Mm ii-t-1-database mkt-l-1-2

DATABASE MARKETINGDATABASE MARKETING

What is dataWhat is data

It is not informationIt is not information

It is not knowledgeIt is not knowledge

Data by itself is a fact or multiple Data by itself is a fact or multiple facts or a set of values that is facts or a set of values that is available in a structured manneravailable in a structured manner

It is a kind of raw materialIt is a kind of raw material

WHAT DOES SUCH DATA MEANWHAT DOES SUCH DATA MEAN

Seen out of context without Seen out of context without interpretation and application of interpretation and application of human mind it does not mean human mind it does not mean anythinganything

It is just like a nugget an objectIt is just like a nugget an object

IT DOES NOT HAVE VALUE RELEVANCE IT DOES NOT HAVE VALUE RELEVANCE OR SIGNIFICANCEOR SIGNIFICANCE

With interpretation or application of human With interpretation or application of human intelligence it becomesmdashpossiblyndash a source intelligence it becomesmdashpossiblyndash a source of useful information and therefore of useful information and therefore valuable to your businessvaluable to your business

WHEN HUMAN INTELLIGENCE IS APPLIED WHEN HUMAN INTELLIGENCE IS APPLIED TO STUDYING DETAILS INTERPRETING TO STUDYING DETAILS INTERPRETING THEM AND IDENTIFYING PATTERNS THAT THEM AND IDENTIFYING PATTERNS THAT MAY BE USEFUL DATA BECOMES VALUABLE MAY BE USEFUL DATA BECOMES VALUABLE INFORMATIONINFORMATION

Therefore collecting and storing data is Therefore collecting and storing data is pertinent only if is a part of a strategic pertinent only if is a part of a strategic planplan

DATABASESDATABASES

WHAT IS A DATABASEWHAT IS A DATABASE

Database is a set of collection of such Database is a set of collection of such structured facts stored in physical files and structured facts stored in physical files and managed by database management managed by database management systems (DBMS)systems (DBMS)

It is collection of facts which is potentially It is collection of facts which is potentially useful to the organisation when studied in useful to the organisation when studied in detail and interpreted for a purposedetail and interpreted for a purpose

DATABASE contd-DATABASE contd-Organised collection of comprehensive data about individual Organised collection of comprehensive data about individual customers or prospects including geographic customers or prospects including geographic demographicpsychographic and behavioral datademographicpsychographic and behavioral data

It gives a 360-degree view of customers and how they behaveIt gives a 360-degree view of customers and how they behave

A company is as good as its customers data baseA company is as good as its customers data base

In consumer marketing the customer database might contain In consumer marketing the customer database might contain customersrsquo customersrsquo

a)demographicsmdash age income family members birthdaysa)demographicsmdash age income family members birthdays

b)Psychographicsndash Activities interests opinion b)Psychographicsndash Activities interests opinion

c) RFM of past purchasesmdashrecency frequency and monetary value of c) RFM of past purchasesmdashrecency frequency and monetary value of past purchasespast purchases

The DBMS is a system that handles The DBMS is a system that handles the data so that you can access it in the data so that you can access it in a variety of waysa variety of ways

DATABASE MARKETINGDATABASE MARKETINGIT IS A TYPE OF BUSINESS METHOD IT IS A TYPE OF BUSINESS METHOD A PROCESS WHEREBY DATABASE IS A PROCESS WHEREBY DATABASE IS TURNED INTO A BUSINESS DECISION TURNED INTO A BUSINESS DECISION

WHY DATABASE MARKETINGWHY DATABASE MARKETING

Why Database MarketingWhy Database Marketing

Informational ReasonsInformational ReasonsAvailability of abundance dataAvailability of abundance data

Permission to collect themPermission to collect them

Technological ReasonsTechnological ReasonsTechnology to collect and warehouse dataTechnology to collect and warehouse data

Technology and computing power available to Technology and computing power available to analyze themanalyze them

Availability of commercial software some of Availability of commercial software some of which are even ldquouser friendlyrdquo (eg XL miner which are even ldquouser friendlyrdquo (eg XL miner SAS enterprise miner)SAS enterprise miner)

