Customer related Database management system

The customer related database gives a business an insight on the customer behaviour. It is
the foundation on which the CRM software strategies work. For any business using the
CRM, the customer-related database is highly important to impart the customer-based
strategies and tactics.

The database supports all the forms of CRM Strategic, Operational, Analytical, and
Collaborative.

What is Customer-Related Database?

It is the collection of customer-related information focusing on historic sales, current
opportunities, and future opportunities. These databases are maintained by a number of
different functions such as sales managers, channel managers, product managers, etc. It can
store information such as

Customers personal information containing fields for name, address, contact details,
contact preferences, age, marital status, birthdate, anniversary, professional and
social status, etc.

Sales managers can record past transactions, product preferences, opportunities,

campaigns, enquiries, billing, etc.

Channel managers can record business-owned retail outlets, online retail information.

Product managers may record product preference, price band, product categories
explored, etc.
Based on the respective purposes, there are two types of databases
Operational and Analytical. The operational data resides in Online Transaction
Processing (OLTP) database and analytical data resides in Online Analytical Processing
(OLAP) database.

Types of Customer Data

There are mainly two types of CRM data Primary and Secondary. The primary data is
the one which is collected for the first time. The secondary data is the one which has been
collected earlier.

The primary data is collected by conventional means such as conducting surveys, holding a
skill competition, inviting the customers to subscribe for the newsletter or to register their
purchase, etc.

Database and Hardware for CRM

The CRM software use Relational Database architecture. It is composed of tables with rows
and columns. The tables are connected to other tables by a unique identification number
stored in the ID field, named primary key.

Database Management Systems for CRM

There are many database management systems available in the market today. Some popular
ones are Microsofts SQL server, Oracle, DB2 from IBM, etc. These systems help to update
and administer the database.

Hardware Considerations for CRM Database

The hardware platform on which the database will reside is selected based on the following
factors

The database size.

The existing technology used in the business.

The location of CRM users. Especially in case of global use of CRM, the multilingual
users from different time zones can access the CRM for operational and analytical
purposes.

Data Attributes
The CRM data must have the following attributes
 It must be sharable because many people need to access it from various geographical
locations.

It must be relevant means pertaining to the given purpose.

It should be most accurate. Inaccurate data wastes the marketing efforts of the
business, predicts wrong opportunities and serves the customers with insufficient and
inaccurate service. Data should be reviewed timely to ensure removal of inaccuracy
taken place while acquiring and entering the data.

It should be up-to-date means it should store and show the latest information.

It should be transportable from one location to other. It should be available where

the users need it. The technology of compiling and handling data electronically is
essential for todays fast-paced businesses.

It should be secured. Businesses need to keep their data safe from loss and theft and
unethical snooping as many businesses can subscribe to the same CRM software
through the same portal.

Developing and Maintaining Customer-Related Database

The database is a repository of collection of files (or tables). The files contain a number of
records (or rows of the table), which in turn contain various fields (or columns of the table).
Each file contains information about a topic such as customer, sales, products, etc.
Step # 1. Define the Database Functions:
Databases support the four forms of CRM strategic, operational, analytical and
collaborative. Strategic CRM needs data about markets, market offerings, customers,
channels, competitors, performance and potential to be able to identify which customers to
target for customer acquisition, retention and development, and what to offer them.

Collaborative CRM implementations generally use the operational and analytical data as
described below, so that partners in distribution channels can align their efforts to serve end-
customers. Customer-related database is necessary for both operational and analytical CRM
purposes. Operational CRM uses customer-related database to help in the everyday running
of the business.

i. a telecoms customer service representative (CSR) needs to access a customer record when
she receives a telephone query

ii. a hotel receptionist needs access to a guests history so that she can reserve the preferred
type of room smoking or non-smoking, standard or deluxe

iii. a salesperson needs to check a customers payment history to find out whether the account
has reached the maximum credit limit.

iii. Analytical CRM uses customer-related database to support the marketing, sales and
service decisions that aim to enhance the value created for and from customers.

Step # 2. Define the Information Requirements:

The people best placed to answer the question what information is needed? are those who
interact or communicate with customers for sales, marketing and service purposes, and those
who have to make strategic CRM decisions.

A direct marketer who is planning an e-mail campaign might want to know open and click-
through rates, and click-to-open rates (CTOR) for previous e-campaigns, broken down by
target market, offer and execution. She would also want to know e-mail addresses, e-mail
preferences (html or plain text), and preferred salutation (first name ?Mr? Ms?).
Operational and analytical needs like these help define the contents of customer-related
databases. Senior managers reviewing your companys strategic CRM decisions will require
a completely different set of information. They may want to know the following.

