Segmentation and buliding the database

The last week and a half we have been talking about putting the marketing database together. We take internal information, external information and modelled data and create a database that really works for marketing applications. Internal information is transaction oriented, typically and includes information about what the customber has purchased and when. But transaction information only tells part of the story. We might not even have the customer's name if the product was shipped to a different person than a purchaser (b2b) or not have information about the household if just one person in the house buys our product (b2c). We need to enhance the database to get value and we talked about buying data from an outside data source to supplement our internal data. Typically, we send our raw data files to an outside source and they do a merge/purge and cleanse our data and append to our data records. We can then begin the process of modelling our data to identify our best customers. We talked about RFM (Recency, Frequency and Monetary Value) as a way of segmentation but that the RFM approach is only a starting point. Marriott uses a CAP model which includes capacity and propensity to purchase. The different types of segmentation that are discussed in the book are a good starting point for data anlysis but more sophisticated companies eventually develop their own proprietary segementation schemes.