Commercial ReasonCommercial ReasonInterest in generating intelligence to remain Interest in generating intelligence to remain competitive main market sharecompetitive main market share

Drive to be efficientDrive to be efficient

DATABASE MARKETING-DEFINITIONDATABASE MARKETING-DEFINITION

A More Inclusive Definition of Database A More Inclusive Definition of Database MarketingMarketing

Database marketing is a systematic Database marketing is a systematic approach to the gathering consolidation approach to the gathering consolidation and processing of marketing databases to and processing of marketing databases to learn more about customers and learn more about customers and competitors select target markets competitors select target markets compare customers value to the compare customers value to the company provide more specialized company provide more specialized offerings as well as make other marketing offerings as well as make other marketing and strategic decisions and strategic decisions

Data BaseData Base

OtherData

Customer Data

TransactionalData

Data Warehousing Data BaseData Analytic ToolsSoftware

MARKETING

DECISION

MEMORY

DATA QUALITYDATA QUALITY

VALUE OF DATAVALUE OF DATA

For data to be useful it must have certain characteristics to For data to be useful it must have certain characteristics to make it ldquogood datardquomake it ldquogood datardquo

1 ACCURACY1 ACCURACYA simple incorrect data entry is the most common form of A simple incorrect data entry is the most common form of data errordata error

2 INTEGRITY2 INTEGRITYIs the structure of data and relationship among entities and Is the structure of data and relationship among entities and attributes maintained consistentlyattributes maintained consistently

Eg ldquoQualifications Graduaterdquo used across the system or Eg ldquoQualifications Graduaterdquo used across the system or ldquoQualifications=Graduaterdquo ldquoqualifications graduatersquo also ldquoQualifications=Graduaterdquo ldquoqualifications graduatersquo also usedused

COMPLETENESSCOMPLETENESSIs all the data completeIs all the data complete

VALIDITYVALIDITYDoes the data value within acceptable range of businessDoes the data value within acceptable range of business

TIMELINESSTIMELINESSIs the data available when requiredIs the data available when required

ACCESSBILITYACCESSBILITYIs the data easily accessible understandable and usableIs the data easily accessible understandable and usable

It is very essential for the team in charge of data to It is very essential for the team in charge of data to understand the user of datunderstand the user of dat

DATA MININGDATA MINING

In the past there was never a high level of precision when In the past there was never a high level of precision when it came to marketing your productsit came to marketing your products

Trying to compare traditional marketing strategies with Trying to compare traditional marketing strategies with data mining is like trying to compare a precision guided data mining is like trying to compare a precision guided missile to blindly throwing darts at a board There is no missile to blindly throwing darts at a board There is no comparisoncomparison

The advancement of artificial intelligence neural networks The advancement of artificial intelligence neural networks and computer algorithms has led to a world in which the and computer algorithms has led to a world in which the technology is capable of learning Because of this it can technology is capable of learning Because of this it can look for relationships that my not be obvious to the userlook for relationships that my not be obvious to the user

Data mining is a technique that enables the company to Data mining is a technique that enables the company to discover connections patterns and relationships in a set of discover connections patterns and relationships in a set of data with a high degree of accuracy and precisiondata with a high degree of accuracy and precision

It is It is not not a business solutiona business solution

However the patterns that are discovered by data mining However the patterns that are discovered by data mining tools are only relevant if they are directly related to solving tools are only relevant if they are directly related to solving a specific problem Otherwise any patterns that are a specific problem Otherwise any patterns that are discovered is useless Also you have to look at the discovered is useless Also you have to look at the coverage of your data mining tool coverage of your data mining tool

Typical tasks addressed by data mining Typical tasks addressed by data mining includeinclude

Rate customers by their propensity to Rate customers by their propensity to respond to an offer respond to an offer

Identify cross-sell opportunities Identify cross-sell opportunities

Detect fraud and abuse in insurance and Detect fraud and abuse in insurance and finance finance

Estimate probability of an illness re-Estimate probability of an illness re-occurrence or hospital re-admission occurrence or hospital re-admission

