Chapter 8:

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

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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

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 3
Categorization Based on Information in the Databases

Customer Prospect
Database Database

Cluster Enhancement
Database Database

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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

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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?

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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

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 7
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 126 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

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 8
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
• 5 clusters with the nation‘s most affluent social people
(Elite Suburbs)
U1
• Executives and professionals
(Urban Uptown)
C1 • 3 clusters making the upper crust of America‘s second and satellite
cities
(City Society)

T1 • Clusters comprise of multi-income families with school age kids

and are headed by well-educated executives and professionals
(Landed Gentry)

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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
§ InfoBase provides a large collection of U.S customer information like telephone &
address data, mailing lists including hotline files, e-mail data
§ InfoBase Enhanced provides the ability to append the latest demographics, socio-
economic and lifestyle data to your existing in-house customer database

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 10
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 Customer
List List

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 11
Categorization Based on The Nature of Underlying Marketing
Activities (2)

§ Active Marketing Database

Strategic
Marketing
Plan

Marketing
Database
Program

Data Updates Execution

Results

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 12
Categorization Based on Database Technology

§ Hierarchical database
§ Inverted database
§ Relational database

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 13
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:

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Inverted Database & Relational Database

§ Inverted 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

§ Relational Database
§ Has the greatest flexibility
§ Users can create queries to extract and combine information
§ Examples of Relational Database:
§ Oracle, SQL Server, and Microsoft Access

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Benefits of Marketing Databases

§ Ability to carry out profitable segmentation

§ Ability to retain customers and repeat business
§ Ability to spot potential profitable customers

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 16
Uses of Marketing Databases

Uses of Marketing
Database

Uses that directly Uses that directly

influence Customer influence other
Relationship Business Operations

V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 17
Uses of Marketing Databases (2)

Uses that directly influence 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
§ Cross-sell products/services
§ Ensure cost-effective communication with customers
§ Improve promotion result by efficient targeting
§ Personalize customer service
§ Stealth communication with customers

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Uses of Marketing Databases (3)

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
§ Integrate the marketing program
§ Create a new valuable management resource

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CRM at Work

§ Effective use of email marketing

§ 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 and Database Clustering
§ 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

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CRM at Work (2)

§ Enhancement Database
§ 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
§ Active Marketing Database
§ Best Buy updates in-house customer database, Athena, regularly
§ Athena helps Best Buy identify students, likely-to-be-students and parents of students, who
were sent back to school promotions
§ Store saw 17% increase in online sales in 2015 second quarter
§ Did not have to spend as much money on TV or print ads
V. Kumar and W. Reinartz – Customer Relationship Management: Concept, Strategy, and Tools, 3rd Edition 21
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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