NEW ORLEANS -- The data base marketing initiative at Brodbeck Enterprises, Platteville, Wis., has generated a 4% sales increase and reduced customer counts 3% to 4% by inviting "cherry pickers" to shop elsewhere.
The operator of Dick's Supermarkets has abandoned conventional newspaper advertising in favor of a 16-page direct-mail piece sent only to frequent shopper club members who achieve minimum spending levels. Customer purchasing data is collected at the point of sale and reviewed weekly to determine who's entitled to receive the piece.
Cherry pickers must step up their spending to qualify for the mailing, lest they miss out on the discounts and other promotions geared for frequent shoppers, said Bill Brodbeck, president and chief executive officer of Brodbeck Enterprises.
"Distributing the Inside Shopper Report [direct mail piece] cost us over $100,000 more than our previous advertising approach but it is paying off in additional purchases by customers," he said.
Total store sales have increased about 4% since the electronic marketing program was launched 20 months ago, Brodbeck said. The direct mail component was introduced five months ago.
Brodbeck outlined the company's data base marketing strategy and results during a standing-room-only seminar at the Food Marketing Institute's MarkeTechnics convention here last month.
coupons, manufacturer coupons, recipes and food preparation tips as well as information about contests and 10-week incentive programs geared for club members.
"The incredible flexibility of the piece promises us much: We can even 'stop the press' and do location-specific advertising," he said. "We've become a competitor to the newspaper in which we were advertising."
Production and distribution costs for the piece, mailed third class bulk to 40,000 homes, is approximately 34 cents per household weekly, or slightly less than $18 per family a year, he said.
"Speaking of costs, ad markdowns continue to fall as we further cut off cherry pickers," Brodbeck noted.
"Overall, we're seeing noticeable sales increases and therefore profit increases, higher levels of manufacturer support [of the direct mail piece] and a reduction in ad markdowns as a direct result," he said.
A new format to be introduced next month is expected to generate $250,000 in annual savings, Brodbeck said, noting the piece will be larger, 32 to 48 pages, but distributed biweekly instead of weekly.
"The front half of the piece will contain the first week's advertised items and customers need only flip the piece over and turn it upside down to review the back half that contains the ensuing week's specials," he explained.
"This direct communication to our customers is and will continue to be our most successful and meaningful activity in electronic marketing," he said.
The company modifies the piece's mailing list weekly, sending it to the best customers identified through data base analysis, and weeding out cherry pickers by formula.
"If someone has not shopped with us for eight weeks, they are removed from the direct mail list," he said. "If they spend $25 in any given week, they go back on the list, initially for eight weeks. But if they fall off again, they must again spend $25 in a given week to be put back on, but this time, for four weeks only."
Brodbeck said tweaking the project with refinements, such as the new format, and close monitoring of shopper spending levels have enabled the company to effectively market to its best shoppers while reducing ad spending.
"We will be communicating with our customers at the lowest cost, as a percentage of sales, in our company's history. And we'll be doing it with greater efficiency in delivering our message than has ever been so."