The Database

DIRECT MARKETING CHAPTER 2

Ass.Prof.Dr. Tuğçe Ozansoy Çadırcı
THE DATABASE

Marketing
Database
Defined
PART 1
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3
What is a Marketing Database?

The database can be pictured as a customer information card.

Figure'2.1!!Pictorial)representa.on)of)a)database)
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What is a Marketing Database?-2

‣ The basic information held in a database includes;

‣ Personal details (profile data)
‣ Transactional details and purchase history
‣ Communication history.
‣ Basically;
‣ A database is a collection of data records in a list that can
be manipulated by software,
‣ A data record is the entire set of information that is
associated with the customer
‣ A data field is one item of data within a record. (e.g. a
name, an address etc.)
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Marketing Database Defined

“A customer database is an organized collection of

comprehensive data about individual customers or
prospects, including geographic, demographic,
psychographic and behavioral data.”
Armstrong et.al., 2009
“A marketing database is a list of customers’ and prospects’
records that enables strategic analysis, and individual
selections for communication and customer service
support. The data is organised around the customer.”
Tapp et.al.,2014
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A Customer Database is

‣ The heart of all direct and

interactive marketing
activities.
‣ The key to developing strong
customer relationships and
retaining customers.
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The Customer Database…

‣ holds data about actual customers and prospects.

‣ This data can be;
‣ Demographic (age, gender); Geographic (Addresses, ZIP
codes); Psychographic (activities, intrestst, opinions,
lifestyles); and behavioral (purchase history, communication
history, buying patterns, customer responses)
‣ This data can be used as an input in;
‣ Segmentation
‣ Customer Value Assessment
‣ Targeting
‣ Customer Fulfillment and Service
‣ Lead Generation and Qualification
‣ Sales
‣ Building Customer Relationships
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Primary Objectives of a Database

(1)To get to know customers better

(2)To sell different products or services to existing
customers
(3)To introduce new products or services
(4)To distribute information about an upcoming event
or sale
(5)To introduce new employees
(6)To keep customers satisfied and happy
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Highly Satisfied Customers

‣Tend to be more loyal customers

‣Generate more profits over their lifetime of patronage
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The Reasons Why Loyal Customers Generate More Profits…

‣ Loyal customers…
(1)Increase their spending over time
(2)Cost less to serve than new customers
(3)Generate word-of-mouth advertising or referrals
(4)Are less price sensitive than new customers
THE DATABASE

The Minimum
Requirements
of a Database
PART 2
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Four Types of Data

‣ Primary data, such as names and addresses of customers, details of

products and/or services your organization offers, pricing details,
campaign details and definitions of various channels of distribution.
‣ Secondary data, which is data used to qualify primary data, such as
demographics, lifestyle information, geographical profiles or levels of
penetration into markets.
‣ Performance data to record how your customers have responded, what
they bought, how much they spent and to which campaigns they
responded.
‣ External data, covering everything rented or bought in lists to data
from various agencies that can enhance your base data.
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Basic Software Functions

‣ These are timeless and were identified by Goldwag in 1995:

‣ Name and address processing – data management issues
‣ Being able to make selections – the database must be able to generate
the desired list of customers to be contacted.
‣ Having analytical capability – the most basic requirement here is for
simple campaign analysis. Each response is allocated to the promotion
that generated it. Percentage response figures of each campaign are
then output.
‣ Being able to generate reports – Basic reports would includes such
examples
‣ We had 1,000 transactions yesterday.
‣ We are loosing 10,000 of our customers prompt action.
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What Data to Collect?

‣ Kotler et al. (2009) say that marketing managers will sometimes

complain about not being able to get hold of critical information
while being awash with to much information they cannot use.
‣ They point out that a marketing information system should be a
hybrid of three things:
‣ What managers think they need
‣ What managers really need
‣ What is economically feasible.
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What Data to Collect?-2

‣Boddington (1994) suggests the following principles should be taken

into account when collecting data:
‣Data should be split into ‘essential now’ and ‘possible future use’
‣Data should allow ease of sourcing and updating
‣The cost of raw data, for example external bought-in data, must be
offset against benefits.
‣THE GOLDEN RULE FOR DATA COLLECTION CAN BE SUMMED UP
AS “ONLY HOLD DATA THAT IS REQUIRED FOR YOUR
STRATEGY”.
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What to do? ASK THE RIGHT QUESTIONS

‣According to Kotler et.al (2009) the basic questions that managers should ask
for structuring an effective database are:
‣What decisions do you regularly make?
‣What information do you need to make those decisions?
‣What information do you regularly get?
‣What special studies do you periodically request?
‣What information would you want that you are not getting right now?
‣What information would you want: daily? monthly? yearly?
‣What topics would you like to be kept informed of?
‣What data analysis programmes would you want?
‣What are four most helpful improvements that could be made in the present
marketing information system?
THE DATABASE

