Keeping Track of Retail Customers
By Arthur Middleton Hughes
For a retailer
to succeed in database marketing, you need a database with transaction history.
The difficulty is in capturing the data. Some people pay by check or cash.
Others use a VISA or MasterCard. All large department stores issue cards they
hope their customers will use. In fact, only the most determined customers use
the cards. It is a nuisance to carry around ten or twelve store cards in
addition to your Master, Visa, or Amex cards. The solution to this situation is
to get customers to register their bank credit cards with you, so that when the
customers use them, you will know that they have made a purchase.
Idine has made a successful
business out of this idea.
Members register their credit
cards with iDine. Then whenever they go to any of the 7,500 restaurants
anywhere in the country and pay for their purchases using one of these cards,
iDine finds out about it and gives them a credit on their credit card account or
gives them airline miles. The customers donÍt have to say to the restaurant,
ñBe sure to let iDine know that I am eating here!î The process is so simple
that it is amazing that more retailers have not caught on to this idea.
In the absence of a registered credit card to identify their
customers - and because it is often more effective -- many retailers are using
a reverse telephone match to capture customer data. The Sports Authority, the
largest full-line sporting goods equipment retailer in the US, is a good
example.
Retail sales are often driven by the calendar. People are in
the buying mood before Christmas. The mood is entirely different a month later.
The Sports Authority, which operates 198 full-line sporting goods superstores
in 32 states across the US, wanted to respond to existing and new customers in
key markets around the busy holiday shopping season. Like most retailers, it
gathers information about customers at the point of sale. However, by the time
any information on a customer made its way to The Sports Authority marketing
department for use in follow-up or promotions, at least a month had elapsed. To
capture repeat business before the four-week holiday season ended, Jeff
Handler, SVP, Advertising & Marketing, looked for a way to shorten this
time to a one-week window using direct mail.
The vision was to identify the customers, and then, using
print-on-demand, react to those customers with an appropriate direct mail
offer, all within one week after any store visit. Few retailers in America have ever accomplished such a feat.
The Sports Authority customer contact strategy involved point-of-sale data
analysis, interaction with the full customer database, and creation of customized
marketing communications.
The Sports Authority centers its holiday promotions around
the first week in December. For this program, The Sports Authority focused on
its in-store customers, as opposed to Web or catalog customers.
The Objective: Repeat Business
To make the most of the holiday season, The Sports Authority
uses both mass marketing and targeted direct mail to bring shoppers into the
store in December. The store's solution was designed to cost-effectively bring
customers back one or more times before Christmas during a time period when
repeat business may be difficult to achieve because customers have many
choices. Without special incentives or relevant messages, they may not return
to stores where they have already spent money for some of their holiday
purchases. The key is to provide compelling offers in a timely manner. Without
a truly sophisticated system, compelling and timely offers are not possible.
The Sports AuthorityÍs goals: get a printed customized direct mail piece into
customer hands within one week following a store visit, and reward early
purchasers during the holiday season
The most difficult elements of the project included getting
a program in place by November 30 from the starting point of early November,
and then being able to quickly turn around a second offer to customers and
prospects. Part of the process
involved matching the in-store customers to their mailing addresses. The team used a reverse telephone
number append process. Each clerk at each point of sale station captured the
buyerÍs telephone number as a part of the transaction. Every night, this data
was transmitted from each of The Sports Authority stores to the central
database where the phone number was matched to mailing addresses using reverse
append. With its database process
and the help of an outside database vendor, The Sports Authority was able to do
that within one day of the purchase.
Many of the names and addresses were on The Sports Authority customer
database. Other names and addresses came from rented telephone append lists.
The offer
The next day after any purchase, The Sports Authority was
able to identify the name and address of almost every person who provided a
phone number the day before. They were then able to print and mail them a
targeted direct mail certificate that would arrive in the shopperÍs mailbox
within one week of her visit to the store. The project started in November with
a holiday gift guide mailed to all existing retail customers near each store.
In certain key markets, there was some targeted prospecting as well. If the person made a purchase based on
the gift guide they would receive a second standard post-card offer within one
week.
The Sports Authority says approximately five percent of the
shoppers who received the initial gift guide came to the stores and used the
certificates. The follow on mailing to anyone who responded to the first
holiday mailer brought in double-digit response rates, essentially tripling the
industry norm for response rates, and, most importantly, bringing back those
customers to shop again before Christmas.
Why did it work? Because of recency and a solid offer. The customer most
likely to respond to any promotion is the customer who made a purchase the most
recently. The increased sales were so significant in comparison with the cost
of the program that The Sports Authority has made it a permanent part of its
marketing program.
Arthur Middleton Hughes is Vice President of The Database Marketing Institute. Ltd. (Arthur.hughes@dbmarketing.com) which provides strategic advice on relationship marketing. Arthur is also Senior Strategist at e-Dialog.com (ahughes@e-Dialog.com) which provides precision e-mail marketing services for major corporations worldwide. Arthur is the author of Strategic Database Marketing 3rd ed. (McGraw Hill 2006). You may reach Arthur at (954) 767-4558 .
The articles on this web site are available to the general public to read, enjoy and for limited business use. If you want to reprint more than one or two of them for resale or use in a business or educational environment, send an email to Arthur Hughes at arthur.hughes@dbmarketing.com. He will give you permission by return email. The cost, depending on the number of copies you want to reprint, is very inexpensive.
