Database Marketing

Online retailing has existed for nearly 20 years, and product recommendations have been around for almost as long due to the pioneering work of Amazon.com, which applied for a patent on its collaborative filtering technology in 1998. Since then, a majority of retailers have adopted online product recommendations. Yet many of these implementations are still fairly primitive because they fail to understand an online shopper’s real-time product needs.

The fact is, Amazon.com has been collecting my information for years — not just addresses and payment information, but the identity of everything I've ever bought or even looked at. And while dozens of other companies do that too, Amazon's doing something remarkable: it's using that data to build our relationship.

Tom Weisend, director of user experience at flash-sale retailer RueLaLa, says data informs all of his decisions and warns against the inclination to “trust your gut” when making decisions about how you market to your customers.

Retailers are already collecting various data sets such as customer data, competitive data, social data, online behavioral data and offline data to tailor product selections, determine pricing and timing of price markdowns, and even provide online product recommendations. While this is a step in the right direction, retailers are still faced with numerous challenges when it comes to fully leveraging their data to make real-time decisions that can produce additional revenue and/or cost savings.

Plow & Hearth engages its customers and prospects via a multitude of marketing vehicles — catalogs, email, direct mail, affiliate marketing, search engine marketing, TV and radio ads. With that mix comes the challenge of determining the best way of contacting consumers. Does a customer who received a catalog yet purchased via the web still need to be mailed an expensive catalog?

Starting in 2005, Borders began amassing a database of more than 48 million email addresses of customers who participated in its loyalty program. Now that the company is in bankruptcy, that email database is seen as valuable property by Barnes & Noble, which won an auction to purchase Borders’ assets for $13.9 million. The problem for Barnes & Noble is that Borders originally promised many of the customers in its loyalty program that it wouldn't disclose their personal information without their permission. Borders changed its policy in May 2008, but collected millions of email addresses and other data before then.

A report by Forrester Research titled Customer Experience Boosts Revenue shows a strong correlation between customer experience and three keys to loyal behavior: intent to buy again, reluctance to switch and likelihood to recommend. The fundamental idea here is that as a customer's relationship with a company deepens and extends, profits increase — and not just by a little. 

Every retailer understands that direct mail can't do it all. Any campaign needs the other channels to work together, to some extent — and ideally on the same page. While the closely coordinated direct mail and email campaigns are both popular and successful today, perhaps the most effective demonstration of the offline-online marriage are personalized URL (PURL) campaigns.

Predictive analytics can allow you to best find who you should be contacting, what should you be offering, when to make the offer and how to make the offer for optimum results.

Using a multi-store e-commerce strategy can significantly increase customer acquisition, loyalty and conversion rates. Leading online retailers are currently benefiting from an effective multi-store ecommerce strategy, now is the time to learn how.