582 The Marketing Book
Summary data
The transactional database needs historical
data. Otherwise there can be no record of a
customer’s business relationship with the com-
pany. Usually, the data used to portray a
customer history (or the results of a promotion)
are summarized, so that they don’t occupy too
much space (memory) in the system.
While this is very sensible, because it saves
costs, the problem is that essential details are
sometimes lost. Generally speaking, the num-
ber, value and dates of a customer’s transac-
tions will be retained but the merchandise
categories and, certainly, the actual products
purchased will often be lost for all except the
most recent transaction. Furthermore, com-
panies are usually bad at keeping customer
service records. A marketing analyst can waste
hours or days looking at customer profiles,
seeking an explanation for why some custom-
ers are disloyal. The true explanation may lie
elsewhere. Perhaps the disloyal customers
ordered goods that were out of stock or had to
return defective items.
Meanwhile, the sharp reduction in data
storage and retrieval costs has encouraged firms
to keep more raw data for analysis instead of
summarizing them and archiving old data. This
is a major benefit of data warehousing.
CRM and database marketing
Although enterprise-wide CRM systems may
have grown out of database marketing (some
would say call centre operations), they have
become distanced from the marketing
function.
CRM systems are essentially operational
whereas marketing database systems can
exploit data that are downloaded from
operational systems without disturbing them.
Marketing database needs may be supplied by a
data mart within a CRM system.
The CRM system is generally seen as the
software that automates the ‘front office’. The
front office includes the call or contact centre,
the website and any other point of interaction
between the company and its customers. Front
office functions include service as well as sales.
The impetus for the adoption of CRM has not
necessarily been increased customer knowledge
but cost cutting. Cost cutting is achieved by
increasing productivity of customer-facing staff
and by diverting transactions down completely
automated routes.
The CRM system may work in tandem with an
ERP (enterprise resource planning) system that
handles the back office functions. The emphasis
is on operational efficiency.CRM and relationship marketing
The very name ‘customer relationship manage-
ment’ implies that customers are a resource that
can be managed, like the supply chain and sales
staff. Although CRM feeds off customer data, it
is essentially neutral. It may be customer-
focused in a marketing sense or it may be
enterprise-focused, being employed to seek
ways to save on customer service. It depends
who is extracting actionable data and for what
purpose. However, the fact that a common
information system is being used throughout
the organization is clearly advantageous.The customer as relationship
manager
Two features that are apparent in interactive
marketing are transparency and customer
empowerment. The US software producer,
MicroMarketing, has devised software that
enables customers to pull information out of
data warehouses in order to complete transac-
tions by web or phone. This looks like the way
of the future.CRM should not be confused with Relationship
Marketing, which is the title of an influential