Chapter 2- Building Databases, Selecting Customers and Managing Relationships

Question 1

What is the definition of Customer Database ?

Answer 1

A customer database is a list of customer names to which the marketer has added additional information in a systematic fashion.

Question 2

Why is the Customer Database so important ?

Answer 2

• The heart of all direct and interactive marketing activities.
• The key to developing strong customer relationships and retaining customers.

Question 3

What are the Primary Objectives of a Customer Database ?

Answer 3

• To get to know customers better
• To sell different products or services to existing customers
• To introduce new products or services
• To distribute information about an upcoming event or sale
• To introduce new employees
• To keep customers satisfied and happy

Question 4

What are the characteristics of Highly Satisfied Customers ?

Answer 4

• Tend to be more loyal customers
• Generate more profits over their lifetime of patronage

Question 5

What are the Reasons Why Loyal Customers Generate More Profits ?

Answer 5

• Increase their spending over time
• Cost less to serve than new customers
• Generate word-of-mouth advertising or referrals
• Are less price sensitive than new customers

Question 6

What are Types of Sources Data To Collect To Build A Customer Database ?

Answer 6

• Customer’s Name
• Address
• Telephone Number
• E-Mail Address
• Demographics
• Psychographics
• Past Purchases (Transaction Data)

Question 7

What is Database Maintenance: Merge/Purge ?

Answer 7

• A process using match codes to identify and delete duplicate names and addresses
• Keeps house lists from being duplicated
• Can remove names that requested no solicitations
• Can identify “multibuyers”

Question 8

What is The Need for Database Maintenance ?

Answer 8

• Lists are perishable
• Constant control and maintenance is required
• Includes identifying and eliminating any duplicate records
• Three categories of database maintenance activities are needed

Question 9

What are the three Categories of Database Maintenance Activities ?

Answer 9

1. Change of Address investigations
2. Nixie removal
3. Record Status updates

Question 10

What is Change of Address ?

Answer 10

• Should be requested through the U.S. Postal Service (National Change of Address Service - NCOA)
• Promotions that are mailed out to improper addresses may result in a financial lost

Question 11

What is Nixie Removal ?

Answer 11

Defined – mail that has been returned by the Postal Service because it is undeliverable as illegible addresse

Question 12

What is the description of Record Status Updates ?

Answer 12

• Transaction Data
• Marital Status
• Deaths

Question 13

What is Database Security ?

Answer 13

• Information Privacy
• Proper Database Storage
• Listing Marking -“salting” or “seeding”
  
  • Direct Marketers must safeguard their customer database and discourage theft.

Question 14

What is Common Uses of a Customer Database ?

Answer 14

• Profile Customers
• Retain Best Customers
• Thank Customers For Their Patronage
• Capitalize on Cross-Selling/Continuity Selling
• Develop A Customer Communication Program
• Perform Marketing Research
• Generate New Customers
• Send Customized Offers

Question 15

What is Performing Database Analytics ?

Answer 15

Data Mining

• Defined: The process of using statistical and mathematical techniques to extract customer information from the customer database to draw inferences about an individual customer’s needs and predict future behavior.
• Online Analytical Processing (OLAP)

Question 16

What’s the Secret to Database Analytics ?

Answer 16

• Be able to identify their “most” and “least” valuable customers;
• Clarify demographic and behavioral statistics that apply to each population.

Question 17

What is Database Enhancement ?

Answer 17

Defined – Refers to adding and overlaying information to customer records to better understand and describe the customer

Question 18

What are the three reasons to Enhance a Database ?

Answer 18

1. Learn more about the customer
2. Increase the effectiveness of future promotional activities targeted to current customers
3. To better prospect for new customers who are similar to current customers