237:"Database Marketing is an interactive approach to marketing, which uses individually addressable marketing media and channels (such as E mail, telephone and the sales force): to extend help to a company's target audience; to stimulate their demand; and to stay close to them by recording and keeping an electronic database memory of the customer, prospect and all commercial contacts, to help improve all future contacts and to ensure more realistic of all marketing."
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manner. In smaller (and more homogeneous) databases, it will be difficult to justify on economic terms the investment required to differentiate messages. As a result, database marketing has flourished in sectors, such as financial services, telecommunications, and retail, all of which have the ability to generate significant amounts of transaction data for millions of clients.
361:) companies. Also, their relationships with customers will often rely on intermediaries, such as salespeople, agents, and dealers, and the number of transactions per customer may be small. As a result, business-to-business marketers may not have as much data at their disposal as business-to-consumer marketers.
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These data become critical to segment markets or define target audiences, e.g. purchases of software license renewals by telecom companies could help identify which technologist is in charge of software installations vs. software procurement, etc. Customers in
Business-to-Business environments often
186:
Database marketing emerged in the 1980s as a new, improved form of direct marketing. During this period traditional "list broking" was under pressure to modernize, because it was offline and tape-based, and because lists tended to hold limited data. At the same time, with new technologies enabling
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The distinction between direct and database marketing stems primarily from the attention paid to the analysis of data. Database marketing emphasizes the use of statistical techniques to develop models of customer behavior, which are then used to select customers for communications. As a consequence,
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Marketing to prospects general, database marketers seek to have as data available about customers and prospects as possible. For marketing relies extensively on third-party sources of data. In most developed countries, there are a number of providers of such data. Such data is usually restricted to
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Because of the complexities of B2B marketing and the intricacies of corporate operations, the demands placed on any marketing organization to formulate the business process by which such a sophisticated series of procedures may be brought into existence are significant. It is often for this reason
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Marketers trained in the use of these tools are able to carry out customer nurturing, which is a tactic that attempts to communicate with each individual in an organization at the right time, using the right information to meet that client's need to progress through the process of identifying a
320:
Although organizations of any size can employ database marketing, it is particularly well-suited to companies with large numbers of customers. This is because a large population provides greater opportunity to find segments of customers or prospects that can be communicated with in a customized
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Companies with large databases of customer information risk being "data rich and information poor." As a result, a considerable amount of attention is paid to the analysis of data. For instance, companies often segment their customers based on the analysis of differences in behavior, needs, or
332:
In to existing customers, more sophisticated marketers often build broad databases of customer information. These may include a variety of data, including name and address, history of shopping and purchases, demographics, and the history of past communications to and from customers. For larger
496:
While the idea of storing customer data in electronic formats to use them for database-marketing purposes has been around for decades, the computer systems available today make it possible to gain a comprehensive history of client behavior on-screen while the business is transacting with each
392:
They may also develop predictive models, which forecast the propensity of customers to behave in certain ways. For instance, marketers may build a model that ranks customers on their likelihood to respond to a promotion. Commonly employed statistical techniques for such models include
364:
One other complication is that B2B marketers in targeting teams or "accounts" and not individuals may produce many contacts from a single organization. Determining which contact to communicate with through direct marketing may be difficult. On the other hand, it is the database for
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name, address, and telephone, along with demographics, some supplied by consumers, and others inferred by the data compiler. Companies may also acquire prospect data directly through the use of sweepstakes, contests, on-line registrations, and other lead generation activities.
170:, and transaction history details from internal sales or delivery systems, or a bought-in compiled "list" from another organization, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any
389:, in which customers are placed into sub segments based on the recency, frequency, and monetary value of past purchases. Van den Poel (2003) gives an overview of the predictive performance of a large class of variables typically used in database-marketing modeling.
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Kestnbaum collaborated with Shaw in the 1980s on several online marketing database developments - for BT (20 million customers), BA (10 million) and
Barclays (13 million). Shaw incorporated new features into the Kestnbaum approach, including
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Sources of customer data often come from the sales force employed by the company and from the service engineers. Increasingly, online interactions with customers are providing B2B marketers with a lower cost source of customer information.
