CRM - Beyond the Hooplah (1,414 words)
July 2002
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The Differences Between CRM and Database Marketing
by Bob McKim
Even with all of the hoopla surrounding customer relationship management (CRM) these days, it's only now that management is beginning to wonder: Is there a difference between CRM and database marketing? They're also asking the bottom-line question: What can we really expect in return for all the money we're pouring into CRM?
Both disciplines have similar and overlapping characteristics, such as providing a 360-degree view of the customer and integrating all the data into a common system. While implementation costs can be similar, CRM appears to be the more expensive exercise.
CRM relies more on new technology that's built for its own purposes, but also has templates that fit most marketing purposes. Database marketing uses existing technologies from established vendors but requires extensive customization.
CRM technology promises to provide personalization to every customer and prospect. Database marketing identifies unique segments in the database that react to specific stimuli, such as promotions.
Both programs are hindered if the data has inconsistencies and isn't fully populated. Database marketing can be more successful and doesn't need every customer record populated with data.
CRM aims to strike up a relationship with the customer through affinities and personalized communication, thus making the customer more transactive. Database marketing anticipates customer behavior in time and reacts to changes in that behavior. Database marketing relies heavily on rules-based delivery of communications. CRM waits for the customer to interact with the system.
CRM also assumes the customer wants a relationship with the company whereas database marketing is proactive and delivers information or communications when the customer is in the buying window.
The metrics for each tend to be different, as well. CRM talks and reports on a return-on-investment (ROI) basis. Database marketing reports activities on an ROI basis, but reports on customer lifetime value.
CRM systems take up to a year to be installed and function properly. Database marketing systems can be up and producing information and results in four to six months.
Challenges
In the past few years, the biggest problems I've seen with CRM and database marketing lie within the organizations that purchase them and the systems. These problems fall into three distinct areas:
- Difficulty identifying the business problems accurately enough before buying the software.
- Lack of a common definition for CRM.
- Lack of measurement from either the software itself or the technology's purchaser. I've yet to see an accounting of improved customer value, the trackable cost savings or the marginal lift between existing methods and the new CRM methods.
by Bob McKim
Even with all of the hoopla surrounding customer relationship management (CRM) these days, it's only now that management is beginning to wonder: Is there a difference between CRM and database marketing? They're also asking the bottom-line question: What can we really expect in return for all the money we're pouring into CRM?
Both disciplines have similar and overlapping characteristics, such as providing a 360-degree view of the customer and integrating all the data into a common system. While implementation costs can be similar, CRM appears to be the more expensive exercise.
CRM relies more on new technology that's built for its own purposes, but also has templates that fit most marketing purposes. Database marketing uses existing technologies from established vendors but requires extensive customization.
CRM technology promises to provide personalization to every customer and prospect. Database marketing identifies unique segments in the database that react to specific stimuli, such as promotions.
Both programs are hindered if the data has inconsistencies and isn't fully populated. Database marketing can be more successful and doesn't need every customer record populated with data.
CRM aims to strike up a relationship with the customer through affinities and personalized communication, thus making the customer more transactive. Database marketing anticipates customer behavior in time and reacts to changes in that behavior. Database marketing relies heavily on rules-based delivery of communications. CRM waits for the customer to interact with the system.
CRM also assumes the customer wants a relationship with the company whereas database marketing is proactive and delivers information or communications when the customer is in the buying window.
The metrics for each tend to be different, as well. CRM talks and reports on a return-on-investment (ROI) basis. Database marketing reports activities on an ROI basis, but reports on customer lifetime value.
CRM systems take up to a year to be installed and function properly. Database marketing systems can be up and producing information and results in four to six months.
Challenges
In the past few years, the biggest problems I've seen with CRM and database marketing lie within the organizations that purchase them and the systems. These problems fall into three distinct areas:
- Difficulty identifying the business problems accurately enough before buying the software.
- Lack of a common definition for CRM.
- Lack of measurement from either the software itself or the technology's purchaser. I've yet to see an accounting of improved customer value, the trackable cost savings or the marginal lift between existing methods and the new CRM methods.
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