Yes, it seems we’re expensive and years behind in adoption of new marketing tools and methods. We like to talk of new technologies that will save us and expand boundaries, yet we’re still not doing the basics right. It appears we can do nice TV ads, but little else. Examining some of our letterbox mail reveals even our direct mail strategies are old world. We’ve been conditioned to accept 0-2% response rates when 3-5% is becoming the norm overseas. The very best average a staggering 12-15%!

What New Methods?

New database marketing practices lower overall marketing costs and also help boost sales results, especially for retailers. But making it happen comes down to a real desire to become more efficient, less wasteful. Additionally, there’s often a fear of databases and vested interests within most creative agencies to keep the status quo. Real change may mean finding a new supplier!

It’s a ‘Green’ initiative. A question of sending out relevant mailers, only to those that want them..

It also comes down to wanting to understand our customers better and getting our hands dirty with CRM (Customer Relationship Management) toolsets. Easy perhaps for large retailers like Sainsbury in the UK and even Myer in Auzzie. They can utilise their loyalty program customer data to build targeted direct mail campaigns. It’s cheaper than mass advertising and far more effective.

Highly personalised, relevant full colour offers in the mail is extremely rare here, even though the technology is readily available. Even the big retail chains here with customer data don’t do it properly, with their handful of direct mailers using little more than adding a first name to a generic postcard. They say they do more, but it’s not obvious. Even our utility and credit card accounts that also have ample transactional data are 5-10 years behind the best in the world practices - Are we being lazy, or just lack the skills?

So, we’re ineffective and way behind – Can we catch up?

To gauge what’s required, compare what’s commonplace in the US market from the video below. It reminds us to always look at mailer design from a customer perspective. Smarter direct mailers are performing very well in the US. Because these well-targeted direct mail promotions really work, it’s been a hidden goldmine, especially for small businesses, helping them get more customers and sales.

If any of these ideas or items in the video bring you inspiration, email zn.oc.gnitekramlatigidnull@nivek.

P.S. Think the fancy CRM systems that drive all this are only for the big corporates and national retail chains? Wrong. Smart, more affordable online systems now bring easy loyalty and CRM technology to small business  – In fact for those starting afresh, with no legacy systems in place have a big advantage.

Need more proof ? Read Double Your Rewards, our Rafi Articles, the Insight out of chaos website and GAWright retail marketing video

Not long ago I made a trip over to the local Radio Shack to purchase an electronic plug for my cassette recorder.  As I paid for my item the retail clerk asked me for my name, address, cellphone number, birth date, and even my email address (something every retailer should be asking for today!).

Although I felt a twinge of discomfort giving out my personal information, I went ahead and gave it to him and went on my way.

Driving home I reflected on Radio Shack’s checkout process and was reminded of the power of information gathering at the point of sale. I had just given Radio Shack three ways to contact me, not to mention, information on what I had purchased. In the hands of a skilled marketer, this information is powerful.

Small businesses should be looking for low cost, high impact marketing

The recent economic slowdown has brought increased competition to small businesses. And with that, retailers across North America have described their sales as “flat.” Small businesses should be looking for low cost, high impact marketing activities to drive prospects to their business.

One of the most effective and cost-efficient ways to add profits to the bottom line is the use of database marketing, which uses information collected at the point-of-sale.

Using personal data, purchasing data, and contact information from a customer database, a spa and pool retailer can make offers to customers for complimentary products and services and engage in loyalty marketing activities.

Database marketing has four key elements,

(1) gathering customer data,

(2) building a customer database,

(3) creating targeted offers for specific customer groups, and

(4) tracking results to improve responses.

• Step 1: Gather customer data. The easiest way to begin this process is to develop a simple form for customers and salespeople to fill out every time a customer purchases a product or service. Include personal information such as names of spouses, children, profession, and birthdays, as well as, product information such as manufacturer, make, and model.
• Step 2: Build a database to store your customer information. Start simple using off-the-shelf software such as Microsoft Access. Later on you can begin to modify the database to either include different types of information or to print special reports.
• Step 3: Start sending offers and personal messages to your customers. Don’t wait until you have a large mailing list. Begin sending notes to customers right away thanking them for their purchase, to celebrate birthdays, share holiday messages, and inviting them to come in and take advantage of special offers.

There is an old saying that goes, “Business goes where business is invited, and stays where it is appreciated.” A personalized invitation to drop by the store to take advantage of a specific incentive is sometimes all that is needed to keep your customers coming back into the store.

Instituting a program of personal, hand-signed notes that coincide with birthdays or special events addressed to the customer’s significant other that offer gift ideas, can have surprising results.

• Step 4: Track the results of your database marketing efforts. By knowing who you sent offers to and who responded will help you identify your best customers, allow you to more effectively allocate your marketing dollars, and help you tweak your marketing pieces to get higher response rates.

What Information Do I Collect?

It’s important to determine in advance the type of information to collect. To do this, make a list of common special offers you might be presenting to your customer.

For instance, if you sold a product in the health industry and many of your customers have lower back problems you could joint venture with other businesses to develop special promotions on products that help to relieve lower back pain.

