Download Using Databases

Chapter 3:
Using Databases
Overview
Topics discussed:
Types of databases
Categorization based on information in the databases
Categorization based on the nature of the underlying marketing activities
Categorization based on the database technology
The benefits of marketing databases
The uses of marketing databases
Overview
Categorization
Based on their main business functions
Databases managing business operations
Databases supporting decision-making activities
Alternate categorization:
Information included in the databases
Nature of the underlying marketing activities
Database technology used
Categorization Based on Information in the Databases
Customer
Database
Prospect
Database
Cluster
Database
Enhancement
Database
Customer Database
Data from active and inactive customers
Information included in customer databases:
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 (2)
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 130 million companies in more
than 190 countries
InfoBase 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
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:
InfoBase List: Offers a collection of US consumer data available in one source for
list rentals covering 120 million households and 190 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
SegmentsS1
every U.S neighborhood into 62 distinct areas
• 5 clusters with the nation‘s most affluent social people
(Elite
Suburbs)
Every Prizm database is categorized into groups with every group having clusters
U1
(Urban Uptown)
C1
(City Society)
T1
(Landed Gentry)
• Executives and professionals
• 3 clusters making the upper crust of America‘s second and satellite
cities
• Clusters comprise of multi-income families with school age kids
and are headed by well-educated executives and professionals
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: InfoBase Enhanced
provides a large collection of U.S customer information like telephone &
address data, mailing lists including hotline files, e-mail data
provides the ability to append the latest demographics, socioeconomic and lifestyle data to your existing in-house customer database
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
Campaign 1
Customer
List
Database
Customer
List
Campaign 2
Categorization Based on The Nature of Underlying Marketing
Activities (2)
Active Marketing Database
Strategic
Marketing
Plan
Database
Marketing
Program
Data Updates
Execution
Results
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
Organized in a tree-like structure
Example of a custom mill business database:
Inverted Database & Relational Database
Suited for direct marketing application
Has speed and flexibility to respond to unanticipated questions
Easy to add new elements, when updated information is acquired
Has the greatest flexibility
Users can create queries to extract and combine information
Examples of Relational Database:
Oracle, SQL Server, and Microsoft Access
Benefits of Marketing Databases
Ability to carry out profitable segmentation
Ability to retain customers and repeat business
Ability to spot potential profitable customers
Uses of Marketing Databases
Uses of Marketing
Database
Uses that directly
Uses that directly
influence Customer
influence other
Relationship
Business Operations
Uses of Marketing Databases (2)
Identify and profile the best customers
Develop new customers
Deliver customized messages 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
Stealth communication with customers
Uses of Marketing Databases (3)
Evaluate and refine existing marketing practice
Maintain brand equity
Increase effectiveness of distribution channels
Conduct product and market research
Integrate the marketing program
Create a new valuable management resource
CRM at Work
Emails are the most financially efficient form of direct communication between firms and
customers
Most effective day of the week to communicate with potential customer:
B2C firms: Wednesday and Friday
B2B firms: Monday or Tuesday
American Express clusters customers’ purchasing behavior data and provide upgrades or
cross-selling offers based on the customer’s change in cluster group
Accurate database clustering is important for marketers, as customer databases evolve
over time
Evolving and moving clustering system allows customers to move freely in and out of
clusters as is warranted by their purchase behavior
CRM at Work (2)
County drains, a drainage service company, has built its business around superior
customer service
Challenged to provide premium customer service, as its customer base was expanding
rapidly
Chose an adaptive database, GoldMine Premium Edition, which allowed County Drains to :
a) continue with it premium customer service and (b) proactively engage with customer to
provide more relevant services
Harrah’s Casino constantly update its customer data through the customers’ use of its
loyalty card
The updated customer data allows Harrah’s to create a customized rewards system
Success of this program can be seen in Harrah’s expansion and profitability
In 2003, opened 26 new casinos and earned $4 million more than the prior year