Imagine you work for a business. You have a new product line that should arrive this month. You need a marketing campaign for surrounding neighborhoods. However, it is costly to advertise to every person in the surrounding areas. Thus, it is beneficial to apply a direct advertising technique. This should reduce costs and produce a more effective marketing campaign. Database marketing is a direct marketing technique that uses customer data to create direct communication. Therefore, database marketing allows businesses to generate customer lists based on similar product purchases. Businesses use previous purchase behaviors to predict customer interest in the new product. Database marketing requires interaction with customers. This relationship is known as customer relationship management (CRM). CRM is a technology that manages interactions between the business and the customer. Thus, CRM technology establishes connections to customers through direct marketing, sales, customer service, and support. We will examine database/direct marketing used to model customer acquisition and retention and the concept of lifetime value (CLV).
Completing this unit should take you approximately 3 hours.
Database marketing is a data collection technology used to understand customer needs. It is all about leveraging customer data to deliver personalized, relevant, and effective marketing. Implementing large-scale marketing campaigns is not a new concept. However, database marketing technology has made large-scale marketing more efficient and practical.
There are two practical factors for database marketing. (1) Technology that allows for collecting enormous quantities of customer data, and (2) powerful statistical technologies that analyze customer data to better understand their wants and needs. Proper customer databases will include names and addresses, phone numbers, e-mail addresses, purchase histories, product requests, and any other data that can be legally collected.
Read this article. Why is it important to understand customer purchasing behaviors? How does database marketing improve the business-to-customer relationship? Database marketing does more than build relationships with customers. It reduces marketing costs, increases profit margins, and improves product development. Currently, there are various customer database technologies utilized to build business-to-customer relationships. The key strategies enabled by a database marketing system include customer acquisition, customer retention, customer growth, and customer loyalty.
B2C relationships are built by establishing business principles, guidelines, and best practices. B2C utilizes CRM to establish relationships by improving direct interactions with customers.
Read this article and focus on how different departments within a business use customer data for CRM. Then, complete the case study. What data did the company collect for database marketing? How did this company use database marketing to improve customer relationships (CRM)? The case study was an example of a real-world CRM process used to improve customer interaction.
Read this article and evaluate how well you understand database marketing and CRM by answering the questions at the end of the article.
Read this article, which focuses on types of data typically stored in customer databases. Then, answer the practice question at the end of this lesson to summarize the types of data stored by CRM software.
View this figure on the components of CRM. Take notes and document the CRM components and flowchart.
CRM is used in almost every industry. Read the section of this article on CRM objectives. Think about businesses you regularly interact with. Have they become more customer-focused over time, or are they still very product-focused? Why do you believe that?
Read this article on CRM in the agricultural industry. What is the benefit of adding CRM as an approach to business? How did the banking and agricultural industry meet business objectives using CRM?
The lifetime value of a customer, also known as customer lifetime value (CLV), is the total amount of money a customer is expected to spend on a business' products or services during their lifetime. CLV is an important metric to measure customer relationship management (CRM). CLV reveals how well customers like your product or service. Decision-makers can make informed decisions and grow their business using CLV metrics.
CRM systems form the basis for how organizations make decisions on managing current customers and identifying prospective customers. Read this article to learn how organizations utilize CRM systems in their decision-making and the companies that provide some of the tools used in these systems. While reading this article, think about how organizations build and maintain relationships with you, their customer. List some of the advantages and disadvantages of this approach.
CLV puts a value on the customer relationship; thus, it is a key component in the CRM system. Knowing the customer's value helps an organization determine which customers they want to strengthen their relationship with and which ones they don't. Read this article to explore the concept of customer lifetime value and why an organization needs to utilize it in its decision-making. Focus on the methodology for calculating CLV and think about the variability inherent in each step of the calculation.
We recommend reviewing this Study Guide before taking the Unit 7 Assessment.
Take this assessment to see how well you understood this unit.