STORES - September 2010 - (Page 63)
THE LAST THIS / CONSIDER LAUGHPOV
Keep the Conversation Going
BY SAM KLIGER
When the going gets tough, the tough get talking – to their customers. Customer Relationship Management and ongoing communication will make or break your business. It’s true in a good economy, and even more true in a bad one.
It may seem counter-intuitive. You may have All the principles of CRM apply to this reduced seen the results from your direct marketing efpopulation. You want to continue communicating forts diminish significantly versus better times. directly with this “best customer” base because You may be wondering, “Should I abandon my it will continue to generate a very large portion CRM strategy, or cut back on my communicaof your sales. Just as important, these are the tions frequency?” customers that will be there for you when the Maybe your CRM approach does need adeconomy comes back — and they will be even justing. But abandon it? Go ahead, your commore loyal because you stuck by them. They will petitors will thank you. be part of your “best customer” population long Instead, make your CRM work smarter. into the future. Spend more time, not more money, managing Proximity to the store is another metric in List Sam Kliger is president the relationship. Analyze, target, measure and Selection. If in the past, you used a 40-mile raand CEO of KWI. test. Readjust constantly based on response. dius, consider reducing it to 30 miles. In a downExperiment and expand on what you see is working. turn, consumers tend to shop more locally. Above all, make good use of your customer database to Strength of offer is your next power play. Since this genmicro-target communications as closely as possible to erates 30 to 40 percent of your responses, it’s a very imspecific demographics and preferences. portant decision. “Should I offer $25 off the purchase, or To maximize results, consider this research on what protect myself by offering $25 off a minimum of $75?” A prompts consumer response to a direct marketing camminimum purchase requirement may protect margins, but paign: will definitely depress the response rate. Yes, some cus• 50-60 percent is due to the quality of the mailing/e-mailtomers will come in, spend $25 and walk out, but experiing/phone list ence shows the vast majority will spend higher than your • 30-40 percent is due to the appeal/targeting of the offer normal/average transaction. • 0-15 percent is due to creative/production factors of presCreative presentation drives only about 10 to 15 percent entation of customer response, yet may incur the most cost. Can List Selection has the biggest impact on customer reyou reduce the quality of paper, print black/white instead of sponse; therefore, it’s where most of your effort should color, mail a small versus large post card without affecting apply. Selection metrics start with RFM: your brand image? As long as you have selected the proper • Recency – Length of time since the customer’s last list and given as strong an offer as possible, you can help transaction offset negative impact of lower cost production choices. • Frequency – Number of transactions in a specified time In times like these, short-sighted retailers have a tenden• Monetary – Amount the customer spent in a specified cy to revert back to a “broadcast” message as a way to time reach customers without the cost of targeting. But CRM sciWith every retailer our CRM team has ence has shown broadcast efforts are actuhelped over the last 25 years, somewhere ally more expensive because they are less Make good use of between 20 and 30 percent of the cuseffective. The best way to influence future your customer datatomers provide between 70 and 80 perpurchase intent is through communications cent of the sales. This ratio, known as the that strongly connect with the customer’s inbase to micro-target Pareto Principle, holds true for almost terests. Lead time for developing purchase communications as every type of retailer. Even in a weak intent may be longer in today’s economy, but closely as possible to it is still best managed via timely, relevant economy, when you may have a smaller specific demographpopulation of best customers, that 20 to 30 campaigns. percent will still account for 70 to 80 perRemember: When you aren’t communicatics and preferences. cent of your business. ing with your customers, your competitors are.
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Table of Contents for the Digital Edition of STORES - September 2010
STORES - September 2010
Table of Contents
Networking & Communications
Payments & Credit
Point of View
Retail Industry Calendar
STORES - September 2010