Are bought databases worth it?

According to statistics published on the internet, 87% of businesses say email marketing is CRITICAL to their business. 59% of B2B marketers say email is their top channel for revenue generation. And globally, the ROI on email marketing is around 4000%.

It is little wonder businesses in want of more leads look to nurturing existing contacts as a viable way of increasing revenue.

Established businesses will often have a dormant database they can dust off and re-engage to get the ball rolling. These are referred to as ‘owned databases’ - that is, a list of people who already know the brand having worked with them in the past. 

For newer businesses with no list, or organisations who are looking to launch into a new industry vertical, there is the option of purchasing a database.

Bought databases have somewhat of a bad reputation 

There is a long-standing myth that purchasing a database is spammy and will annoy a lot of people. And historically these things have been true - to a point. 

The reasons these myths persist usually come down to 'user error':

1. People on the database usually don’t know they are on the database, which means they’re less likely to engage with any correspondence from the brand. This can damage the brand’s reputation
2. The purchaser of the database has unrealistic expectation of what the database is capable of doing for their business
3. Database quality may mean a large percentage of the people on the list are not suitable for the purchaser’s business goals 
4. There is no strategic campaign developed to engage the people on the database … which leads us back to point 1. 

Given a database can cost anywhere between $2,000 to upward of $50,000+ there is a lot of risk associated with the purchase, and even more risk involved with how you leverage your investment.

In short; the road to lead generation is littered with burnt databases and damaged reputations.

Not all purchased lists are equal

Not by a long shot.

Impressively large lists for impressively small costs are usually 'more chaff than oats' - that is, a large percentage of the people on the list will not be suitable for your business. 

The integrity of the list you are purchasing is critical to the value of the list. Smaller, highly curated lists have more potential value provided you have a strategic campaign mapped out to introduce them to your business - and then nurture them over a long period of time.

Creating a strategy prior to purchasing a list means you will know exactly what kind of list you need, eliminating much of the risks associated with purchased databases.

Owned databases

In contrast, growing a database from scratch is also fraught with challenges. Where you might save money, you will spend time, as it takes as much strategic thought and planned execution to build an truly engaged list.

Like all investments, there can be short term gains and long term benefits. It is the far-horizon pay-back which really make long term database nurture an incredible business investment.

Established businesses often already have a list of past, present and potential clients within the business which can be used as the basis of a nurture campaign. Again, there needs to be a strategy to engage, retain and convert the people on the list which fits with both your business and their needs.

What does ‘long term database nurture’ mean?

In the same way a book-keeper is a permanent role in a business, nurturing a database can also be a permanent marketing activity.

Our longest running clients have been with us for 8 years and counting. We create regular content and a newsletter for their databases. And in case you’re thinking there is something special about these two businesses - there isn’t . One is a single consultant and the other is a multinational enterprise. 

The single thing they have in common is the intersection between the suitability of the people on their database, the service they are selling, and the value of the information being shared.

Does size matter?

There is a way to work out the value of a database and it has nothing to do with the size of the list, the size of the organisation or the volume of content needed. 

So no, size does not matter. 

What matters is the potential commercial value of your database versus the cost of running an ongoing campaign.

The general rule of thumb is as follows

The higher the value of your offer, the less people you will need on your list. However, they must be the right people for your offer. 

So if the average value of a client is $25,000 and you send 12 newsletters every year, securing 4 new clients over 12 months means an additional $100,000/year. 

The cost of producing the newsletter can be around $20,000 (this is fully outsourced, there are more cost effective strategies), which may seem high but when you take the following factors into consideration, starts to look pretty attractive:

• Your sales process will be significantly shorter as people on your list will call you first when they are ready to buy
• Your reputation as an expert in your topic area will be elevated - producing content on an ongoing basis will do that
• Repeat business will increase, deepening your reputation further

You start to see the attraction, right.

Discover more the commercial value of your database here.

If you are starting from scratch and you want to start building a database, the easiest way is to create an opt-in offer to attract the right people to your business. 

You might be are looking to purchase a database; book a call with us to make sure you have everything you need to get the maximum value from your investment.

Maybe you already have a list of people you can start contacting, download our guide to starting a newsletter for your business below.