Database and Direct Marketing: Differences made Easy
Database Marketing is a form of Direct Marketing
Are database and direct marketing strategies the same? If not, what are the differences? These are just some of questions this article attempts to answer. Database and direct marketing are somewhat similar in that database marketing is a form of direct marketing. It uses existing or potential customers' databases for data mining to compile personal messages in order to promote a product or service. It is how this data is analysed that makes it different.
What are the Similarities and Differences?
Here are some similarities between database and direct marketing:
- Both use data mining software to search for specific customer data. Data mining occurs when data are analysed from different perspectives using data mining software and then converted into useful information. This data can be facts, figures, numbers and text related to existing or potential customers. If the patterns or relationships among these data are analysed and presented logically, information can become useful to the marketer.
- Both use personalised communication based on information extracted from the databases.
- Both use the same media channels to communicate with existing or potential customers.
- Both build relationships with customers and increase sales, leads, profits and customer retention through identification with the company and personal communication.
Here are some differences:
- Direct marketing is a huge and evolving discipline and involves numerous forms of direct personal contact with a customer or potential customer, for example, telemarketing or other forms of direct selling using different media.
- Database marketing is one aspect of direct marketing and only concentrates on optimally using information in databases to compile personal communication messages based on a customer's unique profile.
- Direct marketing also uses data mining software to extract specific customer information but usage is more limited.
- Database marketing goes a step further by also compiling customer behaviour models through complex statistical techniques and by using data warehouses to obtain as much data about customers as possible. Apart from customer databases, business databases are also used to market to businesses. Customer segments are then devised and a marketing programme and strategy are developed for each of these customer segments.
But where do organisations obtain your information which is stored in databases? You might not even realise it but your information can be obtained from application forms (not restricted to privacy), contests you enter, product warranty cards, loyalty cards, subscription forms, credit application forms and even charity donation forms. Your information is worth millions of dollars to marketers who use databases to create tailor-made marketing messages to customers (also see my article what happens to all your information you share). Your information is converted into powerful knowledge which can generate millions for companies if they use this information right. Database marketing provides the technique for companies for doing just that.