1. Why would a customer database be so useful for the companies described in the case? What would happen if these companies had not kept their data in databases?
2. How did better data management and analytics improve each company's business performance? Give examples by mining these customer databases.
3. Are there any ethical issues raised by mining customer databases? Explain your answer.
1. We may define database as the structure set of data stored in computer that is available for various processing tasks and ready for query. Many companies make log of customer transaction and information into structured database.
Customer database be useful for companies because:
- Get More Customers Coming Back by improving customer experience
- We can get more customer satisfactions if we treat them on the way they are special/well known to us
- We may use the customer database to trace the trend of purchase and so be able to maintain the inventory
- For better customer experience keeping customer information in database for faster access adds easier search mechanism too, that helps improvement in day to day works
For larger companies like Forbes and Kodak there are tremendous amount of information about customer and their day to day transactions. If these companies are not using database for storing information the situation will be same as traveling On Foot to visit the globe rather than taking airways. So it's apparently impossible to get better customer support, inventory management, trend analysis. Staffing will be another challenge for those companies to manage proper utilization of the manpower.
2. During the course of civilization simple machines improved human living style and later on the combination and improvement on such machines gave rise to highly sophisticated appliances and equipments that eases our day to day tasks. In the same way the data keeping tasks started from paper based system followed by Spreadsheet. Now this is best supported by database systems.
Database system improve the data management and analytics as:
- Better security
- Easier to execute search and queries
- Relational database system reduced redundancy and enabled linking table so that more space is saved than storing same information on multiple locations
- The work performance is improved
- Analysis of stored data helped better decision making
- The business productivity is uplifted
The examples are Forbes maintained proper data on its individual subscribers and Web sites. Kodak handled 50 million customers compiled from direct purchases and registration from Kodak's Web site and their photo sharing website.
The online advertisement portal Adsense maintains track of each and every flavor of sites visited by web surfers and feed them ads relevant to their taste. This saves flooding irrelevant ads to customers that are not likely to purchase those item.
3. Data mining is the process of extracting inherent information from the data available in database. In current scenario data mining is extracting the trend of shopping and the frequency they visit certain store. When a company traces such personal hidden information then there obviously arise the issue of Breach in customers privacy. Privacy is the protection against data collection on backside/unknowingly by other person. Using those items to evaluate some one is not permitted.
Other ethical issues arise when some CRM person see a person's' shopping history then he may confuse whether to confess customer likes this or that or not. Instead the shopkeeper knows the trend but cannot claim he is right. Moreover the customer might not like backbiting or back side data collection/interpretation.