Impress customers with what you know about them

By Kim Komando

Some businesspeople seem to remember everything about their clients. Perhaps they ask about your recent trip to Yosemite with your three boys. Or maybe they bring up the remodeling of your kitchen.

How ever can they recall such mundane facts? Easy. They didn't call Miss Cleo. They constantly update certain facts about you using their computer. They keep the equivalent of a high-tech black book that those of us in the know call a database.

Taking it from the top

In case you don't know, a database is an electronic compilation of your data. If you need information about a customer, Joe Jones, you enter his name in a box. Depending on how your database is constructed, you instantly retrieve data on what he has ordered, his payment history, his address or whatever you need. No more fishing around through paper files!

Many people already have a database and don't know it. Contact managers such as Microsoft Outlook and Act! are databases. But they focus on contact information. If you have Microsoft Outlook 2003 with Business Contact Manager, included in Microsoft Office's small-business and professional editions for 2003, you have a repository for sales and related customer data as well as for contact information.

Developing your own database allows you the ability to save whatever information you want to save. Unfortunately, databases are more difficult than, say, word processors. But you can learn to develop one — or you can contract for the work. Either way, you're smart to have one.

There are two basic types of databases: flat file and relational. If your needs are truly basic — for instance, a list of customer names and addresses — you can get by with a flat-file database. They're cheap. Microsoft Works includes a flat-file database that will get the job done.

Don't start entering names yet. We've got some more things to cover first.

A relational database is more flexible

Flat-file databases can cause you problems as your business grows. More about that in a moment. I recommend that you bite the bullet early on, and go with a relational database. These are harder to learn and more expensive to develop, but they are much more flexible.

Small and medium-size businesses should use programs such as Microsoft Access and Apple's FileMaker, which is also available for Windows. These are very powerful relational databases, which will hold a huge amount of data. They can easily be hooked to the Internet, so customers can browse your products online. (Larger businesses should check out Microsoft's SQL Server.)

The appeal of flat-file databases is their ease of development. Let's go back to your customer, Joe Jones. All of his information is in one record. You have his name, address, company name and the employee from your company, Bertha, who services that account. Simple, huh? You can easily access his information with a query to the database. Or you can get a list of people whose accounts are serviced by Bertha.

Now, let's say Bertha services hundreds of accounts. Suddenly, she resigns. Eric takes over her accounts. You need to go into hundreds of records, and change "Bertha" to "Eric." Please! I'll have a root canal instead!

The truth is, Joe Jones' record is going to include a lot more data than four fields. You need payment information, customer numbers, where he banks, product preferences, pricing data, family information and so forth. You could easily have dozens of fields. And you could spend all of your time updating them. Suppose a product price were changed. Every record in which the product appeared would have to be changed. This is a classic example of technology taking over your life.

To database aficionados, this is an "update anomaly." There are two other anomalies: "insertion" and "deletion." I won't go into them. Believe me, you don't want to know.

In the bad old days, very complicated flat-file programs were developed to help eliminate anomalies. But there was a screaming need for something better. It's here. Read on.

Entering data in tables

Enter the relational database. Instead of putting Joe's information into one huge record, it's broken into tables. Bertha and Eric, for instance, are in your employee table. Joe is in the customer table. Payment information is in a third table. And so on.

When you want a list of Bertha's accounts, you run a simple query. It chooses the data you need from the various tables. If Eric takes over her accounts, you make a simple change in the employee table or query. For the user, it really is simple.

Unfortunately, relational databases are more difficult to develop. You need to think about which information goes into which table. Then you have to establish how the tables relate to one another. This is the relational part!

The programs themselves include information on how to do this. You may find this somewhat less than enlightening. If that's the case, there are lots of books that can help. Some are good, some aren't. Amazon.com lists about 12,000 books on Access. There are more than 300 on FileMaker. So how do you choose?

I recommend that you sort them by reader review. At the top of the page listing the books, you'll find a drop-down box marked "Sort by." Choose "Avg. Customer Review." Customers have given dozens of Access and FileMaker books the highest mark: five stars.

Of course, most business owners are already buried. They don't have time to develop a database. If that's you, think about a contractor. You'll find many in any metropolitan telephone book. They're on the Internet, too.

Like books, contractors run the gamut from excellent to awful. I'd pick a contractor through recommendations. Do they belong to the local chamber of commerce? Talk to other members. Or try a trade group. Everybody needs a database. You should be able to find someone who's had a pleasant experience.

If that doesn't work, every city of any size has a computer groups, both PC and Apple. They may well include database developers.

There are some important things to remember when you deal with a contractor. He or she has to understand your business. Be prepared for long conversations about your needs. The more the contractor knows, the more likely you'll be happy with the final product. A good contractor will ask you lots of questions.

Get a generous amount of documentation

You should insist on thorough documentation from the contractor. Regular maintenance will be needed to keep the database up to date. You may change contractors in the future. The new person will need to understand what the first contractor did.

Also, be sure to specify in the contract that you own the development data. You don't want someone else deciding in the future whether your database can be changed.

You also should consider hooking your database — or a portion of it — to your Web site. This is not too difficult. Any good database designer should be able to handle it. Again, documentation is important. Web sites take regular maintenance.

A database will quickly become the heart and soul of your business. It will place virtually all of your business information at your fingertips. That is obviously convenient. It is also dangerous. If something happens to those database files, you're in big trouble.

So back them up. You can use tape. Or you can burn the files to a CD, copy them to another computer or even send them to a site on the Internet. An off-site backup is best. You wouldn't want to lose both the original data and the backup to a fire or theft. But whatever you do, don't fail to do backups!

We all know that it's easier to resell a current client than drum up a new one. That's why it is so important to keep track of the ones you have. And here's where the power of a database can help your business grow.