Just about every company has a database or two of customers and prospects. But how you set up and manage that database has a lot to do with whether or not you can use the database to help market your company.

One of the biggest advantages of having a database of customers and prospects is being able to send marketing messages to them. For prospects, many marketing experts say that it takes multiple messages, from you to a prospect, before he will buy something from you. And the number of messages needed to get him to buy tends to increase, the higher the price of your products or services. For customers, when they hear from you again, it keeps you higher in their awareness and will tend to prompt repeat sales.

But one of the most important aspects of marketing to a database of customers and prospects, is being able to send the right message to the right type of person. Have you ever gotten a marketing message urging you to buy something you'd already bought? It's vital to send the appropriate message to the person. But how do you know which people are which?

Categorization
That question brings us to categorization, which is the thrust of this article. It's vital to categorize the people in your database, according to several important criteria. These are:
1. Source 2. Status 3. Type
I'll explain each of these in detail.

1. Source: This means basically where did the reach from that person or company come from originally? In other words, what prompted them to contact your company originally?
If a person originally reached to you from a direct mail piece, or from a newspaper ad, or from your web site, or through a promotional email, or through a paid search engine ad, you need to record this in the database record. In other words, you need to set up a "Source" field in the database, and record what caused them to reach, in every single case.
How you go about doing this can be quite a subject. The best way I have found to do it is to create numerical codes, for each type of promotional action that you use. For instance, you might assign the 2000 series to direct mail. Then your first direct mail piece gets assigned the code 2001. The next one is assigned 2002, and so on. When someone reaches from that mail piece, you enter them in the database, and in the Source field, enter 2002. Later you can tell how many people responded to that mail piece, and how many of those people became customers.
You could assign the 3000 series to magazine ads, then assign your first ad 3001, the second 3002, and so on.
The key in implementing a sourcing system is to always ask the prospect what caused him to respond. In cases where it is possible, you put the code right there on the mail piece, in the ad, etc.

The reason you do this is so you can easily track how many people respond to your promotional actions, and you can later track which promotional actions resulted in the most sales.

2. Status: another important way to categorize your prospects and customers is according to a "status" system. This is a system where you create or name a series of steps that a prospect will go through on the way to becoming a customer. For example, for some businesses, a series such as this might be appropriate: a. Lead b. Sent literature c. Phone follow-up contact d. Meeting set up e. Meeting done f. Closed, contract signed
The sequence would be different for each business. You would have to work out what works best for you. It is also a good idea, in the case of repeat sales to create some statuses that extend after the point of first sale, such as second reach, literature sent, new meeting set, etc.
Once you have a system, you have to then go through your database and assign a status for each person in it. This can take some time, but is very worthwhile. Because then, you can write sales letters and emails and send them out to your prospects. If you are in a situation where you collect email addresses for your prospects, you can send out a series of emails to people to move them along in the sales sequence (and in that case, it's free). And because you know what "status" they are in, you can write something that speaks specifically to where they are at.

Of course it's also vital, once you set this system up and assign statuses to everyone, that once someone's status changes, you have to make that change in the database. That way the information will continue to be up to date.

3. Type: Not every business will need this. What it means is the type of person that he is. I don't mean "customer" versus "prospect," which would be covered by statuses. I'll give you an example of what this would mean in, say, a real estate sales office. You could have types like "buyer," "seller," or "refinance." In other words, for a business that sells multiple products or services, which type of prospect is he?
If your business sells only one thing, you might not need this. But for most, this is a vital category to set up.

Summary
For each of "Source," "Status," and "Type," set up a field in your database, get the data entered for all existing records, and then keep it up to date. I worked with one company that had one field with all these categorizations sort of mushed together. Obviously that didn't work and we had to separate them out.
With all three of these set up, you can then market effectively to those people, send them messages that are relevant to them and speak to where they're at, and that can increase your marketing effectiveness greatly.

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John Eberhard is President of RealWebMarketing.net (http://www.realwebmarketing.net), and is a marketing consultant, writer and political analyst living in Los Angeles. He can be reached at http://www.realwebmarketing.net/contact.html