Chapter 11 Terms

Database Marketing
involves collecting and utilizing customer data for the purposes of enhancing interactions with customers and developing customer loyalty.
o Identifying customers AND building relationships
Operational Database
customer transactions and follows accounting rules
Marketing Database
current and former customer information as well as prospect information
What Databases include
customer names / email address / history of every purchase transaction / results of customer surveys / customer preferences / marketing promotion history / database coding
Data Warehouse
holds all customer data.
•Operational database: holds individuals transactions with the firm and allows accounting principals
•Marketing database: contains information about current customers, former customers, and prospects
Email and internet data
cost effective and builds relationships
o Cookies: stores information, personalize website, customize content.
adding geographic codes to customer records to make it possible to plot customer addresses on a map. People who share common values and interests tend to live in the same neighborhoods.
Database coding and analysis
provide information for the development of personalized communications.
o Assist in making marketing promotional campaigns.
o Common forms of coding
• examples: lifetime value analysis, customer clusters, location-data tracking
Customer Lifetime Value (CLV)
represents the present value of future profits a customer will generate over his or her lifetime relationship with a company.
o Key figures: revenue and costs / retention rate / visits or purchases per time period
o 20% inactive nonprofitable customers
o 60% active profitable customers
o 20% very active, very profitable customers
marketers use coding systems to group customers into clusters based on a wide variety of criteria. Groups customers into clusters and develops marketing programs for each cluster. Increases advertising effectiveness.
o Example: customers with home mortgages above 100k with balances of 30 to 60% remaining may be targeted for a home equity loan.
Data mining
process of using computer data analysis software to mine data for meaningful information and relationships.
o Used to build profiles of customer groups and of a firm’s best customers. Then you search for the customers who fit the profile.
o Purposes:
• Develop marketing communications
• Develop marketing programs
• For personal sales
• Qualify prospects
• Information for sales calls
Internet for communications
o Key technology for database-driven marketing communications.
o Cheapest form of communication
o Available 24/7
o Builds bond with customers
o Customers are able to access additional information whenever they want
o Metric analysis reveals that the customer read the message, the time it was read, and how much time was spent reading it.
ID codes
assigning customer IDs and passwords that allow them to access components of the website that are not available to those who simply visit the site without logging on. Example: cookies remember your password to websites
process of searching the database for a specific piece of information for marketing purposes. (example: home depot’s trawling program locates individuals who have moved or when they buy new homes)
Permission marketing program
form of database marketing in which the company sends promotional materials to customers who give the company permission to do so
empowerment and reciprocity• Steps
1. Obtain permission
2. Offer ongoing curriculum
3. Reinforce the incentive to continue relationship
4. Increase level of permission
5. Leverage the permission to benefit both parties
consumers believe they have power throughout the relationship and just not at the beginning
sense of obligation toward the company by giving the consumers rewards along the way and not just at the beginning
loyalty programs
offering free or discounted merchandise for a series of purchases.
• Goals:
• Maintain or increase sales, margins, profits
• Increase loyalty
• Preempt or match a competitor’s offer
• Encourage cross-selling
• Differentiate the brand
• Discourage entry of a new brand
Customer relationship management
provide a method to employ databases that customize products and communications with customers with the goals of higher sales and profits.
• Builds long-term loyalty and bonds with customers through personal touch
• Measured by 2 metics: lifetime value and share of customer
Direct mail
most common form of direct response marketing. Targets both consumers and B2B customers.
o Response list: consists of individuals who have made purchases or who have responded to direct mail offers in the past.
o Hot list: includes individuals who have responded to a direct mail offer within 30 days.
o Compiled list: list of individuals who meet specific demographic characteristics
feature low pressure direct response marketing tactic that gives consumers time to consider goods and prices. Provides complete product information to members of the buying center and prices for the purchasing agent.
direct sales
when someone contacts peers and provides them with small catalogs or marketing brochures.
personal selling
hopes to result in the acquisition of new customers in addition to influencing current customers to increase levels of purchases. NOT limited to just making sales.
o aims to develop long term relationships with customers.
o Relationship selling: create a customer for life, not for a single transaction.
Steps in selling process
o Generating leads: referrals generate the most idea leads because satisfied customers make most recommendations.
o Qualifying prospect: potential income vs probability of acquiring prospect.
o Knowledge acquisition
o Sales presentation
• Stimulus response
• Need-satisfaction
• Problem solution
• Mission sharing
o Handling objections
o Sales closing
o Follow-up
Lifetime value
measures potential level of purchases to be made by an individual or market segment.
Share of customer
measures a customer’s potential value. The percentage of expenditures a customer makes with one particular firm compared to the total expenditures in that product’s category. Important in personal selling