Customer Relationship

Management
A Databased Approach
V. Kumar
Werner J. Reinartz

Instructors Presentation Slides
Chapter Seven
Using Databases
Topics Discussed
Types of databases
The Benefits of Marketing Databases
The Uses of Marketing Databases
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?
Prospect Database
Non-customers that have profiles that are similar to the profiles of existing
customers
Segments prospects and positions the companys 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 nations 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 Americas second and
satellite cities

T1 (Landed Gentry) clusters comprise of multi-income families having 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: 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
Customer list
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 Database Campaign 2
Customer list
Database Based on Nature of Underlying
Marketing Activity (contd.)
Active marketing database








Example: Travelers case
Retention program Five touches Systematic and low-cost interactions
Result - increased retention rate; decreased defection by 5%
Database Strategic
Marketing Plan
Marketing
Programs
Execution
Data updates Results
Categorization Based on Database Technology

Hierarchical database


Inverted database


Relational 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

Hierarchical Database
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

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

Relational Database
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
other business operations
Uses that directly influence
customer relationship
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

Stealth communication with customers
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