Customer database and database marketing 19-10-13 [compatibility mode]
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Transcript of Customer database and database marketing 19-10-13 [compatibility mode]
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What is the difference between?
• Mass Market• Target Market• Database Market
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Customer Database &
Database Marketing
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Session Coverage
• Customer Databases
• Data Warehouses
• Data Mining
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DATABASE MARKETING• Companies treat all customers as one body, one
intellect or one segment• Communication campaign (in most cases) send
the same message or make same offer to all the customers
• This is against the strategic goal of database marketing
• “It involves use of computers to capture transaction information and track customer profiles”
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NEED FOR DATABASE MARKETING
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So Many Changes in MarketingRetail / Banking
• Kariana Shops(merchants)
• 18 Million in India• Know you & family• One to one relation• Personal Service• Recognize you, your
needs and want• “Your Loyalty must for
their business”
• Retail Store Chains• Impossible for them to
know each customer in individualized fashion
• Only with sophisticated marketing database technology, we can capture, analyze and act on same interpersonal marketing opportunities
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Target Marketing SegmentationTwo Approaches
• Cognitive• (look Like)• Demographic
– Age, Income, Edu
• Psychographic– VALS
“Very logical approach to refine suspect to more likely prospect”
• Behavioral• How they act?• Requires base info• Requires all transaction
information electronically– Date of last to most recent
purchase– Frequency of purchase– Av amount spent per
order
BUT..THIS IS ONLY THE ENTRY POINT INTO THEPRACTICE OF INTELLIGENT MARKETING
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Analysis can now begin
• RFM MODEL• Sort customers by purchase date• Divide customers list into 5 equal
segments• Next sort customers by no of orders and
monetary value• RFM Score-Best Customer Segment-111• Worst Customer Segment-555
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RFM Model
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Results
• It answers-What %age of your sales has come from which segment (80 / 20 rule)
• Implement new marketing campaign on certain %ages of each segment
• Test their response• Benefits:• Easy and cost effective• Increased response rates• Greater Profit
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Profit and Loss from RFM Cells
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HP on Customer Loyalty
• A very satisfied customer is 6x more likely to repurchase than a satisfied one
• The average customer with a problem eventually tells 9 other people
• Acquiring a new customer costs 5-7x more than retaining one
• An increase in customer retention of 5% can boost profits 25-85%
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Database Marketing System-Model
Memory Intelligence Output
Data AnalyticTools/Software
MarketingDecisions
Data
TransactionData
CustomerData
Other Data
DataWarehouse
Database
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Geo-demographic Database
Data Techniques Output/Application
Segmentation
Targeting
Advertising/Promotion
Clusters
Demographics
Purchase
Different habits
Pin codes
Cluster
Analysis
Distinct
Clusters
used for
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Different Trends in terms of Clusters
Customers Same Preferences, Existing Brands would be Similar
Preferences-Scattered throughout,1st brand to position in center
Firms develop many brands
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Classification of Data
Classification
Internal Data External Data
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Internal Data• Generated within the organization.• May be readily available or may require
considerable processing before marketer can use it.
• Sales and Cost data compiled in regular accounting process.
• Importance:• Reebok: Analyzed internal sales data and found
that internet sales was only 0.7% and retailers had bad feelings about it. STOPPED