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There are two main types of marketing databases, consumer databases, and business databases. Consumer databases are primarily geared towards companies that sell to consumers, often abbreviated as (
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For prospect data, businesses can purchase data from compilers of business data, as well as gather information from their direct sales efforts, on-line sites, and specialty publications.
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tend to be loyal since they need after-sales-service for their products and appreciate information on product upgrades and service offerings. This loyalty can be tracked by a database.
159:) or BtoC. Business marketing databases are often much more advanced in the information that they can provide. This is mainly because business databases aren't restricted by the same
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Shaw and Stone (1988) noted that companies go through evolutionary phases in the developing their database marketing systems. They identify the four phases of database development as:
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to marketing strategies. In 1967, they founded the consulting firm
Kestnbaum & Co, that employed several notable database marketeers such as Robert Blattberg, Rick Courtheaux and
512:(CRM) systems use the stored data not only for direct marketing purposes but to manage the complete relationship with individual customer contacts and to develop more customized
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Database marketing applications can be divided logically between those marketing programs that reach existing customers and those that are aimed at prospective customers.
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relationships to better understand which are the most popular product combinations. Any identified relationships can then be used to cross-sell and up-sell in the future.
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The growth of database marketing is driven by a number of environmental issues. Fletcher, Wheeler and Wright (1991) classified these issues into four main categories:
548:(SI) can also play an equivalent role to the marketing IT process strategist, particularly at the time that new technology tools need to be configured and rolled out.
651:
Fletcher, Keith, and Colin
Wheeler, and Julia Wright. "Success in Database Marketing: Some Critical Factors." Marketing Intelligence & Planning 10 (1992): 18-23.
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has established a set of data protection rules that determine what uses can be made of customer data and how consumers can influence what data are retained. In the
484:(HIPAA) (which regulates the gathering and use of consumer health data), and various programs that enable consumers to suppress their telephones numbers from
480:, there are a variety of state and federal laws, including the Fair Credit Reporting Act, or FCRA (which regulates the gathering and use of credit data), the
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A major challenge for databases is the reality of obsolescence - including the lag time between when data was acquired and when the database is used.
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allows a business to deliver specific customer communications based on an individual's purchase patterns, helping to increase loyalty and improve
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As database marketing has grown, it has come under increased scrutiny from privacy advocates and government regulators. For instance, the
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The earliest recorded definition of
Database Marketing was in 1988 in the book of the same name (Shaw and Stone 1988 Database Marketing):
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357:) company marketers, the number of customers and prospects will be smaller than that of comparable business-to-consumer (
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channel automation, contact strategy optimization, campaign management and co-ordination, marketing resource management,
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Strategic
Database Marketing: The Master plan for Starting and Managing a Profitable Customer-Based Marketing Program
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problem, learning options available to resolve it, selecting the right solution, and making the purchasing decision.
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and marketing analytics. The designs of these systems have been widely copied subsequently and incorporated into
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business-to-business marketers which often includes data on the business activity about the respective client.
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544:(IT), or a marketing IT process strategist. Although more technical in nature than often marketers require, a
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marketing was in ascendancy, with the aim of opening up a two-way communication, or dialogue, with customers.
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Constrained optimization of data-mining problems to improve model performance: A direct-marketing application
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or potential customers to generate personalized communications in order to promote a product or service for
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that large marketing organizations engage the use of an expert in marketing process strategy and
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Tapp, Alan (1998), Principles of Direct and
Database Marketing, Trans-Atlantic Publications.
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and allows businesses to measure several factors such as the cost of acquisition and the
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The New Direct
Marketing: How to Implement A Profit-Driven Database Marketing Strategy
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Robert D. "Bob" and Kate
Kestnbaum developed new metrics for direct marketing such as
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Bayesian Neural
Network Learning for Repeat Purchase Modelling in Direct Marketing
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Shaw, R. and Stone, M. Database Marketing. New York: John Wiley & Sons, 1988.
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The development of economical methods for differentiating customer communication.
