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Database Marketing Overview
By Damon J. Ragusa
Damon Ragusa is founder and CEO of ThinkVine. He is a 17-year consultant, frequent lecturer, and pioneer in agent-based modeling applications for blue-chip marketers. He founded ThinkVine in 1999 and has built it into a firm specializing in the integration of marketing science, information technology and data-driven initiatives to support strategic marketing, database marketing, and customer relationship management.
  1. Introduction
Database marketing is based on the principle that through collecting and organizing information about your business, you can reduce the cost of your business’s marketing efforts and increase profit.

Often people think of this information as being exclusively consumer focused. However, a truly integrated database approach incorporates information about your products, suppliers, competitors, and other business areas. For the sake of simplicity, most of the discussion here will focus on consumer-focused database marketing.


Planning



Database marketing is not a strategy unto itself. It is a tactical approach to supporting marketing strategy. It is not a separate function to the rest of marketing. It is complimentary to all forms of business intelligence.

However, like any strategy it does require a specific plan and an understanding of where you are starting and where you are going. The latter is often left out of the equation resulting in wasted time and money.

Surprisingly, companies often neglect to evaluate what database marketing resources (data, tools, and people) they already have available before making expensive decisions. The following are steps to consider when creating a strategy for integrating database marketing into your organization:

  1. Determine clear objectives for database marketing.
  2. Conduct an internal audit:
    - Discover all sources of internal data, software, systems and personnel.
    - Evaluate the accessibility to these resources.
    - Note any barriers (organizational or technological).
    - Evaluate documentation processes.
  3. Evaluate external data sources, software and systems alternatives.
  4. Using the results of the audit, the evaluation and your budget constraints - choose your weapons.
  5. Find the right people – the best data, software and systems amount to little without the right people. Creativity is a virtue for database marketers.
  6. Above all – talk to others that have been through the process. Chances are they made all the mistakes that you are about to make.

Types of Databases



There are several types of databases. Following are some definitions:

  • Transaction database – as the name implies this type of database manages customer transactions.

  • Customer database – a customer database most often contains more detailed information about the specific customer (demographics, socio-economic data, etc.)

  • Marketing database – a marketing database extends beyond your customer base and includes prospects from your market.

    A truly integrated marketing database includes all three.

    History as a Guide to the Future



    Most of the projects being done in database marketing are intuitive. So why has it taken over a decade to move database marketing into the strategic framework of most every company?

    • Computer storage media (e.g. hard drives) are more affordable.
    • The emergence of powerful new software tools support database development, analysis and CRM.
    • Real success stories and established ROI have emerged for the database marketing function.
    • Increased overall marketing expenditures through economic expansion
    • An explosion in direct marketing function forced companies to get smarter about managing market data.
    • Internet-based marketing generated a lot of data, transitioning many organizations to a more digital marketing focus.

    For a time in the late 1980s and early 1990s database marketing was only a function for large companies and academics with the resources and access to mainframe computers.

    Today it is possible and practical to manage large market databases on a desktop computer.

    Understanding the evolution of database marketing will aid in understanding it’s various functions. This understanding will also guide you in developing a solid strategy for integrating database marketing into your overall marketing strategy.

    The functional evolution of database marketing can be broken down into six phases.

    1. Transaction Knowledge
    2. List Management
    3. Database Analysis (DBA)
    4. Contact Management
    5. Software Evolution
    6. Customer Relationship Management (CRM)

    As stated previously, these six phases are also milestones for developing a fully functional database marketing strategy. The order is relevant. However, you must consider each and every phase as you proceed in developing these capabilities.

    Also, depending on your market some or all of these phases will vary dramatically in complexity. A company with two thousand customers will have different challenges than one with two million customers.
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2001 MarketingPower.com, Inc. Contents used by permission of the author.
Table of Contents
1. Introduction
2. Transaction Knowledge
3. List Management
4. Database Marketing Analysis
5. Contact Management
6. Software Evolution
7. Customer Relationship Management


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