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Customer Relationship Management A Databased Approach: V. Kumar Werner J. Reinartz

This document discusses different types of marketing databases including customer databases, prospect databases, cluster databases, and enhancement databases. It covers how these databases can be categorized based on the information included, the underlying marketing activities, and the database technology used. The key benefits of marketing databases are the ability to perform profitable segmentation, retain customers, and identify potentially profitable customers. Marketing databases also enable various customer-focused and operations-focused uses.

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Prasad Kaps
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97 views

Customer Relationship Management A Databased Approach: V. Kumar Werner J. Reinartz

This document discusses different types of marketing databases including customer databases, prospect databases, cluster databases, and enhancement databases. It covers how these databases can be categorized based on the information included, the underlying marketing activities, and the database technology used. The key benefits of marketing databases are the ability to perform profitable segmentation, retain customers, and identify potentially profitable customers. Marketing databases also enable various customer-focused and operations-focused uses.

Uploaded by

Prasad Kaps
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Customer Relationship

Management
A Databased Approach

V. Kumar
Werner J. Reinartz

Instructor’s Presentation Slides


Chapter Seven

Using Databases
Topics Discussed

• Types of databases

• The Benefits of Marketing Databases

• The Uses of Marketing Databases


Types of Databases
Categorization:

• Based on their main business functions

– Databases managing business operations

– Databases supporting decision-making activities

Alternate categorization:

• According to the information included in the databases

• Based on the nature of the underlying marketing activities

• Based on the database technology used


Categorization Based on
Information in the Databases

Types of databases:

• Customer database

• Prospect database

• Cluster database

• Enhancement database
Customer Database

• Data from active and inactive customers

• Basic information: name, address, zip code, and telephone number

• Demographic information: age, gender, marital status, education,


number of people in household, income

• Psychographic information: values, activities, interests, preference

• Transaction history: frequency of purchase, amount of spending

• Other relevant information: inquiries and referrals, satisfaction, loyalty


Customer Database (contd.)
• Data from inactive customers:

– How long have the customers been inactive?

– How long have they been active?

– What was their purchasing pattern when they were active?

– How much did they spend?

– How were they initially acquired?

– Why are they inactive?


Examples for Customer Database

• D&B’s U.S Marketing File: Customer database comprising of


telemarketing, direct mail, competitor analysis and other types of data
pertaining to 18.5 million small, privately owned and large publicly owned
businesses

• InfoBaseR eProducts –from Acxiom provides the user companies with the
email addresses of their customers
– email marketing - most inexpensive profit-generating marketing tool

-- to augment companies’ direct mail or other channels

of communication with customers


Customer Database – CRM at Work:
Email marketing at Blockbuster
• Email marketing :

– Targeted Personalized offers

– Reduced direct mail costs and therefore increased Net Marketing Contribution

– Additional customer touch point

– Larger number of customers visiting the company’s website

• Case: Email Marketing company Quris helped Blockbuster create its


email newsletter

– Newsletter marketed Blockbuster’s new movies (on DVD/VHS) and games to


its customers via email which also included a bar-coded coupon for customers
to print and redeem

– Results: The total ROI for the program was 96% higher than the ROI for direct
mail; for customers receiving electronic coupons, it was 144% higher
Prospect Database
• Non-customers that have profiles that are similar to the profiles of existing
customers

• Segments prospects and positions the company’s differentiated products


to the prospects’ specific needs

• Examples of some Prospect databases used in the industry:

– The InfoBaseR list: Offers a collection of US consumer data available in one


source for list rentals covering 111 million households and 176 million
individuals

– Harris Selectory Online: A prospect database from D&B which helps companies
find new customers allowing companies to:

• Qualify leads that they are developing


• Contact the decision-maker best suited to hear their sales pitch
• Research potential opportunities
Cluster Database
• Clusters defined based on geographic reference groups,
affinity groups, and lifestyle reference groups

