertising every single year to buy customers. Essentially, to buy a customer involves putting an advert into some medium, which could be the paper, yellow pages, magazines, television, radio or even using something like Google Adwords.

The customer will then ring you or visit your website, based on the advert. Whilst they are there you should be collecting the customer details so that you can follow-up with the customer once they leave. The key reason you need to collect the customer details, is that it is very rare that you will sell to the customer the first time they visit your website. By collecting their details you can follow-up with the customers to help convince them that your company is a reputable company and your products are in fact what they need. You may even find that it takes up to 27 individual contacts with a customer before they will decide to buy from you. (The statistic of 27 times is what many radio stations in Australia will use to convince you to use regular radio advertising)

By having a customer database, you will be then able to maintain that contact with the customer till they decide to buy. Let's look at it this way. If your advert costs you $200 and you only had four responses or visits, then each person essentially cost you $50 to buy.

Now if the product you were selling was only $20 each, and each customer bought one, then you would have lost $30 on each sale. Therefore, each customer was not a worthwhile investment!

However, if you had one other product that had a value of $80 that you could sell to them, and each customer bought one each of these products, you would make a profit instead of a loss by maintaining the customers’ "life time value". The bottom line is that if you don't capture your customer details into a database so that you can use them in the future, then more than likely you will go broke, because as most business people will tell you, it’s hard to sell on the first meeting, that is especially true of websites.

Essentially, once you have the customer details in a customer database you can then use a whole range of techniques to maintain contact. In an interview by a gentleman called Mr. H, in his internet business he collected his customer information and sent to each customer a Free $5 information pack by snail mail (traditional postal mail) and he did this for years. He literally kept all his customers in a shoebox. Essentially the shoebox was his customer database. I will make a point though, he does now use a computer based customer database, but the point is that by capturing the customer's details and maintaining that contact, he now does approximately $12 million a year in sales. By getting the customer to give you his details, you can than maintain that contact and build rapport and eventually you should be able to convince them to buy.

My computer training business is no different. When I started out five years ago, I had absolutely no customers and I didn't have any contacts either in North Queensland, Australia. I have built my customer database now to about 6,000 solid contacts through our traditional Brick's and Mortar business. These contacts allow me to maintain contact with them through newsletters, emails, offers etc. Having this customer base ensures that even when my advertising doesn't work, and sometimes it doesn't, I can still attract business by marketing to my existing customers. Internet Marketers will call these types of sales, back-end sales but all in all it is about selling products to yours customers that will satisfy their needs.

Does A Customer Database Need To Be Expensive?

Absolutely not! There are many ways that you can acquire a customer database. You could in fact build your customer database using database applications like Microsoft Access which comes with Microsoft Office.

Alternatively, if you’re not that way inclined you could look at other commercial customer databases. Now, in the commercial or professional world, they don't call them customer databases they will call them a CRM system or Customer Relationship Manager. Customer Databases can cost from as little as a couple of 100 dollars to hundreds of thousands of dollars.

One of the things I certainly do encourage is that when you are buying a customer database, make sure that you can export all of your data from the application and that you can update and change the database easily. A few years ago, I had looked at a number of accounting systems and customer database systems for some of our clients and we found that once you put your customer information into these systems, you basically could not ever access the data without using their application. I find this really abhorrent because if that company goes broke and the next version of Windows that Microsoft puts out isn't compatible with that application, it could literally cost you millions of dollars to re-enter the information.

Further to this, make sure that you can use other applications like Microsoft Word and Microsoft Outlook with your customer database. For example, make sure you can use Microsoft Word to do tasks like mail outs, create invoices or mail merges. In particular make sure you can use Microsoft Outlook to email your customers.

The bottom line is this. It doesn't matter whether you are running a traditional Bricks and Mortar business or an Internet Business, you must be collecting customer details so that if they don't buy from you first time you can continue maintain that contact and build your relationship with them with your customer service programs. At the very least, you can always contact those customers and ask them why they don't want to buy your products.

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