Data Building
and Basic
Data Sources
PART 3
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Data Source Principles

‣There are two main data sources

‣Internal (includes company records)
‣External (commercially available lists, census data and so on.)
‣Most data is sourced internally
‣Problems with internal data are:
‣Can be collected with non-marketing purposes.
‣Can be incomplete
‣Can be in the wrong format
‣Can be out of date
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Internal Data Sources

‣Bird (2007) suggests the following sources of data:

‣Records held by anyone within the company who deals with
customers
‣Retail outlets, agents, dealers
‣Guarantee forms
‣Invoices
‣People who visit your stand when you are at any exhibitions or
shows
‣Competition entrants
‣Responders to sales promotions.
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External Data Sources

‣List purchase
‣There are agencies who provide different lists to the direct
marketers.
‣These agencies may provide any data set concerning any
industry.
‣Most of the time this data is categorized according to product
groups.
‣Examples include
‣Marketingfile.com
‣Listbroker.com.
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External Data Sources-2

‣Data building schemes

‣Credit schemes, club memberships, promotions.
‣You only enter a free prize draw to win a wheelchair if you want
a wheelchair.
‣If these offers are created via the Internet the volume of data
increase respectively.
‣Loyalty Programs are also widely used in data building.
‣Companies offer loyalty programs primarily for relationship
building, but this type of programs are also provides
additional information for the database through the use of
loyalty cards.
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External Data Sources-3

‣Introduce new contact channels

‣New channels offering direct contact with customers (e.g.
airlines can offer direct selling to customers rather than using
agencies.)
‣Direct channels use the advantage of new media channels.
‣Most of the time customers input their data into the database
by themselves.
‣Direct sell opportunities over using intermediaries.
‣Includes : product registrations, credit card details,
subscription details, in-store offer details etc.
THE DATABASE

Database
Management
Issues
PART 4
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Database Management

Manage'Data'Sources' Accoun/ng&Systems&and&Sales&
Ledgers&
Direct&from&customers&
Verify:&Run&spot&checks&on&records&
Manage'Data'Entry' picked&at&random&
Validate:&Electoral&roll,&Postal&Address&
File&(PAF),&audit&trail&
DeDduplicate,&Merge&Purge&

?&
Manage'The'Database' InDhouse& Data&Bureau&

Manage&People&IT/
Marke/ng&

Manage&Data&Over&Time&

Figure'2.2!!!Managing&the&data&
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Management of Data Sources

‣Data will come from different places and may not be exactly suited to
marketing’s needs.
‣Accounts data
‣Sales/trading data
‣External data
‣Quality control data
‣Guarantees, warranties and repairs data
‣These all have to be managed, standardised and put into a useable
format.
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Management of Data Sources-2

‣The basic problems with data source management:

‣Stock control and order processing data is held on a “per product
basis”. But marketing data should be kept on a “per customer”
basis.
‣Targeting, customization purposes.
‣Problems within the marketing department
‣Product managers keep data about product purchasers.
‣For direct marketing efforts towards customer acquisition this
information is not enough. Extra information gathering
processes are needed.
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Manage Data Entry

VERIFICATION 1 2 VALIDATION

DE-DUPLICATION 3 4 MERGE-PURGE
‣ SUPPRESSION FILES
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Manage Data Entry - Verification and Validation

‣Verification is a standard procedure.

‣A common approach is to select records randomly for visual
inspection and correction.
‣Validation is checking the accuracy of personal and product data
provided by the customer.
‣This include:
‣Checking product and source codes for invalid master codes.
‣Carrying out audits for finding disparities.
‣Doing a sanity check with random selection of records for visual
inspection.
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Manage Data Entry - Creating Match Codes

‣An abbreviated name/address record

‣Allows each record to be matched with other records

‣A match code is generated for each name on the list

Example Address Derived Match Code

Ann Stafford 82301SAF9330ALI8A3
9330 West Arlington Rd
Alexandria, VA 22301
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Manage Data Entry - De-Duplication

‣De-duplication is the act of ensuring that the database does not

contain duplicate data.
‣Problems with checking new record to existing records:
‣unless there is an exact match of spelling conventional record
matching will fail.
‣Different names within the same household can cause
problems.
‣Address changes can cause problems. The database needs to
be able to spot this and update the old record.
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Manage Data Entry - Merge&Purge

‣Merge purge is similar to de-duplication.

