NCDM Attendees Focus on Retention
"We are finding that customers are digging more deeply into their already existing customer databases to find the best people to target their messages to as opposed to going out and acquiring new ones," said Vicki James, director of consulting at NuEdge Systems, a database marketing company.
James spoke at the session "Using Advanced Database Strategies for Greater Customer Retention and Response: A Bridgestone/Firestone Case Study" along with Jim Stahulak, manager of database/Internet marketing at Bridgestone/Firestone retail and commercial operations. Together, they explained how they are optimizing dollars by scaling Bridgestone/Firestone's direct marketing programs to match customers' potential for retention and greater wallet share.
For example, Bridgestone/Firestone is identifying customers based on how long they have had their cars and focusing on customers who have had them for a specific length of time as opposed to just focusing on customers who have spent the most at the company. The latter customers, they reasoned, most likely have reached their spending potential, so it's time to seek other revenue avenues.
"We are now focusing on car owners who have had their cars for three to six years and six to seven years because we feel they have the greatest potential to buy," Stahulak said, though he added that he is not ignoring the other groups of customers.
The recession, however, is not the main reason his company is focusing on retention, Stahulak said.
"We ramped up our customer retention efforts when we got into some trouble with our tires a few years back and it was reported all over the general press," he said. "We realized that we could not rely on mass media advertising to get our message out, especially if news about our tires was on the front page of a newspaper. We realized we had to rely on our most loyal customers."
Other attendees said they also are focusing on customer retention.
"We've already begun doing some retention programs and are seeing good results," said Vince Gaimpietro, a marketing manager in the government program at Geico Direct, Washington. "About eight months ago, we really started to focus more on customer retention, partly because of the economy and partly because we realized that this is a really important area for our business."
Joe Colletti, executive vice president of consulting services at Analytici, a database marketing services firm, said companies understand that they have to be in retention mode now. But he also is seeing an interest in acquiring customers.
"Whether they are acquiring or retaining customers, however, they now seem to know the importance of targeting," he said. "Now they know they have to target with ROI in mind."
Colletti said he also noticed that customers seem more cautious about signing contracts with suppliers.
At least one attendee said his company is having a good year.
"People are doing a lot more research and digging before they actually buy software products. Since we evaluate these products, our services are in demand right now," said Naras Eechambadi, CEO of Quaero, a database marketing consulting company. Eechambadi also said the industry is focusing more on the core business of data analytics and "has become a niche industry again."