1. For Marketing Planning. A database is created to collect information the company believes it will need for the next 5 or 10 years. After a while it realises that it collected some information that it does not need and has not collected some information which is vital. The markets for products change, so actual customers change, and customer types change. It is not long before the database is full of people who are not likely to purchase from the company’s current product range and more importantly those people who might buy are not included on the database. So then the marketing departments start over and create a new database to collect information that it will need for the next 5 or 10 years……..(we have been here before).
2. For Lead Generation. The database needs to have potential customers and it might not have them because of 1 (above) and because sales people are much happier to carry out traditional transactional marketing than to operate thro the organisation’s CRM (Customer Relationship Management).system. It is easier to wrap up a sale if your not consistently asking the customer for personal information. Sure you have his/her address: isn’t that enough? So if sales people are not using the database properly it is always then difficult to argue with Finance to come up with extra money to buy more software or hire a couple of people to input the data. The cost of gathering information is always much higher than businesses expect.
3. For Key Account Customers. The items 1 and 2 (above) apply to a certain extent for this section. But specifically for Key Account Customers, databases might prove a waste of time because the customer does not want a relationship with the company – it just wants to buy stuff and no more. Some products are only bought once in a lifetime or every 10 years or so, therefore the company constantly bombarding the customer with messages is counter-productive. Also, some product markets traditionally have little customer loyalty, so database KAM is a waste of money.
As for real-world observations, Databases at their best means that when you stay at a well-known chain hotel in Paris, their database remembers you from your New York stay and automatically brings you an extra pillow, or remembers that you have a nut Allergy and arranges breakfast accordingly. Databases at their worst means that you get asked to join American Express 3 or 4 times a year every year, some 20 years after you first joined American Express.
There is no quick-fix solution to these problems. And companies will have to change at an even greater rate over the next 10 years making it even harder to figure out what detailed information is needed.
Finally, here in the UK there are laws regarding the information you can keep about customers or potential clients and over time, if it not used, it has to be deleted.
Hope this is of some use. Good Luck!!