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Buying Data vs Growing Your Database Naturally

January 5, 2016

Not every business has a customer base the size of Coca-Cola or Unilever with millions of active customers which is increasing with subscribers daily. For the average business the constant struggle is - how do I grow my customer base?

There are two overarching methods to increase your customer base, buying data such as a mailing list which gives a company and instant boost to their databases. Alternatively you can grow your database naturally through a variety of tactical methods. We will look through the advantages and disadvantages of both these routes.

 

We’ll take a look first into the concept of buying a mailing list.

 

Advantages:

  • Tailor made – Depending on your budget, you can source mailing lists to meet your companies exact specifications

  • It gives you an Instant boost to the database – Buying data can boost a database size overnight for example from 1,000 customers to 100,000!

  • Customers are used to receiving purchased mailing lists communications – When someone ticks the opt in for 3rd party content, there is in part an acceptance they will receive some type of communication attempting to cross sell another product/service to them in the future.

Disadvantages

  • Spammer Status – If customers start complaining about receiving unwanted emails from you they may well complain directly to you but they may also voice their thoughts with their friends and family.

  • Expensive – Purchasing data is not cheap and can burn through a large portion of a company’s budget.

  • Nothing is guaranteed – Just because you have spent £100K on a mailing list does not mean you will get a ROI.

  • Company reputation – Once your brand is known for spamming, you will lose trust.

  • Lack of a connection with customers – As your data has been bought you are likely to be an unknown entity to recipients.  Response rates are likely to be far less than normal as a result.  Open rates – Mailing lists have an open rate of about 5%

  • Blacklisted from ESPs – Constantly buying mailing lists can alert ISPs (email providers) who will blacklist you.  Once this happens it could potentially affect your overall marketing plans to communicate with customers if the email channel becomes unavailable.

 

We’ve now highlighted the benefits and limitations of buying mailing lists. We will now look at the benefits and limitations of growing your database naturally;

 

Advantages:

  • Quality over quantity – Its more profitable to have a smaller more detailed and nurtured customer base where you fully understand a customer’s preferences and purchasing behaviour, over a large source of largely unknown records.

  • Cheaper option – Considerably less expensive to grow your customer base naturally, albeit it obviously takes time.

  • Get to know your customers – Over time you can get to know your customers and find out what makes them tick. For example what do they click on, not click on.

  • High response rates & less unsubs – By knowing your customers you can tailor communications to different segments who will engage at a higher rate.

  • Customers have made their own decision to subscribe – Your customers have made a personal decision to subscribe to your communications, which means they are more likely to engage in the future.

  • Opportunities to refer a friend – The best form of marketing is word of mouth, potential customers are more likely to be persuaded by friend who is already a satisfied customer in your database.

Disadvantages:

  • Slow process – Growing your customer base naturally won’t happen overnight and the process requires more creative and long term planning.

  • Need to be resourceful – There is no quick fix to growing your database in this way, techniques like blogging and surveys can be time consuming.

  • Limited communication reach – growing a customer base tactically will leave you with a limited recipient list in the short term, whereas buying data you can a large target audience straight away. 

 

Although buying data has its benefits like an instant boost to your customer database companies cannot solely rely on this method for growth. The long term sustainability will come from nurturing your customer base slowly as these will be your most loyal customers. Buying data does deliver a quick fix but results are far from guaranteed and you can quickly burn your marketing budget on thousands of uninterested leads.

Remember good things come to those who wait!

 

If you would like to hear more about how we could assist you in regards strategies to increase your customer base please don’t hesitate to contact us.

 

 

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