Database Marketing differs from traditional marketing in that the traditional approach is usually about generating the next sale, while database marketing is more about generating future sales; hopefully across the entire lifetime of the prospect or customer.

For example, let's say your product or service typically sells for $60, the return on investment analysis of traditional marketing is focused on that $60 sale, and success is largely viewed on the basis of generating as many $60 sales as quickly as possible.

However, let's think about the reported historical statistic¹ that for every $100 we spend on advertising products and services, less than $20 is dedicated to retaining the customers we already have. That means $80 out of every $100 is dedicated to acquiring new customers—convincing prospects to try your product or services for the first time or to switch back from a competitor's product.   With such a high percentage of time and money is invested in trying to find and convince new customers, the customers that we have already acquired are greatly ignored.

Since we know it is much more efficient to generate incremental sales from existing customers, wouldn't you agree that spending 80% of your marketing resources to attract new customer sales is backwards?  More often than not, marketers reward the hardest to find, hardest to acquire, hardest to keep customers with offers and incentives, while the most consistent customers, who have paid full price for products and services, are not rewarded for their patronage. Doesn't it make sense to show appreciation to the most loyal of all customers?

Database marketing is the development of an organized, outbound, appreciation marketing plan that is designed to retain customers and also to grow customer share— increasing the amount of business each customer does with your company.