Databases, Data Warehousing, and Data Mining
Companies organize their information into customer, product, and salesperson databases—and
then combine their data. The customer database will contain every customer’s name, address, past
transactions, and sometimes even demographics and psychographics (activities, interests, and
opinions). Instead of sending a mass “carpet bombing” mailing of a new offer to every customer in
its database, a company will rank its customers according to factors such as purchase recency,
frequency, and monetary value (RFM) and send the offer to only the highest-scoring customers.
Besides saving on mailing expenses, such manipulation of data can often achieve a double-digit
response rate.