To capture the fact that your customer experiences lower back pain, simply place a check box on your form that says, “Do you experience lower back pain?”

If your customer has small children, consider presenting follow-up offers for products targeted for small children. Imagine being a consumer and receiving a letter from your business with an enclosed birthday card for little Joey who just turned eight years old and a discount offer for a basketball hoop or other relevant products.

You think to yourself, “What a great gift. Joey would love that!” This is the power of database marketing.

Collecting Accurate and Consistent Information

Database marketing all starts at the point of sale. Without accurate, complete, and consistent data this type of pinpoint target marketing can’t be done. To ensure that your information is accurate and consistent, help your customers fill out the data collection form and review each information form for completeness.

You might experience a hesitancy from your customer to give out all their personal information, similar to how I felt at Radio Shack.

However, after explaining that the information will only be used to send out special offers during important events, is completely confidential, and will not be shared with anybody else, you’ll find that most of your customers won’t have any problem giving out their personal information.

Cost Effective Loyal Customers

Marketing to your current customers is one of the most effective and cost-efficient strategies you can do to reduce your marketing costs, enhance your customer / retailer relationships, and produce long-term loyal customers who, over a period of months or years, become your biggest source of referrals.

Thanks for the tips David. Today even the CRM technology to hold and manage these customer details is affordable and easy to set up. In fact small retail businesses with nothing in place have an easier time than Corporates with their complex, legacy databases. To get started, email zn.oc.gnitekramlatigidnull@nivek.

Making communications more personal and relevant, as well as more targeted and timely the key to profits

The international audit during 2008 of some 650 senior marketers revealed that making communications more personal and relevant, as well as more targeted and timely, was among the top strategies for realizing greater revenue and profitability from existing customers. Other leading strategies included addressing under-penetrated markets or new customer segments, as well as finding new ways to up-sell and cross-sell existing accounts.

The CMO study highlighted three key obstacles and deficiencies to overcome. This included:

• Lack of real-time data that captures across all customer touchpoints.
• Information not only being selectively gathered, but often inaccurate.
• Data restricted in its availability and use across the organization.

The core need for change  has been simmering for a while now. It started with that groundbreaking research by Romano and Broudy way back in 1999 who clearly established the benefits of  utilising client profiling and transactional data within marketing campaigns.

“It is inexplicable that the vast majority of marketers today are still struggling to source and extract meaningful insights from customer data at a behavioral, transactional and account value level,” noted CMO Council executive director Donovan Neale-May.

Hospitality and Retail have the biggest growth opportunities

An earlier Retail Trends Report in 2005 came to surprisingly similar conclusions to the CMO one. It concluded that retailers that take a customer-driven approach to marketing will be able to withstand the competition for dwindling discretionary income, and still have a productive and profitable. The key to success for small retailers is to identify their best customers, find potential niches to cater to, get to know what motivates customers and then interact as individually as possible.

Retail Trends Report suggests that retailers creating personal experiences and communications are those most likely to come out ahead. Personalising the selling experience and marketing messages will help to level the playing field between small and larger retailers.

According to Gary Wright, of Wright Marketing who specialise in retail strategies, "Technology today puts personalised communications within the reach of every retailer, regardless of size. With new database and digital press technology, small retailers can affordably engage in one-on-one communications which has been proven to significantly increase a customer’s brand loyalty and lifetime value."

when you communicate with a known customer, you are 5 times more likely to generate a response and a sale

Wright encourages retailers to explore database programmes and digital production opportunities that will merge customer data with promotional materials in order to produce personalised and highly relevant materials at a fraction of traditional printing costs. His report indicates that when you communicate with a known customer, you are 5 times more likely to generate a response and a sale. When you add customer-specific information from a database to that correspondence, the potential increase jumps to 13 times.

Loyalty marketing guru Rafi Albo knows all this well. He’s shown us in his own retail sector numerous examples that gained a 15-35% response / voucher redemption rate. Winston Marsh also provided some handy tips for small retailers where he touched upon the benefits of using the internet and email in innovative ways. Now, in 2009, we can add in mobile TXT messaging and QR barcodes.

The opportunities here for all retailers, restaurants and the hospitality sectors are immense, but like any marketing strategy, expert planning and execution is the key to success.  Call us on 027 244 4884 to discuss how we can together devise a retail marketing plan to suit your industry or market sector.

If you want more information on the Routes to Revenue study go to  the CMO web site at http://www.cmocouncil.org/index.asp.

Kevin Trye

Note conversion-rate data is based on visitor conversion rates, not session conversion rates: i.e., No. of unique customers/No. of unique visitors.

*Source: Nielsen Online / Marketing Charts

How is it done?

Research tells us that on a typical website, 3% of visitors are Buyers and the other 97% is distributed among the ‘Potential Buyers’ and ‘Disqualified’ traffic. Yet of that 3% that come to buy, only a small number will actually complete the sale. Now most of you are likely thinking, if that’s the case, how do the above market leaders manage to achieve double-figure results?