‣You are merging two different files
‣Two external files
‣One external or one internal file.
‣Can identify “multibuyers”
‣Important to avoid mailing or ringing the same customer
twice.
‣Existing customers can be mailed with an offer aimed for
prospects.
 32
Name% Address% City%
Ahmet&Keskin& Salkım&sok.&No:23/2& İstanbul&
Ahmet&Keskin& Salkım&sok.&No:23/2& İstanbul&
Ayşe&Korkmaz& Tören&sok.&No:14/11& İstanbul&
A.&Korkmaz& Tören&sok.&No:14/11& İstanbul&
Alper&Türk& Alkor&sok.&No:9/9& İstanbul&
Alper&Türk& Alkor&sok.&No:9/9& İstanbul&
Zeynep&Güner& Ateş&sok.&No:27/3& İstanbul&
Selim&Güner& Ateş&sok.&No:27/3& İstanbul&
Naz&Ertürk& Yankılı&sok.&No:5/14& İstanbul&
Nazlı&Ertürk& Yankılı&sok.&No:5/14& İstanbul&
Ayşe&Gündüz& Simge&sok.&No:8/12& İstanbul&
Ayşe&Gündüz& Simge&sok.&No:9/12& İstanbul&
Selim&Bingöl& Fener&sok.&No:13/4& İstanbul&
Selim&Bingöl& Mevsim&apt.&Fener&sok.&No:4& İstanbul&
Table&2.1!!The&Various&Ways&Duplicate&Records&May&Exist&in&a&Database&
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Manage Data Entry - Suppression Files

‣People might become annoyed of receiving direct marketing

material and may ask you to remove them from your mailing lists.
‣What would you do?
‣Deleting the record will cause more problems.
‣When you buy an external list and if that customer is in that list
you will contact him again.
‣The customer will get more frustrated.
‣The right approach would be:
‣To build a suppression file of names who do not want to hear
from you.
‣When you apply merge purge and de-duplication you should
include your suppression file.
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Managing The Database

Management Advantages Disadvantages

High cost of development
A customised approach is possible
Lack of internal exper se
Day-to-day control
In-house Name and address handling is
Data can be moved easily
di cult
Speed of service
Fewer analy cal tools available

Easier to enforce service-level Con ic ng demands from other

agreements clients
Bureau
Share costs of hardware Online access some mes di cult
experience High opera ng costs

Table&2.2!!Advantages&and&disadvantages&of&in house&versus&bureau&management&
ffi
fl
ti
ti
ti
ti
ti
ffi
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In-house Data Management Issues

‣ The IT people and Marketing people should work collaboratively and

coordinately.
‣ The Marketing Perspective
‣ Marketers are highly obsessed with direct customers.
‣ Marketers,
‣ Should own objectives of the database,
‣ Are often weak at technical details,
‣ Know the danger of delay.
‣ The IT Perspective
‣ The IT people make sure that the company’s internal systems work
properly.
‣ IT department,
‣ Own the technical knowledge of the database,
‣ Need guidance on which data to hold and what software is needed,
‣ Know the danger of chaos.
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Keeping Data Up-to-Date

‣Data decays over time, and so money has to be spent keeping it

up to date.
‣People die, change their names, get married or change their
circumstances … and they don’t even bother to tell you about it!
‣The problem is even more acute in business lists; rapidity of
employment change means as much as 30 per cent of the data
can be out of date within a year.
‣Problems with outdated data
‣The wasted contact
‣The sacrifice of potential response.
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Minimizing Outdated Data

‣Customers whose record become out of data are called “goneaways” or

“nixies”. These customers are a great concern for direct marketers.
‣Verify data against the electoral roll and Postcode Address File before
selections of name and address are made. This will:
‣Help reduce the number of “goneaways”
‣Reduce data capture errors getting back to customers (e.g.name
misspellings)
‣Have your data cleaned regularly by commercial organisations specialising in
this.
‣Use only recent data.
‣This depends on the industry you are working in:
‣For supermarkets a three year old data is usable.
‣But for a car manufacturer 20 year old data may be acceptable.
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Manage The Applications

‣Ensure any data that will be sent back to the customer (e.g. name
and address) is accurate.
‣There is nothing more noticeable or annoying to customers than a
misspelt or incorrect name.
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Database Security

‣ Information Privacy
‣ Protection of the customers’ privacy.
‣ Proper Database Storage
‣ Protection against theft and unauthorized use.
‣ List Marking – “salting” or “seeding”
‣ Direct Marketers must safeguard their customer database and
discourage theft.
‣ Definition: The Process whereby direct marketer places decoys,
which are either incorrect spellings or fictitious names, on a
customer list to track and identify any misuse.