The more you know about your customer, the more successful your marketing campaign, it stands to reason. It is wasted effort to stuff a customer's mailbox full of baby-food coupons if the customer doesn't have children.
The Internet has been helpful in gathering data to improve the personalization of marketing campaigns, and experts say the Web will be the ultimate marketing tool in the future. But today the majority of shoppers are still walking into the store, so many retailers are working on ways they can personalize the in-store shopping experience by using frequent-shopper data more effectively in their one-to-one marketing efforts.
One of the key areas where retailers and manufacturers will be doing more to fine-tune the marketing message is coupons. There is often not much information about the customer redeeming the coupon, especially if the customer doesn't use a frequent-shopper card. Even if the information is available about who redeemed the coupon, many retailers and manufacturers are neglecting to use this data to target the right offers to the right customers.
The paper coupon isn't going away, but the industry needs to learn more about who is redeeming the coupon so it can target the right offers to the right people, said Dave Sabre, national partner for retail technology at Arthur Andersen, Chicago.
Sabre said direct-mail marketing in the future will routinely include coupons with three-dimensional bar codes that can provide detailed information about the customer targeted with the coupon. This data can be captured when the coupon is presented at the point of sale.
This scenario would likely require an upgrade to point-of-sale and other retail systems, but Sabre said the information would be invaluable and could ultimately reduce the costs of marketing campaigns.
"The way coupons are processed now is klutzy. There are new links coming to the point-of-sale that would enable this to improve," he said.
Sabre also said cause-related marketing will be tied into coupon redemption in the future. "People could redeem a coupon and make a donation to their church," he said.
Cause-related marketing in general will be a significant driver for retail marketing in the future, Sabre said. "I also see a lot of use of the loyalty card outside the supermarket. In the future there may be offers such as, if you use your loyalty card at the local fast-food store, you can also make a donation."
While many retailers are looking at ways to incorporate cause-related marketing into their frequent-shopper and other marketing programs in the future, they are also looking for other ways to target customers.
Harps Food Stores, Springdale, Ark., has recently begun a program to target new customers who move into the areas served by the retailer's 42 stores.
"We've started to contact new people moving into an area via direct mail," said Kim Eskew, vice president of marketing.
He said the retailer has investigated some in-store marketing tools, such as in-store television and radio and manufacturers' signage, with mixed results. "If you hit the customer with those same message over and over, they sometimes tune it out and it just becomes noise," he said.
Eskew is hopeful about the future of electronic shelf labels as a marketing tool. "Some of them allow for flashing lights to identify specials. I'd love to do something like this, but we can't cost-justify it at the moment."
The retailer has also been using an on-line marketing program that allows users to select coupons on-line and then come into the store with a printout to obtain the discounts. "The numbers really aren't in on this yet," he said.
Other retailers, such as Whole Foods Market, Austin, Texas, are looking to blend their in-store and on-line marketing by providing kiosks in the store that will connect to the retailer's Web site. In the case of Whole Foods, the retailer plans to staff these kiosks with employees of its newly formed Internet subsidiary, WholePeople.com. WholePeople.com employees will explain the new features and functions when the site, wholepeople.com, launches next spring.
John Mackey, chairman and chief executive officer, said he hopes to leverage the popularity of the stores to build the company's Internet presence.
"With WholePeople.com, we are striving to become the home page for a community of people who share common values about healthy lifestyles and supporting the environment and who are looking for a wide range of high-quality products at competitive prices that are consistent with those values and interests."
He anticipates that only a small percentage of products will overlap from the store to the site, but they will ultimately be aimed at the same type of consumer.