What is Database Marketing, and How it Differs from CRM?

What is Database Marketing?

In this article, I will explain what database marketing is and the difference between CRM.

In recent years, business activities utilizing data owned by companies have been spreading. 

However, to utilize data in business, it is necessary not only to collect it but also to analyze it carefully. And incorporate the hypothesis obtained from the analysis into marketing measures.

Table of contents:

• What is database marketing?
  • Differences from CRM
• Benefits of database marketing
  • Easy to get orders
  • Increased sales efficiency
• Key to success in database marketing
  • Clarify your objectives
  • Define the target and collect the data
  • Choose the right platform for your purpose
  • Incorporate marketing measures into the PDCA cycle
• Summary

What is database marketing?

Database marketing refers to a marketing method that collects, manages, and accumulates customers’ personal information and purchase history in a database, analyzes it from all angles, grasps their needs, and approaches the target audience. 

Since we focus on selling efficiently, the primary focus is to analyze and utilize data from the existing customers rather than new customers.

Difference from CRM

First of all, CRM is an abbreviation for Customer Relationship Management. It is a marketing method aimed at improving the satisfaction level of each customer. So we can suggest products/services that suit customers based on information such as purchase history.

For example, based on the data that “Mr. A” purchases vegetable juice every morning, CRM can suggest various vegetable juice products. 

Database marketing is the process of accumulating such customer information and analyzing the trends of people who purchase vegetable juice every morning to determine which vegetable juices are preferred at which times of the year, and then linking this information to measures.

Although they are both the same in the sense that they analyze customer information and use the results, there is a difference. CRM is an approach that builds relationships by continuing to provide services individually from the customer’s perspective. Database marketing analyzes the trends of customers in the same situation and connects them to marketing measures.

Benefits of database marketing

The following is an explanation of the benefits of using database marketing:

Easier to get orders

A database is a record of past contacts with customers who are interested in your services or products. Make a list of this information and select your targets. By taking an appropriate approach for each customer’s status and situation, you can efficiently lead to orders. Also, by using the database and continuously approaching customers when their needs materialize, you can prevent an influx of competitors and avoid opportunity loss.

Improving sales efficiency

The more customer information you accumulate in your database, the more accurate it will become, and the more efficiently you will be able to approach your target customers. It will reduce the man-hours spent on a considerable amount of time and increase the man-hours for higher value-added tasks, which will lead to an improvement in productivity.

The key to success with database marketing

Finally, let’s take a look at some of the key points that will help you get the most out of database marketing:

Clarify your purpose

Before collecting data, it is necessary to clarify the purpose for which the data will be used. Simply collecting and analyzing a large amount of data in the dark is inefficient and may not yield effective analysis results. For example:

• I want to make new sales
• I want to connect to continuous sales

You can use this as a clue to determine your target.

Define the target and collect the data

By clarifying the purpose, the target of data collection will naturally become apparent.

In the example above, if you need to “make new sales,” you should focus on current customers, and if you need to “make continuous sales,” it is more efficient to focus on existing customers.

Also, you will search for commonalities while focusing on the detailed status of the target, such as age, gender, address, occupation, hobbies, and past purchase history, and select the necessary information. By accumulating information while embodying the target group, it is possible to focus and formulate strategies according to user needs and attributes.

Choose the right platform for your purpose

There are various data management platforms available, including CRM, SFA, MA, BI, DWH, and business card management software. There are also comprehensive data management tools that combine all of these functions.

Since there are a wide variety of platforms, if your goals are unclear as to why you are implementing the platform and what kind of data you want to collect and utilize, it may not lead to results.

Choose the right platform while keeping in mind the purpose you set earlier.

Incorporate marketing measures into the PDCA cycle

To utilize database marketing and achieve results, you need to apply the PDCA cycle.

What is PDCA?

• Plan: Set goals and create a plan to execute them
• Do (Execute): Take action according to the plan
• Check (Evaluate): Analyze and evaluate whether the actions have been taken according to the plan
• Action (Improve): Improve the results of the PDC and strive for improvement

By implementing and visualizing the PDCA cycle, you will be able to clarify your goals and see what you need to do next. Let’s make better use of the PDCA to implement marketing measures.

Summary

In this article, I have introduced what database marketing is, the difference between database marketing and CRM, which is often confused with database marketing, and the effects obtained when utilizing it. Could you refer to it? Leverage databases to increase customer lifetime value by continuing to provide products/services that suit your customers. I hope you have found it useful. Thank you for reading to the end.