Isolate root causes of an outcome in Isolate root causes of an outcome in clinical studies clinical studies

Determine optimal sets of parameters for a Determine optimal sets of parameters for a production line operation production line operation

Predict peak load of a network Predict peak load of a network

Without proper analytical tools discovering useful Without proper analytical tools discovering useful knowledge hidden in huge volumes of raw data knowledge hidden in huge volumes of raw data represents a formidable task represents a formidable task

The exponential growth in data diverse nature of The exponential growth in data diverse nature of data and analysis objectives the complexity of data and analysis objectives the complexity of analyzing mixed structured data and text are analyzing mixed structured data and text are among the factors that turn knowledge discovery among the factors that turn knowledge discovery into a real challengeinto a real challenge

Data Mining provides tools for automated Data Mining provides tools for automated learning from historical data and developing learning from historical data and developing models to predict outcomes of future situations models to predict outcomes of future situations The best data mining software tools provide a The best data mining software tools provide a variety of machine learning algorithms for variety of machine learning algorithms for modeling such as Regression Neural Network modeling such as Regression Neural Network Decision Tree Bayesian Network CHAID Support Decision Tree Bayesian Network CHAID Support Vector Machine and Random Forest to name a Vector Machine and Random Forest to name a fewfew

Yet data mining requires far more than just Yet data mining requires far more than just machine learning Data mining additionally machine learning Data mining additionally involves data pre-processing and results involves data pre-processing and results delivery delivery

Data pre-processing includes loading and Data pre-processing includes loading and integrating data from various data sources integrating data from various data sources normalizing and cleansing data and carrying out normalizing and cleansing data and carrying out exploratory data analysis exploratory data analysis

DATA WAREHOUSINGDATA WAREHOUSING

We build a marketing data warehouse for the main We build a marketing data warehouse for the main purpose of more efficiently and profitably servicing purpose of more efficiently and profitably servicing our customers and prospects today and in the future our customers and prospects today and in the future

Example-- a publisher of several titles that also offers Example-- a publisher of several titles that also offers special online content such as webcasts or paid special online content such as webcasts or paid reports reports

Without such a database a publisher would not know Without such a database a publisher would not know how to cross sell the various titles or online products how to cross sell the various titles or online products or services most effectively The fulfillment files for or services most effectively The fulfillment files for each would most likely be separate and distinct and each would most likely be separate and distinct and not allow for an efficient usage of information for not allow for an efficient usage of information for promotional decision purposes And even if all were promotional decision purposes And even if all were fulfilled from the same source the data would likely fulfilled from the same source the data would likely not be integrated at a customer level nor easily not be integrated at a customer level nor easily accessible for marketing accessible for marketing

Although a fulfillment file contains a wealth of information its Although a fulfillment file contains a wealth of information its structure is rigid (built for fulfillment rather than marketing) and it structure is rigid (built for fulfillment rather than marketing) and it lacks complete information about the customer and typically deals lacks complete information about the customer and typically deals with only one product Thus alone it will not meet all of the needs with only one product Thus alone it will not meet all of the needs to efficiently target communications to your customers or to efficiently target communications to your customers or prospects across the company prospects across the company

What are the key points that must be taken into consideration to What are the key points that must be taken into consideration to ensure success in the build of a marketing data warehouse ensure success in the build of a marketing data warehouse

Why Build a Marketing Data Warehouse Why Build a Marketing Data Warehouse Top Reasons Why We Fail Top Reasons Why We Fail What Functional Areas it Must Support What Functional Areas it Must Support Key Profit Drivers Key Profit Drivers Who Will be Using the Data Warehouse and what it must Who Will be Using the Data Warehouse and what it must

deliver deliver What should be stored on the Data Warehouse What should be stored on the Data Warehouse How often should the Data Warehouse be updated How often should the Data Warehouse be updated Should the Database be Built In-house or Outsourced Should the Database be Built In-house or Outsourced Quantifying Profit Quantifying Profit

Why Build a Marketing Database Why Build a Marketing Database There are three key functions of a marketing database There are three key functions of a marketing database