It’s not just the small ecommerce sites that are failing. Low figures had a lot to do with the demise of Ferrit here. Also, their attempt to market to multiple sectors obviously doesn’t pay. An online version of a super-store is really hard work. Amazon proved that, taking years to turn a profit. Telecom, Ferrit’s owner, obviously could not wait that long. On the net, niche marketing is usually the safer, most profitable strategy.

Checkout these 10 winning websites and see if you can pick up what they’re doing differently.

But it’s not just the products offered. Very high sales conversion rates comes from a combination of art (design, persuasion) and science (databases, analytics, psychology).

It’s used by Rafi Albo and others at the top end of the loyalty marketing sector, who are taking the industry to the next level, achieving incredible bottom-line returns for their clients.

Rafi commonly manages 10-40% conversion rates with his one-to-one direct mail and cross-media campaigns – just proving it’s not a communication channel issue (offline vs online), but one of using the right strategies and techniques.

For more on this key topic, click here.

Today they seem to have lost their way and risk turning into just a another commodity food and drink outlet.   In Europe Mac Cafes are becoming more popular than Starbucks. Who’d have thought that would even happen?  They’ve responded with new drinks like smoothies and more food on offer. But sometimes more means less. It hinders, doesn’t add to sales or generate happier customers – It confuses. (read more). Financial analysts and investors like more. They see more products as more profit.

Today Starbucks runs the risk of alienating much of their customer base since the Starbucks ‘experience’ is being watered down, a problem clearly identified by their new CEO.

The big lesson here for small businesses in the hospitality industry is that dining is as much about the experience as it is about the coffee or food. Below is a good summary from a small business coach Jay Erret in an interview with ……

So, what should restaurants and coffee shops learn from this? Start with three ideas:

• Firstly, look at ways to engage with customers both in-shop, online and via mobile phone. Build a simple loyalty program – We do note that Starbucks are now introducing an improved program based around your mobile phone, not plastic.
• Second, simplify your menu and choices. Take special note of the environment, making it comfortable and encouraging talk. Food and drink naturally has to be of a high standard and having a unique ‘product’ or offering helps a lot. But it’s the experience and service that they’ll remember and come back for.
• Place your restaurant and menu online in a mobile-optimised website. This ties in with the mobile phone loyalty program and helps busy customer see in an instant what’s on offer. Many may like to subscribe to TXT alerts.

These reward programmes have to be done right. In an excellent article by Geoffrey De Weaver "… consumers do not mind sharing information with retailers as long as they receive worthwhile, personalised benefits…  54% of Australian consumers have at least one reward or loyalty card, and 69% tried to use a loyalty card as often as possible. Importantly, both figures are trending north…  Never lose sight of the top 20% of your customers who generate the majority of your sales and profits…"

But for the retailer or restaurateur,, the hidden beauty of loyalty programs is their ability to expertly track things at purchase time. Those linked in with EFPOS systems are the best. Without this or similar mechanism in place, few companies can track individual purchases back to customers.

The Key Driver for targeted marketing campaigns

It’s not just about getting people back to the store and buying. It’s about getting these best customers to buy more products, more often. This data is used to alert the right customers, at the right time, about the right offer. This makes it more relevant and therefore obtain a far higher response, often 10x higher. This strategy also reduces the need to bribe customers with extra large reward points or discounts, which adversely affects the retailers bottom line.

Imagine having an attractive offer arrive in your letterbox (normal or email), based precisely upon your current buying preferences, desires or on your birthday? Loyalty programs collect just this type of data, yet to date, are too seldom used by retailers or brands here in NZ. Yet it’s been common practice in Europe, UK and the US for several years…

Imagine too if this detailed consumer buying data was available in a smart company CRM system like Salesforce? And what if it’s then used to drive a personalised [semi-automated] cross-channel marketing programme? i.e. Many more sales, for much less effort and overhead cost. Predicting buyer needs through data mining isn’t new (click here). But loyalty programme data, linked into one-to-one marketing system takes things to the next level. We can now talk directly to the individual, not just the broader demographic, ensuring much higher response rates and ROI. 

It’s already started Downunder

Myer, a major retail chain in Australia has decided to slash it’s traditional mass advertising budget, instead sending targeted direct mailers to their 2.7 million Myer One card holders.

- It’s a smart move which should pay huge dividends. Once the Myer One database was analysed, it was likely a simple financially-driven decision – One that should save them millions in old fashioned TV and Newsprint advertising, as well as boost their sales volumes and margins.

As Rafi Albo proved many times, a good loyalty program is the hidden key to effective, highly relevant one-to-one communication – When done well it hits that emotional mark, driving sales results way beyond expectations.

Want to know how to set up a one to one marketing-linked loyalty programme? Talk to us.

But my recommended local business marketing guru and motivational speaker is Winston Marsh. He outshines many, with super-practical advice and tips.

Winston spends a lot of time working with small retailers each wanting to boost their sales results and bottom lines. Here’s his frank 10 minute podcast on the impact the internet can have on sales, including the amazing experiences of a NZ client. Click the mp3 graphic below.

Download Winston Marsh