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helps a business to understand how actions taken by the business affected their
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415:, and also allow for some predictions of customer reaction to proposed changes.
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for the company. This ability enables what is called one-to-one marketing or
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attitudes of their customers. A common method of behavioral segmentation is
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purposes. The method of communication can be any addressable medium, as in
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Stone, B (1997) Successful Direct Marketing Methods, NTC Business Books
620:"History Of CRM Software – An Exciting Journey From Ledger To SaaS"
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The move to relationship marketing for competitive advantage.
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Predicting Mail-Order Repeat Buying: Which Variables Matter?
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Predicting Mail-Order Repeat Buying: Which Variables Matter?
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The overcrowding and myopia of existing sales channels.
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The desire to measure the impact of marketing efforts.
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The decline in the effectiveness of traditional media.
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Health Insurance Portability and Accountability Act
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The fragmentation of consumer and business markets.
49:. Unsourced material may be challenged and removed.
148:database marketers also tend to be heavy users of
278:The advent of new methods of shopping and paying.
699:Drake & Drozdenko, Sage Publications (2002)
681:Baesens Bart, Stijn Viaene, Dirk Van den Poel,
8:
666:Tijdschrift voor Economies & Management
333:companies with millions of customers, such
267:The decline in electronic processing costs.
757:Tijdschrift voor Economie & Management
730:Prinzie Anita, Dirk Van den Poel (2005), "
520:offerings. However, a combination of CRM,
337:can often be multiple terabytes in size.
230:and MRM packages in the 1990s and later.
109:Learn how and when to remove this message
723:Peppers, Don and Rogers, Martha (1996),
691:European Journal of Operational Research
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308:coordinated customer communication; and
713:, 3rd edition, McGraw-Hill, New York.
706:, 2nd edition, McGraw-Hill, New York.
178:forms, and credit application forms.
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174:or contest, product warranty cards,
47:adding citations to reliable sources
187:customer responses to be recorded,
725:The One to One Future (One to One)
250:Changing role of direct marketing
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709:David Shepard Associates (1999),
404:Other types of analysis include:
736:Expert Systems with Applications
571:Customer relationship management
510:Customer Relationship Management
270:The increase in marketing costs.
166:The "database" is usually name,
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499:real-time business intelligence
34:needs additional citations for
718:Hillstrom's Database Marketing
1:
746:ROI Driven Database Marketing
608:Direct News-line Nov 18, 2002
685:, and Guido Dedene (2002), “
751:Van den Poel Dirk (2003), “
697:Optimal Database Marketing,
660:Van den Poel Dirk (2003), “
526:business intelligence tools
497:individual, producing thus
286:Changing market conditions
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702:Hughes, Arthur M. (2000),
618:TechOneStop (2017-04-15).
552:Challenges and limitations
716:Hillstrom, Kevin (2006),
264:Changing cost structures
224:marketing accountability
16:Form of direct marketing
532:information a reality.
528:are making delivery of
196:customer lifetime value
163:as consumer databases.
744:Prenner, John (2000),
566:Customer data platform
542:information technology
380:Analytics and modeling
311:integrated marketing.
468:Laws and regulations
387:RFM (customer value)
351:business-to-business
275:Changing technology
242:Growth and evolution
58:"Database marketing"
43:improve this article
693:, 138 (1), 191-211.
474:European Commission
441:Cross-Sell Analysis
421:Customers as Assets
395:logistic regression
200:financial modelling
778:Types of marketing
759:, 48 (3), 371-403.
738:, 29 (3), 630-640.
668:, 48 (3), 371-403.
522:content management
461:customer retention
122:Database marketing
546:system integrator
413:customer behavior
409:Impact Assessment
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720:, Direct Academy
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41:Please help
36:verification
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624:TechOneStop
443:identifies
220:field sales
208:Robert Shaw
767:Categories
748:, UC Press
727:, Current.
629:2023-03-02
587:References
182:Background
128:that uses
69:newspapers
349:For many
216:telephone
138:marketing
134:customers
130:databases
99:July 2023
560:See also
508:Today's
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518:service
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