• Depending on the membership of prospective customers to specific clusters,


firms can customize their marketing communications

• Example: The Prizm database

– Segments every U.S neighborhood into 62 distinct areas


– Every Prizm database is categorized into groups with every group having clusters

• S1 (Elite Suburbs) –5 clusters with the nation’s most affluent social people
• U1 (Urban uptown) –clusters include a good number of executives and
professionals

• C1 (City Society) – 3 clusters making the upper crust of America’s ‘second’ and
‘satellite’ cities
CRM at Work: Globe and Mail
- Example of cluster database

• Globe and Mail, Canadian national newspaper

– Created a marketing database of prospective subscribers

– Enhanced existing customer’s data with Canadian cluster codes and


demographic data, provided by Compusearch

– Using cluster data, targeted customers in the prospect database: sent


offers to prospective customers whose demographics matched that of
current customers

– Used a predictive dialing method that doubled their prospective customer


contacts per hour
Enhancement Database
• Used to transfer additional information on customers and prospects

• An overlaying process is used that eliminates duplications

• Enhancements may include demographic and psychographic data, transaction


history, changes in address, changes in income levels, privacy status, new
product categories bought recently

• Example: InfoBaseR Enhanced


– InfoBaseR provides a large collection of U.S customer information like telephone &
address data, mailing lists including hotline files, e-mail data
– The InfoBaseR Enhanced provides the ability to append the latest demographics,
socio-economic and lifestyle data to your existing in-house customer database
– A consumer goods company can use this data to better target their advertising and
marketing campaigns, expand brand reach, improve acquisition and retention rates,
increase profitability
Categorization Based on The Nature of
Underlying Marketing Activities
• Passive marketing database

– A mailing list that passively stores information about acquired


customers

– Future marketing efforts target the same customers in the list

Customer list Customer list


Campaign 1 Database Campaign 2
Database Based on Nature of Underlying
Marketing Activity (contd.)
• Active marketing database

Database Strategic Marketing


Marketing Plan Programs

Data updates Results Execution

Example: Travelers’ case


Retention program – Five ‘touches’ – Systematic and low-cost interactions
Result - increased retention rate; decreased defection by 5%
Categorization Based on Database Technology

• Hierarchical database

• Inverted database

• Relational database
Hierarchical Database

• All information pertaining to a customer will be in a master record

• Useful when the queries are standard and routine but high speed
processing is required

• Preferred in the banking, airline and hotel industries


Inverted Database

• Suited for direct marketing applications

• Has speed and flexibility to respond to unanticipated questions

• Easy to add new elements to an inverted database as and when


updated information is acquired
Relational Database
• Has the greatest flexibility, but slower speed

• Examples are Databases like Oracle, SQL Server, and Microsoft


Access

• Users can create queries to extract information from these tables


and recombine it
Benefits of Marketing Databases

• The ability to carry out profitable segmentation

• Ability to retain customers and repeat business

• The ability to spot potentially profitable customers


Uses of Marketing Databases

Uses of Marketing Databases

Uses that directly influence


customer relationship Uses that directly influence
other business operations
Uses of Marketing Databases
Uses that directly influence customer relationship:

• Identify and profile the best customers

• Develop new customers

• Deliver customized messages that are consistent with product/service usage

• Send follow-up messages to customers for post-purchase reinforcement

• Cross-sell products/services

• Ensure cost-effective communication with customers

• Improve promotion result by efficient targeting

• Personalize customer service


Uses of Marketing Databases (contd.)

Uses that directly influence other business operations:

• Evaluate and refine existing marketing practices

• Maintain brand equity

• Increase effectiveness of distribution channels

• Conduct product and market research

• Integrate the marketing program

• Create a new valuable management resource


Summary

• Effective Database analysis is important for successful CRM

• Data from active and inactive customers are important to ensure


efficient marketing function

• Marketing databases allow marketers to analyze customers and


classify them into different groups to implement different marketing
programs effectively

• Databases also enable marketers to determine critical factors


influencing customer satisfaction and take measures to retain existing
customers at lowest cost

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