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  • 1. Customer Relationship Management A Databased Approach V. Kumar Werner J. Reinartz Instructor’s Presentation Slides www.drvkumar.com Copyright Dr. V. Kumar,
  • 2. Chapter Seven Using Databases www.drvkumar.com Copyright Dr. V. Kumar,
  • 3. Topics Discussed • Types of databases • The Benefits of Marketing Databases • The Uses of Marketing Databases www.drvkumar.com Copyright Dr. V. Kumar,
  • 4. Types of Databases Categorization: • Based on their main business functions – Databases managing business operations – Databases supporting decision-making activities Alternate categorization: • According to the information included in the databases • Based on the nature of the underlying marketing activities • Based on the database technology used www.drvkumar.com Copyright Dr. V. Kumar,
  • 5. Categorization Based on Information in the Databases Types of databases: • Customer database • Prospect database • Cluster database • Enhancement database www.drvkumar.com Copyright Dr. V. Kumar,
  • 6. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 7. 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? www.drvkumar.com Copyright Dr. V. Kumar,
  • 8. 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 18.5 million small, privately owned and large publicly owned businesses • InfoBaseR 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 9. Customer Database – CRM at Work: Email marketing at Blockbuster • Email marketing : – Targeted Personalized offers – Reduced direct mail costs and therefore increased Net Marketing Contribution – Additional customer touch point – Larger number of customers visiting the company’s website • Case: Email Marketing company Quris helped Blockbuster create its email newsletter – Newsletter marketed Blockbuster’s new movies (on DVD/VHS) and games to its customers via email which also included a bar-coded coupon for customers to print and redeem – Results: The total ROI for the program was 96% higher than the ROI for direct mail; for customers receiving electronic coupons, it was 144% higher www.drvkumar.com Copyright Dr. V. Kumar,
  • 10. 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: – 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 11. 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 nation’s 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 America’s ‘second’ and ‘satellite’ cities • T1 (Landed Gentry) –clusters comprise of multi-income families having school www.drvkumar.com Copyright Dr. V. Kumar,
  • 12. CRM at Work: Globe and Mail - Example of cluster database • Globe and Mail, Canadian national newspaper – Created a marketing database of prospective subscribers – Enhanced existing customer’s data with Canadian cluster codes and demographic data, provided by Compusearch – Using cluster data, targeted customers in the prospect database: sent offers to prospective customers whose demographics matched that of current customers – Used a predictive dialing method that doubled their prospective customer contacts per hour www.drvkumar.com Copyright Dr. V. Kumar,
  • 13. 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, www.drvkumar.com Copyright Dr. V. Kumar,
  • 14. 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 Customer list Customer list Campaign 1 Database Campaign 2 www.drvkumar.com Copyright Dr. V. Kumar,
  • 15. Database Based on Nature of Underlying Marketing Activity (contd.) • Active marketing database Database Strategic Marketing Marketing Plan Programs Data updates Results Execution Example: Travelers’ case Retention program – Five ‘touches’ – Systematic and low-cost interactions Result - increased retention rate; decreased defection by 5% www.drvkumar.com Copyright Dr. V. Kumar,
  • 16. Categorization Based on Database Technology • Hierarchical database • Inverted database • Relational database www.drvkumar.com Copyright Dr. V. Kumar,
  • 17. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 18. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 19. Relational Database • 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 20. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 21. Uses of Marketing Databases Uses of Marketing Databases Uses that directly influence Uses that directly influence customer relationship other business operations www.drvkumar.com Copyright Dr. V. Kumar,
  • 22. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 23. 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 www.drvkumar.com Copyright Dr. V. Kumar,
  • 24. 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 www.drvkumar.com Copyright Dr. V. Kumar,