Question

Discuss the benefits and disadvantages of marketers using data to make marketing decisions. Provide examples of both benefits and disadvantages.

Answer 1

A primary advantage of database marketing is that it helps businesses to make choices about who their potential customers are and what they have in common using business intelligence. That makes the marketing segmentation process more effective in the growing marketing process. Companies analyze the database to find out what customers who buy certain types of products or services share traits. This helps the company to reach those customers with more specific offerings.

Database marketing is used in selling and service situations to boost the quality of your relationships with key customers. Salespeople monitor all prospecting and sales activities with purchasing activity and meeting notes. This allows for better customer relationship maintenance and a greater potential for add-on sales. On a business point of view, employees of the company service will support each particular customer better when they have data on the history of the customer with the organization. Again, this also helps service calls to become incentives for add-on purchases until the service problem is resolved.

One of the main drawbacks which restricts some companies from becoming fully involved in the marketing of databases is its high costs. Full CRM or database marketing often involves building up major infrastructure. Some businesses buy all the hardware and software required for the on-site processing, storage and analysis of customer data. Others pay third party providers and use online portals or apps to get customer info. This typically entails sales of upfront applications and the continuing costs of licensing.

Traditional business leaders are concerned that marketing on the database causes marketers to become technology-focused rather than customer-centric. When it emerged this was a big knock on CRM. The database marketing data collection and analysis process is meant to drive targeted marketing, sales and service that is better for customers and more profitable for the business. Some businesses wrongly put too much focus on building up technology and backed off digital processes of marketing and contact with customers.