Misunderstanding CRM as a database marketing strategy

Customer relationship management (CRM) is an important task for any organization both in terms of profitability and survival (Elbedweihy et al., 2016). It is the prime aspect of any B2B or B2C type of businesses. Therefore, businesses around the world, both small scale and multinationals, adopt different strategies in order to build long term relationships with customers. However, there lies a misunderstanding CRM concept, according to Buttle, (2009), which is, ‘CRM is a database marketing process’.

As Kumar, (2010) indicates that CRM remains primarily focused in preserving existing customers and maintain long term bonds with existing customers and uses only the data from marketing outcomes as a tool in the former process. Customer relationship management is, therefore, after sales service of any business. Kumar, (2010) also implicates that CRM merely extends the concept of marketing and database marketing in order to improve the existing relationship with the customers and even retain the customers. Thus, CRM cannot be marketing strategy rather a customer retention strategy. This is further evident from the importance of CRM in a business.

Importance of customer relationship management

Customer relationship management is primarily aimed at relationship building and maintaining profitable long-term relationships. It is all about keeping the customers happy in the hope to keep them loyal. CRM is also important in intensifying businesses’ ability to meet the feedback and queries of buyers to improve customer satisfaction. According to Zerbino, Aloini, Dulmin, and Mininno, (2018) application of CRM starts from the first stance of post-purchase support to post-purchase feedback and query.

CRM involves gathering intelligence needed to provide improved support and services to customers mainly through business communications. Moreover, such business communications involve:

  • customer service helpdesk,
  • call centres,
  • promotional advertising,
  • feedback centres and,
  • educative product based information.

Subsequently, a strong CRM implementation leads to loyal clients, positive word of mouth and increased sales. Therefore, CRM is customer experience centralized around maximizing interactions and accelerate customer retention.

Customer relationship building in business operations
Customer relationship building in business operations

Difference between CRM and database marketing

The primary motive of database marketing is to understand the customer in a comprehensive manner. Whereby customer database is collected with marketing purposes such as:

  • lead generation,
  • lead qualification,
  • market segmentation,
  • targeting potential customers,
  • acquisition of customers and,
  • sale of a product or service.

The above foresaid points does not focus on building customer relationships (Buttle, 2009). Evidently, database marketing is the technique of gathering information on prospects and generate leads to drive new sales (Chopoorian, Khalil, and Ahmed, 2015). Consequently, the information stored in a marketing database remains used at both the strategic and tactical levels to drive targeted marketing efforts. Therefore, database marketing is all about identifying and analyzing customer segments to increase the impact of marketing campaigns. Henceforth, database marketing is less evident in strategic or operational and collaborative CRM.

Difference between CRM and database marketing
Difference between CRM and database marketing

Furthermore, database marketing is one of the many strategic methods of marketing processes. However, according to Buttle, (2009), CRM is not the core aspect of marketing and hence has a minimal role in marketing. CRM is more customer oriented, whereas, database marketing is product or market-oriented. CRM is only an extended activity of marketing strategy.

Using CRM data to lure repeat sales

According to Kumar, (2008), the Wheel of Fortune model of CRM is about strategies to develop profitable customer relationships. Furthermore, these strategies proceed in a cyclical process. Whereby, the knowledge acquired is used as the basis for deciding which customers to pursue in the future and focus on retaining. Also, it helps to select the most profitable set of customers for building long term relations. According, to the Wheel of Fortune model, customer selection remain not focused on marketing, rather which customers to retain.

Wheel of Fortune model of CRM to develop profitable customer relationships (Kumar, 2008)
Wheel of Fortune model of CRM to develop profitable customer relationships (Kumar, 2008)

Supermarts like Big Bazar and Spar in India, push promotional messages about discounts and offers via SMS. However, this is a strategy that the supermarts use on the basis of the market segments and gathered customer information. Data is only gathered once the client purchases and shares their information. So, the role of the database here is not to lure new customers but existing customers to build a profitable relationship. Another such instance is Wednesday sale by Big Bazar brings back repeat sales by 40%.

Database marketing is a different process of collecting data from different sources for customer segmentation and exploring customer patterns, whereas, database usage in CRM is for retaining customers and building profitable relationships. Database marketing is market-centred, whereas, CRM is customer centred. Furthermore, database marketing uses influence, development, maintenance and operation for the business process, but CRM uses customer attraction and retention as a process. Last but not least, CRM is focused on satisfaction, loyalty, employees satisfaction, whereas, database marketing is focused on market share, capital brand and influence on the market.

References

  • Buttle, F., 2009. Customer Relationship Management: Concepts and Technology.
  • Chopoorian, J.A., Khalil, O.E. and Ahmed, M., 2015. Data Quality and Database Marketing. In Proceedings of the 1998 Academy of Marketing Science (AMS) Annual Conference (pp. 248-253). Springer, Cham.
  • Elbedweihy, A.M., Jayawardhena, C., Elsharnouby, M.H. and Elsharnouby, T.H., 2016. Customer relationship building: The role of brand attractiveness and consumer–brand identification. Journal of Business Research69(8), pp.2901-2910.
  • Kumar, V., 2008. Managing customers for profit: Strategies to increase profits and build loyalty. Prentice Hall Professional.
  • Kumar, V., 2010. Customer relationship management. Wiley international encyclopedia of marketing.
  • Zerbino, P., Aloini, D., Dulmin, R. and Mininno, V., 2018. Big Data-enabled customer relationship management: A holistic approach. Information Processing & Management54(5), pp.818-846
Avishek Majumder

Avishek Majumder

Research Analyst at Project Guru
Avishek is a Master in Biotechnology and has previously worked with Lifecell International Private Limited. Apart from data analysis and biological research, he loves photography and reading. He loves to play football and basketball in his spare time with an avid interest in adventure and nature. He was also a member of the Scouts in his school and has attended Military training.
Avishek Majumder

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