DATA BASE MARKETING: A TURN OF THE CARDS
One exciting outgrowth of increasing involvement in card-based frequent shopper programs is the potential for finely targeted promotions using shopper data bases.Since high card penetration is a prerequisite for data base activity, development in this area may be expected to lag behind that of card programs. However, survey results show a high degree of anticipation. Participation among retailers
August 14, 1995
JAMES TENSER
One exciting outgrowth of increasing involvement in card-based frequent shopper programs is the potential for finely targeted promotions using shopper data bases.
Since high card penetration is a prerequisite for data base activity, development in this area may be expected to lag behind that of card programs. However, survey results show a high degree of anticipation. Participation among retailers is expected to double to 67% of supermarket chains, while 38% of brand marketers said they have firm plans for retailer data base marketing, which would push penetration to a total of 63% of all respondents.
With two-thirds of the consumer goods industry already participating or expecting to, this sector appears ripe for expansion.
On average, brand marketers who are already doing some data base marketing with supermarkets said they are working with anywhere from two to five retail accounts, either actively or in test. Clearly there is room for further expansion in this area.
It's a safe bet that most of the spending by brand marketers in this area will come from the trade marketing budgets, following the trend for card-based promotion programs. Micromarketing programs, based on demographic and transactional information from the data bases, naturally fit into the account-specific mold.
A key aspect of data base promotion activity is tracking and evaluation. Three of four (74%) supermarket retailers responding to the survey said they do measure effectiveness of specific targeted activities under their frequent shopper programs. Of course, that result implies that one in four has no idea about how well their programs are working.
Dedication to measurement is greater among brand marketers responding. Nearly all (93%) said they take pains to measure the effectiveness of specific targeted programs.
Supermarkets gather a wealth of information from their frequent shopper programs. The most widely tracked quantity is transaction frequency, followed by 88% of retailers responding. Also high on the list was total dollar spending, tracked by 84%.
After that, the precision drops off. More than half (53%) of retailers gather department-level data from their card programs. But only 22% of respondents gathered shopper profitability and Universal Product Code-level data.
Brand marketers are getting some useful information from retailer card programs. Half the respondents (50%) said they receive UPC-level data from at least some retailers. Some transaction frequency and promotional lift information is received by 42% of respondents.
Other useful data base quantities, such as profitability by customer and total dollar spending, are seldom made available to manufacturers (17% and 25%, respectively).
Supermarket retailers said they are most likely to use data gathered from their card programs to increase sales (82% of respondents). A surprising 79% said they use the data to develop marketing strategy, and 75% said they use it to convert secondary customers to primary.
Among manufacturers, the accent is on strategy first, with sales close behind. Data is used to develop marketing strategy by 55% of respondents; 36% use it to increase sales, and another 36% use it to acquire new customers.
Just 43% of retailers responding said they use the data to increase profitability. The number is even smaller among manufacturers; just 18% now use data to help the bottom line.