Targeting Preferred Customers

Dec 19, 2003
George Anderson

By George Anderson

Retailers have long known that it costs less money to keep an old customer than to bring in a new one.

Despite this, many retail-marketing programs deal more with attracting new shoppers than with keeping established customers by providing them incentives to shop more often and
buy more goods.

Others, such as Richard Jaffe, a retail analyst with UBS Warburg, believe retailers are waking up to the fact that discounting popular products across the board “means you will
sell your best merchandise on discount and the less desirable merchandise will be left over.”

The advancements made in target marketing can be attributed to retailers having a better handle on their sales data and a different mindset when it comes to promotional activity.

Terry Maloy, senior vice president of marketing, Sports Authority, told the Washington Post the chain tries to offer incentives based on a customer’s past purchase history.
For example, “If a customer purchased footwear, the coupon might be for discounts on certain shoes.”

Retailers are also finding that target marketing can equate to stealth marketing by providing stores with the opportunity to reach consumers with special deals without the competition
catching on.

Trynka Shineman, marketing director at PreVision, told the Post, improvements in the mining of data has enabled retailers to develop targeted programs that reach a greater
number of core shoppers. “It does seem that retailers are mailing deeper into their customer files than they have in the past,” she said.

Moderator’s Comment: How adept are retailers in targeting offers to consumers based on their purchasing history? Do you see a time when target marketing
replaces the kind of broad audience marketing done by many retailers such as newspaper inserts, broadcast media, outdoor?

A former owner of a small consumer electronics chain once told us that he was only interested in taking care of his existing customers. He figured if he
did a great job of that, the customers would do a great job recruiting new customers for him.
Anderson – Moderator

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