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What's the difference between CRM and database marketing?

Database marketing is a component of customer relationship management. CRM includes all processes, strategies and tools to support sales, marketing and customer service initiatives.

CRM and database marketing work together, but they are two very different things.

Database marketing falls under the customer relationship management umbrella, as CRM includes all sales, marketing and customer service initiatives in an organization. Database marketing is a data-driven approach toward improving customer experience, while CRM is process-driven.

Here are some key components of each:

CRM

Customer relationship management is made up of practices, strategies and technologies that businesses use to manage customer relationships throughout the customer lifecycle.

A CRM system compiles customer data from multiple channels, including a company's website, phone logs, live chat, direct mail, marketing materials and social media.

CRM systems can be of great benefit to businesses. The components of CRM software include:

  • Marketing automation -- tools that automate repetitive marketing tasks, such as automatically sending emails to prospects;
  • Sales force automation -- tools that collect, analyze and distribute data in a sale pipeline;
  • Contact center automation -- tools such as chatbots that offer customer self-service that help cut down contact center agent tasks;
  • Workflow automation -- tools that automate manual work, such as data entry;
  • Lead management -- tools that track sales leads;
  • Human resources management -- tools that help track employee information;
  • Analytics -- tools that analyze customer data; and
  • Artificial intelligence -- some tools, such as Salesforce Einstein, rely on AI to automate repetitive tasks and analyze customer behaviors.

Over time, however, customer relationship management has evolved into customer experience management (CXM). While CRM shows a company what a customer looks like, CXM shows businesses what they look like to a customer. It's no longer enough to just define a customer -- businesses want to know how customers perceive them to improve customer experience, win loyalty and retain customers.

Database marketing

Database marketing is a form of direct marketing that uses a company's customer databases -- sometimes augmented with leads from a data broker -- to generate targeted email lists for marketing campaigns, known as customer segmentation. Marketing databases generally include information such as customer names, addresses, phone numbers, emails and transaction histories. Businesses can get this information from customers through web forms, newsletter subscriptions, product warranty cards and abandoned shopping carts.

A customer data platform (CDP) can help unify customer data from multiple sources -- CRM systems, ERP systems, e-commerce systems and legacy systems -- and put them together into one golden record of the customer. CDPs can be a component for building an effective personalization strategy. Marketing departments can use the customer information in a CDP to paint a more accurate picture of the customer and provide them with the most customized marketing correspondence possible.

Some benefits of database marketing include:

  • the ability to identify and segment customer groups;
  • the ability to send relevant content and personalize the customer experience;
  • improved marketing efficiency; and
  • effective customer loyalty programs.

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