Let's face it, when you build a database, there aren't too many ways to get by “on the cheap.” If you really want an accurate picture of your customers and their purchasing habits, you're going to spend some money. And, typically, when we spend money, we want a positive return for that investment.
Think about it — when you spend a few extra bucks on a cashmere sweater, you're looking to get the most mileage out of it. If it sits in the bottom drawer and never sees the light of day, most people would say that's a waste of money and a poor investment. A database isn't that much different.
The simplest, most immediately gratifying way to use your database is in identifying unique customer segments for targeted marketing messages, such as thank-you mailings, reactivation, birthday promotions, seasonal sale previews, new customer mailings and high-purchase bouncebacks. However, to truly squeeze every last drop out of your database, you need to be able to tap into the truly unlimited layers of information presented to you through your customer database.
Here are seven ways to get the greatest return on your database investment.
Site selection. Take a look at your customer-defined store market areas of each store. That is, where are your customers coming from? It is hardly ever a perfect radii around your location, but rather sporadic pockets of customers that may stretch as far as 40 miles away. This information is extremely valuable in supporting real estate decisions.
Demographic profiling. Take your best 30 percent to 50 percent of customers and find out what they “look like” demographically — age, income, home value, presence of children, occupation, etc. This profile will be vital when looking for new customers and also help to further support site-selection decisions, since you can identify those geographic areas where there is a predominance of people who “look” most like your best customers.
Merchandise decisions. For those retailers who track down to the product category or SKU level, the database becomes an important tool for making merchandising decisions. You can easily identify which merchandise sells best in which stores. Tracking to the product level also allows for more finite customer selection for individual merchandise promotions and possible cross- or up-sell promotions and can be useful data to report back to product vendors when looking for co-op opportunities.
Frequent shopper program implementation. When considering the launch of a frequent shopper program, a lengthy sign-up period can be daunting. Tap your database for those most productive customers and send them their memberships directly, allowing for an immediate membership foundation from which to build. Your database also will serve as a road map for the program's structure — illustrating customer purchase dynamics and helping formulate program objectives, rewards levels, expected participation and various evaluation benchmarks.
Telemarketing/customer surveys. If not captured at the point of sale, you can easily append telephone numbers to customer records. Telephone numbers offer sales associates the ability to call the best customers when new merchandise arrives or to follow up during an event. Many retailers also use telephone numbers to facilitate customer telephone surveys.
Focus groups. Retailers can use their database to identify customers based on a variety of purchase criteria and form focus groups. These groups, with highly-selected customers, serve as a foundation for understanding customer opinions on product, store operations and communication.
Advertising. Your database's store market area will assist with spot or newspaper advertising decisions by illustrating prominent geographic concentrations of customers. Retailers can also better target their distribution of free standing inserts, eliminating or scaling down distribution to those sectional centers or ZIP codes that aren't represented in your customer database. At the same time, distribution can be increased in areas where customer direct mail will occur, serving as reinforcement and support for any given event.
Christine S. Foschetti is senior vice president of marketing at Retail Resources Database Marketing Services, Lyndhurst, NJ.