The New Reality for Customer Engagement
There are lots of providers of marketing information that maintain databases of 200 million or more Americans with details on income, lifestyle, shopping behavior and sometimes even whether an individual is a romantic, environmentalist, bookworm or early adopter. But only a handful of these information suppliersDoubleClick Inc.'s Abacus division and KnowledgeBase Marketing Inc. are two prominent examplessell this data as part of a cross-selling program that gives companies new information about their own customers to help them decide who to target for additional revenue.
Abacus' transactional database is particularly interesting because it is fed by more than 1,800 companies that continually provide the details of virtually every purchase they can attach a customer's name to: date, what was bought and how much was spent. This huge database is like a penetrating and valuable spyglass that can tell companies what their customers are doing when they're not shopping with them.
"Cross-selling drives retention and loyalty, which can slip when customers are neglected," says Paul Imbierowicz, Abacus vice president of product management. "So we can take a retailer's list of customers who haven't purchased for 24 months and, using these names, identify where those people are shopping now. If they're active with one of the retailer's competitors, why aren't they shopping with the retailer? Now this company has to come up with a cross-selling strategy to reactivate these customers."
Two possible approaches: Send personalized catalogs to these customers, offering them a discount if they purchase, say, $200 worth of merchandise in any sales channel, or analyze what these customers are buying from other retailers and create customized brochures with special promotions on those items.
Consumer databases can also identify potentially lucrative new markets for companies to cross-sell into. For instance, in 1997 retailer Plow & Hearth Inc. ran its list of customers through Abacus' databases to find out what types of products besides country-living items its customers bought most frequently. The answer: items for home decoration and furniture. Based on this information, two years later Plow & Hearth created a spin-off catalog with products specifically for the home and mailed it primarily to its customers who were frequent purchasers of these products with other retailers.
Within four years, sales from this catalog grew from virtually nothing to 14 percent of Plow & Hearth's total revenue. What's more, a second analysis of Plow & Hearth's customer base, completed in 2000, found that in its markets the retailer commanded a significant 31 percent of its customers' expenditures, up from about half that a few years earlier.
"We were confident about our strategy to increase revenue, because no guesswork was involved, since the results of our analyses were based on actual data," says Pete Rice, Plow & Hearth senior vice president of marketing.
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