CUSTOMER RELATIONSHIP

MANAGEMENT (B7-CRM-
20)
USING DATABASES
 Learning Objectives

Using Databases
 Types of Databases
 Values/Benefits of Databases
 Uses of Databases
 Types of Databases

Databases can be categorized according to the

following criteria:
1. Information included in the databases
2. Nature of the underlying marketing activities
3. Database technology
Categorization Based on the Information Included in the Databases

This categorization includes four types of databases:

1. Customer databases
2. Prospect databases
3. Cluster databases
4. Enhancement databases
 1. Customer Databases
• The customer database is the core of any marketing database.

• Marketers typically use customer databases to identify and profile the

most valuable customers and communicate with them in ways likely
to elicit a customer response.
General information that may ba included in Customer database
Basic information Name, address, ZIP code, and telephone number.
Demographic Age, gender, marital status, education, number of people
information in household, income, etc.
Psychographic Values, activities, interests, preferences, etc
information
Transaction history What transactions have the customers conducted? How
frequently do they purchase? How much did they spend?
How were they acquired?
Other relevant Inquiries and referrals, satisfaction, loyalty.
information
 1. Customer Databases

• In addition to firms collecting data at the point- of-

purchase, some companies buy large amounts of data
from third party affiliates.
• Several companies gather and sell data from public and
private sources .
• These data allow the companies (buying them) to market
their products to specific customer segments to achieve
higher net marketing contribution.
 1. Customer Databases
Example of customer database
D&B Hoovers:
• This analytics solution helps companies with improving
sales and related insights.
• This solution integrates real-time business intelligence,
sales, and marketing investment information to identify
prospects.
• Then the solution assists companies in targeting the
prospects for potential sales by integrating them in the
CRM platforms.
• Some of the information tracked by this solution’s global
database include prospect summary, competitors,
industry developments, business trends, and company
financials, among others.
 1. Customer Databases

• Note: not only active customers, but also inactive

customers should be included in customer databases.
• Data from active customers help marketers learn what
has been done well in the past,
• Data from inactive customers help to identify what
needs to be improved.
 1. Customer Databases

• For inactive customers, the following additional

information would be important to document:
– 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 they were initially acquired?
– Why are they inactive?
 2. Prospect Databases
• Prospects are noncustomers with profiles similar to those
of existing customers.
• The prospect data- base should include as much
information about prospects as the customer database
does about customers.
• The prospect database does not contain any transaction
history data.

• Marketers can use a prospect database to design

marketing campaigns to target prospects with the intent
of acquiring them as new customers.
 2. Prospect Databases
• In order to achieve the best response rate, marketers also
need to segment prospects just as they segment
customers, so that they can position the company’s
differentiated products to the prospects’ specific needs.

• Large-scale promotions to all the prospects should be

implemented only after the prospect list has been tested
on an experimental basis and has proved to be promising.
 2. Prospect Databases
Example of prospect database
Harris Selectory Online:
• This is a prospect database from D&B that helps
companies find new customers. Such a database allows
companies to:
– Qualify developing sales leads.
– Contact the decision maker best suited to hear their
sales pitch.
– Research potential opportunities.
 3. Cluster Databases
• Cluster databases include information about relatively
small clusters.
• These clusters could be defined based on geographic
reference groups (such as a ZIP code area), affinity groups
(e.g., clubs and associations), and lifestyle reference
groups.
• People in the same cluster tend to have common or
similar interests, attitudes, purchasing habits, and
preferences
 3. Cluster Databases
Example of cluster database
Prizm database
• The Prizm database segments every U.S. neighbourhood
into 62 distinct areas.

• Companies can use these databases to identify their

potential future customers, locate them, and determine
how to reach them in the most effective way.

