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Database Marketing: Using Point-of-Sale Data to Improve Profitability
Copyright 2005 David Frey
Not long ago I made a trip over to the local Radio Shack to
purchase an electronic plug for my cassette recorder.
As I paid for my item the retail clerk asked me for my
name, address, telephone number, birth date, and even my
email address (something every retailer should be asking
for today!).
Although I felt a twinge of discomfort giving out my
personal information, I went ahead and gave it to him and
went on my way.
Driving home I reflected on Radio Shacks checkout process
and was reminded of the power of information gathering at
the point of sale.
I had just given Radio Shack three ways to contact me, not
to mention, information on what I had purchased. In the
hands of a skilled marketer, this information is powerful.
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Database Marketing
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The recent economic slowdown has brought increased
competition to small businesses. And with that, retailers
across North America have described their sales as "flat."
Small businesses should be looking for low cost, high
impact marketing activities to drive prospects to their
business.
One of the most effective and cost-efficient ways to add
profits to the bottom line is the use of database
marketing, which uses information collected at the
point-of-sale.
Using personal data, purchasing data, and contact
information from a customer database, a spa and pool
retailer can make offers to customers for complimentary
products and services and engage in loyalty marketing
activities.
Database marketing has four key elements, (1) gathering
customer data, (2) building a customer database, (3)
creating targeted offers for specific customer groups, and
(4) tracking results to improve responses.
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Step 1: Gather customer data.
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The easiest way to begin this process is to develop a
simple form for customers and salespeople to fill out every
time a customer purchases a product or service. Include
personal information such as names of spouses, children,
profession, and birthdays, as well as, product information
such as manufacturer, make, and model.
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Step 2: Build a database to store your customer
information.
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Start simple using off-the-shelf software such as Microsoft
Access. Later on you can begin to modify the database to
either include different types of information or to print
special reports.
_______________________________________________________
Step 3: Start sending offers and personal messages to your
customers.
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Dont wait until you have a large mailing list. Begin
sending notes to customers right away thanking them for
their purchase, to celebrate birthdays, share holiday
messages, and inviting them to come in and take advantage
of special offers.
There is an old saying that goes, "Business goes where
business is invited, and stays where it is appreciated." A
personalized invitation to drop by the store to take
advantage of a specific incentive is sometimes all that is
needed to keep your customers coming back into the store.
Instituting a program of personal, hand-signed notes that
coincide with birthdays or special events addressed to the
customer's significant other that offer gift ideas, can
have surprising results.
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Step 4: Track the results of your database marketing
efforts.
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By knowing who you sent offers to and who responded will
help you identify your best customers, allow you to more
effectively allocate your marketing dollars, and help you
tweak your marketing pieces to get higher response rates.
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What Information Do I Collect?
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Its important to determine in advance the type of
information to collect. To do this, make a list of common
special offers you might be presenting to your customer.
For instance, if you sold a product in the health industry
and many of your customers have lower back problems you
could joint venture with other businesses to develop
special promotions on products that help to relieve lower
back pain.
To capture the fact that your customer experiences lower
back pain, simply place a check box on your form that says,
"Do you experience lower back pain?"
If your customer has small children, consider presenting
follow-up offers for products targeted for small children.
Imagine being a consumer and receiving a letter from your
business with an enclosed birthday card for little Joey who
just turned eight years old and a discount offer for a
basketball hoop or other relevant products. You think to
yourself, "What a great gift. Joey would love that!" This
is the power of database marketing.
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Collecting Accurate and Consistent Information
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Database marketing all starts at the point of sale. Without
accurate, complete, and consistent data this type of
pinpoint target marketing cant be done.
To ensure that your information is accurate and consistent,
help your customers fill out the data collection form and
review each information form for completeness.
You might experience a hesitancy from your customer to give
out all their personal information, similar to how I felt
at Radio Shack.
However, after explaining that the information will only be
used to send out special offers during important events, is
completely confidential, and will not be shared with
anybody else, youll find that most of your customers wont
have any problem giving out their personal information.
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Cost Effective Loyal Customers
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Marketing to your current customers is one of the most
effective and cost-efficient strategies you can do to
reduce your marketing costs, enhance your customer /
retailer relationships, and produce long-term loyal
customers who, over a period of months or years, become
your biggest source of referrals.
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David Frey is the author of the best-selling manual, "The
Small Business Marketing Bible" and the Senior Editor of
the "Small Business Marketing Best Practices Newsletter."
To get your free lifetime subscription visit
http://www.MarketingBestPractices.com
More articles by David Frey - http://www.submityourarticle.com/articles/David-Frey-318/
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