Patterson Dental's CRM Program Has Teeth

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Patterson Dental Supply Inc. executives are smiling about a customer relationship management program implemented three years ago that chips away at the company's customer data and analyzes its customers' current and predicted behavior.


A business unit of Patterson Cos., St. Paul, MN, Patterson Dental offers a range of dental products, clinical and laboratory equipment and value-added services to dentists, dental labs, institutions and other healthcare providers throughout North America. The company's Colwell division also sells front-office supplies to dentists.


While the company sells dental equipment through a direct sales force, the Colwell division uses inbound telemarketing and direct mail.


To market to its office supply customers, Patterson Dental collects customer and transaction data through the telemarketing staff and its direct mail, and the data reside in a data warehouse built by Patterson.


About three years ago, Patterson wanted a better understanding of where those office supply customers stood in the buying cycle so it could build more effective telemarketing and direct mail campaigns.


"We wanted to get a better handle on segmentation of customers," said Mark Bryant, marketing analysis manager at Patterson Dental. "We also wanted to get a better idea of their buying cycles and what they are going to buy."


The old model "was more generic," he said. "We would do more of the mass-mailing concept, and we would also not really take into account someone's purchasing patterns. Basically, if you had a history with us, you were going to get something."


To help with this challenge, the firm enlisted Loyalty Builders, Portsmouth, NH, a relationship marketing company.


"We looked at two other vendors pretty closely and half a dozen other folks in this space," Bryant said. "But in order to meet what we were looking for -- the ability to do some best-customer segmentations and to look at some purchase patterns and attrition-type scores and predictive purchasing -- there weren't a lot of vendors that did all of that or at the level that Loyalty Builders was proposing."


Unlike data mining or RFM, Loyalty Builders' analysis is based on a complex, nonlinear mathematical model of a company's customers. For the analysis, four pieces of data are collected from every transaction: customer ID, transaction date, transaction amount and some product descriptor.


Then every customer's transactions are analyzed using Loyalty Builders' model. The transactions and analysis results are combined into a data mart hosted on Loyalty Builders' servers, and each client gets a secure, customized portal to access the data mart and analysis results. Patterson loads the information, refreshed four times yearly, into its data warehouse.


Loyalty Builders sends scores assigned to each individual in a database indicating what those individuals are likely to buy in the near future.


By analyzing past behavior and determining customers' propensity to buy, Patterson has targeted customers successfully for products they have never bought before. For example, Patterson found that more than 66 percent of targeted customers whose "likely-to-buy" loyalty scores were above 50 percent made a purchase in the offered category.


Loyalty Builders then develops and deploys appropriate marketing campaigns around this information.


"We send a mail piece to customers or launch a telemarketing campaign knowing that those customers were essentially in the marketplace in the near future to buy that particular product," Bryant said. "We know the score is a really good indication of what is going to happen."


The CRM system has boosted sales across all product categories, Bryant said, including underperforming categories.


"We have found that investing in customer analytics and fine-tuning campaigns based on results enhances customer loyalty and produces a greater return on marketing dollars," he said.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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