• Every Prizm database is categorized into groups, each

group having several clusters.
 3. Cluster Databases
Cont. Prizm database
Some of the groups in the Prizm databases follow:
• S1 (Elite Suburbs): The five clusters in group SI are the nation’s
most affluent Social people.
• UI (Urban uptown): These clusters include high concentration of
executives and professionals.
• CI (City Society): The three clusters of group Cl make the upper
crust of America’s second and satellite cities.
• T1 (Landed Gentry): The clusters in this group are made of
multi-income families having school-age kids and are headed by
well-educated executives and professionals. This is the fourth
most affluent group in the United States.
 4. Enhancement Databases
• An enhancement database is used to transfer additional
information about 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, and
new product categories bought recently.
 4. Enhancement Databases
Example of Enhancement database
InfoBaseR Enhanced-InfoBaseR
• provides a large collection of U.S. customer information such
as telephone and address data, mailng lists including hotline
files, e-mail data, and so on in one single source.
• The InfoBaseR Enhanced provides the ability to append the
latest demo- graphics, socioeconomic and lifestyle data to your
existing in-house customer database.
• A consumer goods company could use this data to better
target its advertising and marketing campaigns, expand brand
reach, improve acquisition and retention rates, and increase
profitability.
 Categorization Based on the Nature of the Underlying Marketing
Activities

This categorization includes two types of

databases :

1. Passive Marketing Databases

2. Active Marketing Databases
 1. Passive Marketing Databases

• Passive marketing databases involve generating a customer

list and then storing this list in the database.

• Future marketing efforts target the same customers in the list.

• The database is only a mailing list passively storing

information about acquired customers, and has no active
influence on the company’s strategic marketing decisions.
• Passive databases are often used in smaller companies that
lack the resources to actively track customers and update
databases. Rather, these firms periodically purchase third
party mailing lists from data vendors.
 2. Active Marketing Databases

• Marketers can use an active database to develop strategic

marketing plans.
• Every individual marketing program designed to carry out
the plan will then be data-driven.
• After marketing programs are executed, the results are
used to update the database.
• The updated database can then be used to help marketers
adjust or redesign the strategic marketing plan
 Passive database vs. Active
database
Passive database

Active database
 Categorization Based on the Database Technology

This categorization includes three types of databases :

1. Hierarchical Databases
2. Inverted Databases
3. Relational Databases

Note: the term database, in this context does not refer only to marketing
databases
 1. Hierarchical Databases
• A hierarchical database is useful when search queries are
standard and routine, but require high-speed processing.
• Hierarchical databases are preferred in the banking,
airline, and hotel industries.
• A hierarchical database is organized in a tree-like
structure, similar to that of a family tree.

• In fact, the different levels of the hierarchy are even

referred to as a parent/child relationship
 1. Hierarchical Databases
Example of a hierarchical database
 2. Inverted Databases
• Inverted databases are suited for direct marketing
applications because they have the speed of a
hierarchical database and also the flexibility to respond
to unanticipated questions.
• It is also easy to add new elements to an inverted
database as and when updated information is acquired.
• Examples of inverted file systems are Model 204,
Adabas, and Computer Associates’ Datacom/DB.
• These vary in their processing speeds and flexibility in
the implementation environments.
 3. Relational Databases
• Relational databases are composed of many simple
tables.
• Users can create queries to extract information from
these tables and recombine it.
• This capability means that when compared to other
types of databases, relational databases have the
greatest flexibility.
• However, this flexibility also means the speed of
processing is somewhat slower.
 3. Relational Databases

• Databases like Oracle, SQL Server, and Microsoft Access

are all relational databases.

• Each one of these has different interfaces and

capacities.

• Its use in organizations today depends on the size of the

database marketing initiative.
Benefits of Marketing Databases
• The Ability to Carry Out Profitable Segmentation

• Retained Customers and Repeat Business

• The Ability to Spot Potentially Profitable

Customers
 Uses of Marketing Databases
Uses that Directly Influence the Customer
Relationship
• 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
• Ensure cost-effective communication with customer
• Improve promotion result
• Personalize customer service
• Stealth communication with customers
 Uses of Marketing Databases
Uses that Directly Influence Other Business
Operations
• Evaluate and refine existing marketing practice
• Maintain brand equity
• Increase effectiveness of distribution channels
• Conduct product and market research
• Integrating the marketing program
• Create a new valuable management resource
 Value of CM Systems
• https://youtu.be/fbNPq-ZLzMM
 Next Lesson

Using Databases Cont.

 The Need for Data Mining
 The Data Mining Process