Database marketing is a type of direct marketing which actively makes use of customer databases and records (or those of potential customers) to generate personalized communication systems and mechanics in order to build a marketing strategy to raise awareness and bring the public to a knowledge of a product or service. The method of communication can be any functional and addressable medium, just as it’s the case in direct marketing.
However, it should be known that the main difference between direct marketing and database marketing originates mainly from the emphasis laid on data analysis and sorting. Database marketing puts more importance on the use of statistical techniques to develop models and patterns of customer behavior, which are then used to pick the ideal customers for effective communications to take place. As a direct consequence of this, database marketers also tend to rely strongly on data warehouses for their extensive operations, mainly because having a larger amount of data about customers increases the probability of building a more accurate data set.
Marketing databases are of two main classifications:
- Customer databases, and
- Business databases.
Consumer databases are primarily targeted at companies that are consumer-specific and which rely on the participation and involvement of customers to do business. Customer marketing is often abbreviated as business-to-customer (B2C or BtoC).
On the other hand, business marketing databases are often of much more advanced natures, putting in mind the complexity and structure of the information that they can make available. This is mainly because business databases aren’t restricted by the same privacy laws that apply to consumer databases.
The database usually consists of name, address, and transaction history details derived from internal sales or delivery systems, or a list compiled from the database and sources of another organization, which has captured that information from its customers and is readily available to provide them. Typical sources of compiled lists are charity donation forms, application forms for any free product or bonanza, product warranty cards, subscription forms for email adverts, product updates, newsletters, etc and credit application forms.
The communications generated by database marketing may be described by some as junk or spa, if the message is unwanted by the intended (and eventual) recipient. It is a prevalent debate topic among direct and database marketers that a targeted letter or e-mail to a customer, who wants to be contacted about offerings that may interest the customer, benefits both the customer and the marketer.
The debate as to whether some of the methods of database marketing are legal and supported has reached a new high, as some countries and some organizations insist that individuals are able to prevent entry to or delete their name and address details from database marketing lists. This is why in order to make effective database marketing work, it is better to collect valuable and active information from customers who are willing to provide them. It saves the marketer from litigation and reduces the chances of some forms of legal restriction