Despite the absence of a scheduled co-presenter from JCPenney, InfoWorks senior vice president Brad Rukstales offered insight into how retailers and catalogers can segment transaction, demographic and attitudinal data to make appropriate offers to specific customer groups.
Rukstales offered the case of a marketer that had seen a 1.3% decline in the total number of customer households in its file. The company had seen a 7.8% increase in the number of former customers that had chosen not to come back to it, a 12.2% drop in new customers and a 4.9% decline in its efforts to reactivate formerly lapsed clients.
Rukstales advocates customer segmentation as a way to increase a database’s value. The most commonly used criteria include behavior data, (such as purchase and interaction channel preference and payment patterns) demographics and profitability.
In his example, the company was able to break out eight identifiable customer groups based on lifestage. While some, such as homeowners with children and renters with children, were growing as a portion of the customer base, two--young single homeowners and single renters without children --had seen the biggest declines, 9.4% and 11.7% respectively.
In response, the company re-evaluated the product mix, and layout among its retail outlets, to reflect the tastes of these population groups. It also re-established its brand by sponsoring events such as rock concerts that were in line with the interests of these markets. Rukstales did not offer hard results for these actions.
To Rukstales, who spoke Tuesday at the National Center for Database Marketing conference in Rosemont, IL, well-thought-out segmentation, not more powerful tools, is what determines future success. "The future wars will not be fought on the technology front --the victors will be those who are more creative in the use of customer information," he said. "Everyone will have access to the same point of sale [analysis] system."
Rukstales offered several examples of database strategies that go beyond simple campaign management, including:
-- Measuring the impact changes in the economy had on various customer segments to determine if promotion costs to some groups could be cut;
-- Evaluating pricing strategies based on a customer’s propensity to buy, or the need to move inventory;
-- Customizing merchandise presentation, such as in catalogs or retail displays, based on prior purchase patterns;
-- Developing new products and services based on analysis of customer needs; and
-- Tracking performance of customer segments to gain insight into marketplace changes.
The National Center for Database Marketing Conference ends today.
