Marketing Online

At the heart of CRM is database marketing. Your company needs to
develop separate databases on customers, employees, products, services,
suppliers, distributors, dealers, and retailers. The databases
make it easier for marketers to develop relevant offerings for individual
customers.

In building the customer database, you have to decide on what
information to collect.
• The most important information to capture is the transaction
history of each buyer. Knowing what a customer has purchased
in the past affords many clues as to what he or she
might be interested in buying next time.
• You could benefit by collecting demographic information
about each buyer. For consumers, this means age, education,
income, family size, and other attributes. For business buyers,
this means job position, job responsibilities, job relationships,
and contact addresses.
• You may want to add psychographic information describing the
activities, interests, and opinions (AIO) of individual customers
and how they think, make decisions, and influence others.

 

The second challenge is to get this information. You train your
salespeople to gather and enter useful information into the customer’s
file after each sales visit. Your telemarketers can gather additional
information by phoning customers or credit rating agencies.
The third challenge is to maintain and update the information.
About 20 percent of the information in your customer database can
become obsolete each year. You need telemarketers to phone a sample
of customers each working day to update the information.
The fourth challenge is to use the information. Many companies
fail to use the information they have. Supermarket chains have
mountains of scanner data on individual customer purchases but fail
to use these data for one-to-one marketing. Banks collect rich transaction
information that mostly goes unanalyzed. At the very least,
these companies need to hire a person skilled in data mining. By applying
advanced statistical techniques, the data miner might detect
interesting trends, segments, and opportunities.
With all these benefits, why don’t more companies adopt
database marketing? All this costs money. Consultant Martha
Rogers of Peppers & Rogers Group does not deny the costs: “Establishing
a rich data warehouse can cost millions of dollars
for the technology and the associated implementation and
process changes. Throw in a few hundred thousand for strategic
consulting, a little more for various data integration and
change management issues, and voilà, you’ve got yourself one
hefty investment.”26
Clearly one-to-one marketing is not for everyone. It is not for
companies that sell a product purchased once in a lifetime, such as a
grand piano. It is not for mass marketers like Wrigley to gather individual
information about the millions of its gum-chewing customers.
It is not for companies with small budgets, although the investment
costs can be scaled down somewhat.

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