Customers versus Campaigns
Marketing departments today are not thinking about customers. They are thinking about campaigns. "What response rate did we get? What were our total sales by department? How did the new discount coupons do in comparison with the previous æBuy one, get one free'?"
Lost in all these data are analyses of the activities of each customer. Why? Because it is often very difficult to get customer purchase information. The data are normally not organized by customer, but, instead, by transaction and by campaign. Customers, however, are the ones that are doing the buying.
To study customers, you have look at what an individual has done over the period of a year, instead of looking just at campaigns.
A large and very profitable retail operation was conducting massive daily e-mail campaigns, and studying the results of each campaign by customer.
They discovered that only 10% of all customers who received these e-mails in one year ever bought anything. Of that 10%, about 70% made only one purchase during the year. Thirty percent bought more than once. The analysts divided these multi-buyers into Silver and Gold groups based on number of purchases made during one year. The 15% that they classified as Gold made 45% of the total annual sales.
What can be done for your company's "Gold" buyers? To answer this question, go back to basic database marketing principles: It is far easier to get a buyer to buy a second time than to get non-buyer to buy at all. It is far easier to get a multi-buyer to buy again than to get a single-time buyer do so. People respond to personalized communications. Buyers like to think that their supplier appreciates them and is aware of how much they are spending. Recent buyers respond better than folks whose purchase was some time ago. Frequent buyers respond better than infrequent buyers.
How can you use these principles to increase sales?
Build a marketing database that keeps track of every customer's purchase activity. Use it and study the data.
Ask each customer to provide her home telephone number when making a purchase. If you don't have her name, you can have a service bureau do an overnight reverse append that will give you a high percentage of names and addresses of your customers. For customers enrolled in your frequent buyer club, get phone numbers and e-mails, and get them to provide their credit card numbers. When they use these cards, you can track their purchases in a nightly roundup.
As soon as a buyer has made her first purchase, send her a personalized welcome. The welcome message should, if possible, mention what she bought, and offer her a reward (with an expiration date) for coming back to buy again.
Keep track of each customer's subsequent purchases. You may want to set up status levels: Silver, Gold, and Platinum. Provide special rewards for customers in these status levels, and let them know what the rewards are. Let Silver customers know what they have to do to become Gold.
If you are sending daily e-mails, have a special unsubscribe routine that asks the subscriber why she has decided to unsubscribe. Is it because she does not like your merchandise, or because she does not like your e-mails? If it is the latter, offer her an opportunity to receive e-mails weekly or monthly instead of daily. It's better to be able to send her some promotions than no promotions at all.
With these six steps in place, you should have no trouble finding ways to increase your sales - by studying your customers rather than just your campaigns.