Small Retailers Can Survive With Leveraged Customer Databases

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It can be tough to be a retailer these days, especially an independent retailer. You have competition from the big chains as well as from online stores. You also have a much more limited marketing budget than your larger competitors. What's a little guy to do?


Direct marketing can be a smart way to get the most bang for your marketing buck. If you're reading DM News, you probably appreciate the value of a customer database. Retailers, even small-sized ones, are increasingly developing their own databases. But to take your direct marketing program to the next level, you have to do more than just capture name, address and phone number and send out the occasional sales flier. You also have to incorporate a purchase history and leverage that data.


Building a rich database that includes who bought what can truly help the Davids of the world compete with the Goliaths. Say you're a mom-and-pop bookstore feeling the squeeze from Borders, Barnes & Noble and Amazon.com. A purchase history database would allow you to upsell and cross-sell to your customers based on each individual's previous buying behavior.


Does customer Cathy buy mostly mysteries? Let her know that Sue Grafton's "P is for Pardon" will be on your shelves next month and allow her to reserve a copy at a discount. Did customer Carl buy "Parenting Your Toddler"? Maybe he'd like a special offer on a set of books aimed at 3-year-olds.


This is exactly what Amazon.com does. There's no reason you can't do it, too - with the added advantage of giving each customer a warm smile when he walks in the door and handing him his purchase to take home. The e-commerce sites can't compete with the human touch or immediate gratification that local retailers offer.


And you don't need to limit yourself to U.S. mail. Amazon.com communicates only via e-mail. You can be even more flexible and allow your customers to choose how they would like to hear from you. At the cash register, have your sales staff ask customers if they would like to receive special offers and, if so, whether they would prefer mail, e-mail or even a phone call. Getting permission is mandatory when it comes to e-mail or phone calls, but it's nice to have permission for direct mail as well. If a customer doesn't want to receive your mailing, you've saved a stamp and eliminated the risk of annoying him. If he wants to receive your mailing, your message is welcome and can only serve to increase that customer's loyalty.


Are there costs involved with this type of personalized direct marketing campaign? Sure. Is it time-intensive? You bet. Can it more than pay for itself in terms of brand-building, increasing the lifetime value of each customer and affect your bottom line? Absolutely.


• Stacy Williams is director of marketing at Kilgannon McReynolds Inc., Atlanta, an online and offline advertising agency.
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