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Building your Database Part 2: Organic Development

I don’t care if you work out of your house on a little iPhone app you dreamed up or whether you work for a multi-bazillion dollar Fortune 100 company, we all want a bigger database of customers and potential leads.

So where do you start? How do you continue to grow your database?

Today, most people turn to building their database organically as it is the most cost effective option. Organic database development uses your current assets, current customers, past customers, friends, neighbors, relatives… anyone in your database to collect new names. It also reengages your current database, and helps you clean those contacts up by getting new, up-to-date contact information. We have all seen the ‘Refer A Friend’ promotions that ask us to update our info, and ‘refer’ someone we think might be interested in this ‘limited time super savings discount,’ ‘free membership’ or whatever else the company throws at us as a benefit/temptation.

It is not wise, nor prudent, to build your database using an all organic method.  A number of things could happen including the majority of your contacts coming from the same company, the same city, have similar job titles/functions, or the same industry.  Some of these occurrences may sound positive, but take my word for it; none of these occurrences in your database are good.  Put it this way, managing your database is very similar to managing a 401K portfolio.  The key is diversity.  Your database should have a range of different companies, different job titles, different locations (even if you sell a geography based product), and different industries.  The rational for this is protection from “jolts”.  Diversity in your database protects you from jolts in different segments of the economy.  The storm will come but a diverse database will have segments that will be protected from the wind.

So, what is organic database development? Organic database development is, essentially, using your current database source to collect new names while keeping your current contacts and their contact information up to date.  Why it is so cost effective is you don’t have to pay for the source names?  In all other database building methods you have to purchase or rent the names you want to acquire and use.  With organic methods, you use the existing (paid for asset) to get new assets.  So the next logical question should be how?

Organic database development works because we live in what many would now call a viral world.  Think about how quickly YouTube videos become sensational news stories, and saturate water cooler conversation. With social media adoption at levels no one could have predicted 10, 5, or even 3 years ago (Think about this…as of January 2011, there were 500 million Facebook users. That is 1 in every 13 people on Earth!), it has become even more viral.  The industry jargon used for this is pass-along or word-of-mouth. Some real-world examples include:

  • In telemarketing, getting a customer to refer someone else to call on that may be interested
  • In direct mail, the actual physical pass-along of the brochure/catalog/mailer/etc
  • In email it is the wonderful forward function or the Share-to-Social or Share-With-My-Network links (SWMN) that allow you to pass the information along to other people

The first step in creating a solid and consistent organic database development program is building what we will boil down to a referral model.

  • Do all your sales people ask for a referral?
  • Do you have contests where the base of entry is providing multiple referrals?
  • Do your follow-up questionnaires or surveys ask for referrals?

Where ever it makes sense, ask for a referral.  It is free, it is easy, and only your best customers give you referrals and that is what you want.  Because they trust you and believe in your product, they will provide you with good, quality names. And remember, this is both a B-to-C and a B-to-B tactic.

The second step, for most people, in creating a solid and consistent organic database development program is to hire an Email Service Provider (ESP).  Yes that is right; Outlook is not going to cut it. You do not need to have the ESP do your email marketing for you (you can if you want, but it will cost you), but an ESP will provide you with increased deliverability services, they will make sure your IP does not get blacklisted by the major service provides if you happen to get flagged as SPAM, most will provide you with features that help you with building forms on your site, and all will help you with maintenance/growth of your email database. They will help you to segment your contacts by things like geographic location, by industry, by title and by previous purchase.  Proper segmentation will make help ensure you don’t piss off your email database by sending them irrelevant email.

So now that you are setup with a state-of-the-art email marketing platform, how do grow your database…the point of this whole post?  What better way to grow your database than to offer your current customers something for free. Don’t go all Price Is Right and offer them a new car. And it isn’t a newsletter.  BORING!  You need to look at contests that are relevant and fun, but better than contests are industry specific knowledge.  Yes, you got it – white papers and web seminars.  Nothing builds a database faster than offering free, NON-MARKETING industry or functional knowledge.  We have seen net new names upwards of 40% when emailing our existing database free knowledge offers.  Your database will forward relevant offers of free knowledge to their friends, coworkers, and colleagues, which results in more, relevant contacts in your database.

Third, and equally important, is to ask for contact information on your website.  Whenever and wherever it makes sense ask website folks for their email address.  It is as simple as “Join our mailing list,” or fill out such and such form to get some type of information. You drive people to your website through all types of marketing, both online and offline, so why not be collecting names and growing your database here as well.

Keep in mind that there are a few hindrances in developing a purely organic database. If you are one of those bazillion dollar multi-national Fortune 100 companies, you probably have less to worry about. For smaller companies or those just getting started, read carefully.

A number of things can happen with an organically developed database that could potentially have negative effects on your performance (if you are not careful).  Things to watch out for are the majority of your contacts coming from the same company, the same city, having similar job titles/functions, or being from the same industry.  Now some of these occurrences may sound positive, but in the long run none of these occurrences in your database are good. They potentially limit you and open you up to what I like to call ‘Jolts.’ Diversity in your database protects you from the inevitable storm.  The storm will come, but a diverse database (of qualified and relevant contacts) will have segments that will be protected, and get you through these tough times. For instance, in 2008 you would not have wanted your entire database to be made up of financial institutions and banks. You want to manage your like you would manage a 401K portfolio.  Again, the key is diversity.  If you find yourself lacking diversity, then you may need to look at other ways of growing your database, like purchased lead generation programs or name rentals.

Remember, over time even the best organically developed database may have to look at a redistribution strategy.  You may find out that you are getting too many names from a particular segment, and you may either need to stop working that segment for a while or move to some “purchase” database building methods to get a more even distribution.  It is more difficult and more expensive to get those folks, but eventually, every source needs to be replenished.

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