1048707 1048707 To most efficiently maintain your data in an organized To most efficiently maintain your data in an organized fashion fashion

1048707 1048707 To better support corporate functions To better support corporate functions

1048707 1048707 To better support marketing functions To better support marketing functions

All of which will allow you to better service your customer All of which will allow you to better service your customer and hence maximize revenue and hence maximize revenue

The pinnacle is of course to be able to calculate and The pinnacle is of course to be able to calculate and forecast customer lifetime valueforecast customer lifetime value

The foundation of the database build is the customer The foundation of the database build is the customer contact information From this we accumulate historical contact information From this we accumulate historical purchase and promotional data called our marketing data purchase and promotional data called our marketing data

REASONS FOR FALIUREREASONS FOR FALIURE

The Major Reasons For Failiure The Major Reasons For Failiure

1048707 1048707 Underestimating the time and resource commitment to Underestimating the time and resource commitment to build or maintain the database build or maintain the database

1048707 1048707 Not having the right support team in place once the Not having the right support team in place once the database is delivered even if outsourced database is delivered even if outsourced

1048707 1048707 Not having a plan in place regarding how you will use the Not having a plan in place regarding how you will use the database once delivered and how you will quantify the database once delivered and how you will quantify the benefits benefits

1048707 1048707 Inappropriate in scope -- too broad or too narrow Inappropriate in scope -- too broad or too narrow

1048707 1048707 Not properly prioritizing deliverables ndash phased in Not properly prioritizing deliverables ndash phased in approach approach

Failure to shift the paradigm at the organization to a Failure to shift the paradigm at the organization to a information-based decision approach information-based decision approach 10487071048707

Thinking that if you build the database profits will come Thinking that if you build the database profits will come

Failure to realize that your number one priority in the build Failure to realize that your number one priority in the build is getting the data right 1048707 is getting the data right 1048707

Failure to fully assess costs of ldquoadd onsrdquo relative to total Failure to fully assess costs of ldquoadd onsrdquo relative to total database costs versus their benefits database costs versus their benefits

10487071048707

It is not any one reason that causes It is not any one reason that causes failure but a combination of the failure but a combination of the above above

KEY PROFIT DRIVERSKEY PROFIT DRIVERS --The major profit drivers can be--The major profit drivers can be --Demographic Profiling--Demographic Profiling --Mkt Research support--Mkt Research support --CRM Strategies--CRM Strategies --Lifetime Value analysis--Lifetime Value analysis --Customer Acquisition Models--Customer Acquisition Models --Retention Models--Retention Models --Strategic Corporate Reports--Strategic Corporate Reports Some functions can be performed just by virtue of having all of Some functions can be performed just by virtue of having all of

the data readily available and in one place others require the the data readily available and in one place others require the application of quantitative sophistication to complete application of quantitative sophistication to complete

WHO WILL BE USING DATABASEWHO WILL BE USING DATABASEKeep in mind that there are many individuals throughout the Keep in mind that there are many individuals throughout the organization who will utilize a marketing database However organization who will utilize a marketing database However typically many of these needs are related in one form or typically many of these needs are related in one form or another As such you will want to involve all in the decision another As such you will want to involve all in the decision process of what the database should ultimately accomplish process of what the database should ultimately accomplish

Many individuals will need similar access to the database and Many individuals will need similar access to the database and what is has to offer For example all functional what is has to offer For example all functional areasindividuals will want some form of ldquodashboardsrdquo or other areasindividuals will want some form of ldquodashboardsrdquo or other reports reports

To ensure success and keep the cost of the database in check To ensure success and keep the cost of the database in check you must understand the relationships between the individuals you must understand the relationships between the individuals so that priorities can be properly set regarding deliverables and so that priorities can be properly set regarding deliverables and features It is best to build in phases ---start out small and build features It is best to build in phases ---start out small and build on each success Remember this is a marketing database on each success Remember this is a marketing database

The primary focus must first be to meet marketingrsquos needs The primary focus must first be to meet marketingrsquos needs Other divisions can then followOther divisions can then follow