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Best Practice in Managing Customer Data
VRL Financial News Publishing, Aug 2010
The main tool that the marketer has is knowledge gained through acquisition and the use of information. Information is power, but only if organised in a useful way and presented in a manner that is easy to use.
This report will introduce and describe approaches and methods for building marketing databases, and strategies for involving their use in the development and long-term management of card portfolios.
Marketing databases are designed to organise information to support marketing and advertising, and the tools that have been developed to search these databases are designed to extract the knowledge that can be applied to optimise advertising and marketing efforts.
Properly designed and populated marketing databases are the most effective way to store and retrieve the data that database marketing is dependent on.
You may ask: Why would I want to undertake the sizable expenses in time and resources to design, build and maintain a comprehensive database? Why should my institution incur this additional expense? The expense can be significant, especially if no existing resources are available for leverage. Setup costs can exceed $65 per account, and annual maintenance costs can sometimes be greater than that.
The answer lies in the ability to limit the marketing expense for all campaigns by utilising the knowledge base in the marketing database to target the most responsive customers. A further answer lies in the benefit gained by the increase in portfolio activity that those customers provide.
The major players in the financial services industry have found many uses for marketing databases:
- in the effort to maximise the use of those services by customers;
- in the promotion of their products to potential customers; and
- in the broader management of their customer relationships.
The financial services institutions that offer credit and debit card services have found that the use of marketing databases has allowed greater selectivity in acquiring less risky and more profitable customers, and has improved the retention rate of the most profitable customers.
In addition, some of the most powerful uses of marketing databases may not be in the marketing department at all. The determination of what data to include in the marketing database should be carefully thought out. Input should be obtained from other areas of the company, including operations, risk management, legal, and senior management. This will ensure that the critical areas of the business will be serves and the business-critical data will be included in the database. The gathering and merging of information should be carefully done with the goal of integrating all data into a comprehensive and cohesive database. If the initial effort of defining the scope and specifics of the information to be stored is properly done, the database can serve the institution in many ways beyond its marketing campaigns. This result will serve to integrate the business better and to increase the return on investment of the database.
This report introduces and describes the approaches and methods for building marketing databases, and provides strategies for involving their use in the development and long-term management of card portfolios.
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