Direct, Digital &

Data-Driven
Marketing
© Lisa Spiller
 Chapter 2
Database marketing and
customer relationship
marketing
Chapter spotlight

• Dick’s Sporting Goods

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Customer database defined

• A customer database is a list of customer names to which

the marketer has added additional information in a
systematic fashion.

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A customer database is…

• The heart of all direct and interactive marketing

activities.
• The key to developing strong customer
relationships and retaining customers.

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Why do loyal customers generate
more profits?
• Loyal Customers …
– Increase their spending over time
– Cost less to serve than new customers
– Generate word-of-mouth advertising or referrals
– Are less price sensitive than new customers

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Database development process

• Marketer’s often use a centralised computing system that

collects, integrates and manages big data via a Data
Management Platform.

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An example of how loyalty programs
are driven by customer databases

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Managing Source Data

• Capture relevant data

• Source code of each customer
– Indicates the media, media vehicle or means by which a
customer has responded
– Such as, participation at an event or referral details

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Types of source data to collect
to build a customer database
• Customer’s Name
• Address (including ZIP code)
• Telephone Number
• E-mail Address
• Means by which customers first learned about the company
• Past Purchases (Transaction Data)

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Database RFM assessment:
Recency/frequency/monetary
• Evaluates customers with respect to their transactions
– Recency – how recently
– Frequency – how often
– Monetary – how much money spent
• Weights vary
• Helps determine future potential of customers
• *See example in text

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The need for database maintenance

• Lists & data are perishable

• Constant control and maintenance is required
• Activities include:
– Eliminating duplicate records
– Identifying consumer names that re-appear on different
lists
– Keeping records current

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Database maintenance: Creating
match codes
• An abbreviated name/address record
• Allows each record to be matched with other records
• A match code is generated for each name on the list

• Example Address Derived Match Code

• Ann Stafford 82301SAF9330ALI8A
• 9330 West Arlington Rd
• Alexandria, VA 22301

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Database maintenance: Merge/purge
process
• A process using match codes to identify and delete duplicate
names and addresses
• Keeps house lists from being duplicated
• Can remove names that requested no solicitations
• Can identify ‘multibuyers’

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Three ways to keep database records
current:
• Change of address investigations
• Nixie removal
• Record status updates

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Database security – Protection

• Information Privacy
• Proper Database Storage
• List Marking – ‘salting’ or ‘seeding’

Direct Marketers must safeguard their customer database

and discourage theft.

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Customer databases’ enable stealth
marketing
• Ability to communicate with small market segments or
individual customers without other customers knowing
• Able to extend different types of offers to individual
customers on the basis of their personal information

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Common uses of a customer
database
• Profile Customers
• Retain Best Customers
• Thank Customers for their Patronage
• Capitalize on Cross-Selling/Continuity Selling
• Develop a Customer Communication
Program
• Perform Marketing Research
• Generate New Customers
• Send Customized Offers … and MORE!

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Communication plan

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Example of using a database to
obtain new customers

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Performing database analytics

• Necessary for making strategic business decisions

• Helps determine value of customer
• Relies on customer profiling, modelling and data mining
• Data mining
– Process of using software tools to find relevant
information from large amounts of data
– Statistical and mathematical techniques to extract
knowledge

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Three reasons to enhance a
customer database
• To learn more about the customer
• To increase the effectiveness of future promotional activities
targeted to current customers
• To better prospect for new customers who are similar to
current customers

Important to utilize both Internal and External Data

Enhancement.

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Customer relationship management
(CRM)
• To identify ‘touch points’ between the business (company)
and its customers and prospective customers
• To target customer needs to maximize the customer’s
experience and overall customer satisfaction
• Customer journey maps
• I-CRM

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Customer journey map

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I-CRM

• Not all customers are created equal

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Customer value

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Lifetime value of a customer (LTV)

• Calculated as the discounted stream of net revenues that a

customer will generate over the period of his or her lifetime
of patronage with a company

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One-on-One Personalisation

• Detailed market segmentation analysis allows for

customisation and personalisation of marketing
communications for each customer.
• Micro-targeting – is one-on-one personalised marketing
based on advanced, precise psychographic and lifestyle
data.

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Partner relationship marketing (PRM)
example

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Cause-related marketing example

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Case

• Nevada Tourism

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