Customer information fields:

Most CRM software has predefined fields in different modules, whether for sales, marketing
or service applications. For example, in a sales application, a number of fields (columns) of
information about customers are common: contact data, contact history, transactional history,
current pipeline, future opportunities, products and communication preferences.

Contact data:
Who is the main contact (name) and who else (other names) is involved in buying decisions?
What are their roles? Who are the decision-makers, buyers, influencers, initiators and
gatekeepers? What are the customers invoice addresses, delivery addresses, phone numbers,
fax numbers, e- mail addresses, street addresses and postal addresses?

Contact history:
Who has communicated with the customer, when, about what, in which medium and with
what outcome?

Transactional history:
What has the customer bought and when? What has been offered to the customer, but not
been purchased?

Current pipeline:
What opportunities are currently in the sales pipeline? What is the value of each opportunity?
What is the probability of closing? Is there a10 per cent, 20 per cent 90 per cent chance of
making a sale? Some CRM applications enable sales people to allocate red, amber or green
signals to opportunities according to the probability of success.

Opportunities:
Whereas transactional history looks backwards, opportunity looks forwards. This is
where opportunities that have not yet been opened or discussed are recorded.

Products:
What products does the customer have? When were these products purchased, and when are
they due for renewal? Have there been any service issues related to these products in the
past?

Step # 3. Identify the Information Sources:

Information for customer-related databases can be sourced internally or externally. Prior to
building the database it is necessary to aud it the company to find out what data are available.
Internal data are the foundation of most CRM programmes, though the amount of information
available about customers depends on the degree of contact that the company has with the
customer. Some companies sell through partners, agents and distributors and have little
knowledge about the demand chain beyond their immediate contact. Internal data can be
found in various functional areas.

Enhancing the data:

External data can be used to enhance the internal data and can be imported from a number of
sources including market research companies and marketing database companies. The
business intelligence company Claritas, for example, offers clients access to their Behaviour
bank and

Lifestyle Selector databases:

These databases are populated with data obtained from many millions of returned
questionnaires. Experian, another intelligence company, provides geo-demographic data to its
clients. External data can be classified into three groups:

1. compiled list data

2. census data

3. modelled data.

Step # 4. Select the Database Technology and Hardware Platform:

Customer-related database can be stored in a database in a number of different ways:

1. Hierarchical

2. Network
3. Relational.

Relational databases:
Relational databases are now the standard architecture for CRM applications Relational
databases store data in two dimensional tables comprised of rows and columns. Relational
databases have one or more fields that provide a unique form of identification for each
record. This is called the primary key. For sales databases, each customer is generally
assigned a unique number which appears in the first column

Step # 5. Populate the Database:

Having decided what information is needed and the database and hardware requirements, the
next task is to obtain the data and enter it onto the database. CRM applications need data that
are appropriately accurate.

We use the appropriately because the level of accuracy depends upon the function of the
database. Operational CRM applications generally need more accurate and contemporary
data than analytical applications. You may have personally experienced the results of poor
quality data. Perhaps you have received a mailed invitation to become a do nor to a charity, to
which you already donate direct from your salary.

This could have happened when a prospecting list that has been bought by the charity was not
been checked against current donor lists. Perhaps you have been addressed as Mrs. although
you prefer Ms. This is caused because the company has either not obtained or not acted or
checked your communication preferences. One of the biggest issues with customer data is not
so much incorrect data as missing data. Many organizations find it difficult to obtain even
basic customer data, such as e-mail addresses and preferences.

The main steps in ensuring that the database is populated with appropriately accurate
data are as follows:
1. Source the data

2. Verify the data

3. Validate the data

4. De-duplicate the data

5. Merge and purge data from two or more sources.

Step # 6. Maintain the Database:

Customer databases need to be updated to keep them useful.

It does not take long for databases to degrade. Companies can maintain data integrity in a
number of ways.

1. Ensure that data from all new transactions, campaigns and communications is inserted into
the database immediately. You will need to develop rules and ensure that they are applied.

2. Regularly de-duplicate databases.

3. Audit a subset of the files every year. Measure the amount of degradation. Identify the
source of degradation: is it a particular data source or field?

4. Purge customers who have been inactive for a certain period of time. For frequently bought
products, the dormant time period might be six months or less. For products with a longer
repeat purchase cycle, the period will be longer. It is not always clear what a suitable
dormancy period is. Some credit-card users, for example, may have different cards in
different currencies. Inactivity for a year only indicates that the owner has not travelled to a
country in the previous year. The owner may make several trips in the coming year.

5. Drip-feed the database. Every time there is a customer contact there is an opportunity to
add new or verify existing data.

6. Get customers to update their own records. When Amazon customers buy online, they
need to confirm or update invoice and delivery details. Remove customers records when
they request this.