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Best Practice in Managing Customer Data

Published: August 2010

Best Practice in Managing Customer DataThe main tool that the marketer has is knowledge gained through acquisition and the use of information. Information is power, but only if organised in a useful way and presented in a manner that is easy to use.

This report will introduce and describe approaches and methods for building marketing databases, and strategies for involving their use in the development and long-term management of card portfolios.



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Marketing databases are designed to organise information to support marketing and advertising, and the tools that have been developed to search these databases are designed to extract the knowledge that can be applied to optimise advertising and marketing efforts.

Properly designed and populated marketing databases are the most effective way to store and retrieve the data that database marketing is dependent on.

You may ask: Why would I want to undertake the sizable expenses in time and resources to design, build and maintain a comprehensive database? Why should my institution incur this additional expense? The expense can be significant, especially if no existing resources are available for leverage. Setup costs can exceed $65 per account, and annual maintenance costs can sometimes be greater than that.

The answer lies in the ability to limit the marketing expense for all campaigns by utilising the knowledge base in the marketing database to target the most responsive customers. A further answer lies in the benefit gained by the increase in portfolio activity that those customers provide.

The major players in the financial services industry have found many uses for marketing databases:

  • in the effort to maximise the use of those services by customers;
  • in the promotion of their products to potential customers; and
  • in the broader management of their customer relationships.

The financial services institutions that offer credit and debit card services have found that the use of marketing databases has allowed greater selectivity in acquiring less risky and more profitable customers, and has improved the retention rate of the most profitable customers.

In addition, some of the most powerful uses of marketing databases may not be in the marketing department at all. The determination of what data to include in the marketing database should be carefully thought out. Input should be obtained from other areas of the company, including operations, risk management, legal, and senior management. This will ensure that the critical areas of the business will be serves and the business-critical data will be included in the database. The gathering and merging of information should be carefully done with the goal of integrating all data into a comprehensive and cohesive database. If the initial effort of defining the scope and specifics of the information to be stored is properly done, the database can serve the institution in many ways beyond its marketing campaigns. This result will serve to integrate the business better and to increase the return on investment of the database.

This report introduces and describes the approaches and methods for building marketing databases, and provides strategies for involving their use in the development and long-term management of card portfolios.

Executive Summary

Chapter 1 What lessons can be learned from history? Where can you go for answers?
A brief history of marketing databases for credit issuance
Targeting promotions using marketing databases
In-house or outsource?
Regulatory requirements

Chapter 2 What do you want your marketing database to do for you?
When should you start work on your marketing database?
Who can be an ally in seeking the support of the decision makers?
Basic ideas to establish focus and scale for the database
What can a marketing database do for me?

Chapter 3 Possible marketing database contents: What should you keep, what should you throw away?
Prototyping - getting your feet wet
Different database scopes
What have we learned about data around us?

Chapter 4 How can you put all the pieces together?
What you and your marketing team need to know about building databases
Technical choices
When should you consider using sequential files?
Object-oriented models - a valid option?
Now, let's talk relational
Qualifying the data source

Chapter 5 How can you make your marketing database work for you?
How can you make your marketing database work for you?

Chapter 6 How do you use your marketing data in models to improve marketing programs?
What types of models are available and how do you know which ones to apply?
Specific models described
Planning your modelling process
modelling for the future - newer techniques

Chapter 7 Business Intelligence is not an oxymoron
Data mining
What can data mining do for you?
How data mining works
Tools and methods
Where do you start?

Chapter 8 How can the knowledge be extracted and shared?
How can the knowledge be extracted and shared?

Chapter 9 How can you manage the database safely and securely?
How can you manage the database safely and securely?

Chapter 10 What will you need to keep the motor running?
Infrastructure and support requirements

Chapter 11 What should you really ask of your marketing database?
Looking ahead to the next generation
New directory

Chapter 12 Demographics
Market stage
Key customer segments
Behaioural attributes
Financial services attributes
Financial services usage
Key drivers and operational impacts
Summary - The credit card consumer

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