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
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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
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Categorization Based on Information in the Databases
Customer
Database
Prospect
Database
Cluster
Database
Enhancement
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
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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
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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
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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, socioeconomic and lifestyle data to your existing in-house customer database
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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
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Customer
List
Campaign 2
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Categorization Based on The Nature of Underlying Marketing
Activities (2)

Active Marketing Database
Strategic
Marketing
Plan
Database
Marketing
Program
Data Updates
Execution
Results
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Categorization Based on Database Technology

Hierarchical database

Inverted database

Relational database
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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
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Uses of Marketing Databases
Uses of Marketing
Database
Uses that directly
Uses that directly
influence Customer
influence other
Relationship
Business Operations
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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

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
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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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