Chapter 18

Ten (or So) Ways to Capture Customer Data

In This Chapter

Linking anonymous transactions to customers

Capturing data online

Capturing data at the point of sale

Purchasing customer data

Bits and pieces of customer data are spread out over virtually all the systems that your company uses. But this data is only useful to you if it’s centralized and can be connected to customers. Much of your company’s sales and transaction data is either summarized or cannot be directly traced back to individual customers.

There’s also a lot of information that would be useful to you if it were actually captured. The conversations that occur between your sales staff and customers uncover a great deal of information about customer’s attitudes and preferences. This information would be of great value to you if you could capture and store it.

In this chapter, I talk about some ways you can increase the amount of customer data in your database. When evaluating which of these techniques you might want to employ, you need to stay focused on how you plan to use the data. Capturing and storing data is costly — sometimes very costly. Before making that investment, make sure you know how you can use the data to drive revenue.

Identifying Customers with Loyalty Cards

Capturing customer-level sales data is particularly challenging for consumer retail businesses, especially those that operate physical stores. The problem is that almost all of their sales are made anonymously. Grocery stores, department stores, gas stations and a host of other businesses do not require customers to identify themselves in order to make a purchase.

But understanding customer purchase patterns is as important to these retail businesses as it is to anybody. One approach to getting at this data has been to implement loyalty programs. Loyalty programs operate by offering customers discounts in exchange for personal information. You fill out a form with the basic name and address information necessary to create a customer record in the company’s marketing database. You’re then given a plastic card that you swipe at the cash register when you make a purchase. The card swipe applies discounts or points toward a future discount to your “account.” But it also ties the details of your transaction to your customer record.

When you implement a loyalty program, you want to get as many customers as possible to sign up. The more data, the better. Keep these things in mind:

Make the application as simple as possible so that it can be filled out quickly.

Make the discount meaningful. Being able to tell a customer that they can take $5 off this purchase if they fill out an application is a powerful motivator.

Make the card easy to use. I actually have a half dozen mini-plastic cards attached to my key ring. This has the additional benefit of making sure that I always have my card with me.

Actively manage your loyalty program. You should have a resource dedicated to actively monitoring and tweaking the program rather than simply putting it on autopilot. It’s easy to fall into the trap of simply training your customers to expect discounts rather than actually building loyalty.

Consult your accountant. Loyalty programs can have accounting implications related to the benefits that are promised to the customers. Some of these benefits need to be reflected on your company’s balance sheet.

A Variation on the Theme: Rewards Cards

Rewards cards operate in a similar way to loyalty cards. In fact, many people use the two terms interchangeably. But there’s a slight difference. The difference lies in the nature of the financial incentive. Whereas loyalty cards offer discounts on your company’s products, rewards cards often offer discounts on another company’s products.

The grocery store I usually use has a rewards card that earns me points toward discounts on gasoline. Every $50 I spend at the store earns me 10 cents off per gallon at a particular gas station.

In this case, the card is actually both a loyalty card and a rewards card. I also get discounts on certain products at the grocery store. But my purpose for making the distinction has to do with the cost of a rewards program versus a loyalty program.

Rewards programs serve the marketing needs of a partner company. This means that if you develop a rewards program, you share the cost of that program with somebody else. That makes it an attractive option, particularly for low-margin businesses. In the case of my grocery store card, the cost of the rewards are being borne by the relatively high-margin gas station/convenience store. The low-margin grocery store is reaping the data benefits.

Tracking Transactions with Offer Codes

You’ll face another challenge related to associating purchases with particular marketing campaigns. Even if you can track transactions back to individual customers, it may not be clear whether a transaction is related to a specific marketing campaign.

For example, you might communicate that a discount is available for a limited time on a given type of purchase. But a customer may stumble onto that discount by noticing a good price while they’re idly browsing the shelves. It’s hard to tell whether your marketing communication had anything to do with the customer knowing about the offer.

One way around this is to include an offer code in your marketing communication. There are two ways of doing this:

Use a generic offer code that’s the same for everyone.

Issue serialized codes that are unique to individual customers.

Issuing a single discount code makes implementing the program at the point of sale fairly simple. Your transaction system only needs to know about a single code. This means that the discount can be used multiple times. That’s not necessarily a bad thing. But it does make measuring the campaign’s performance a little tricky.

One disadvantage of this approach is that, personalized or not, these codes can be shared or given away. This makes it difficult to fence the offer. You can’t restrict the discount to only price-sensitive customers, for example. This isn’t as big a problem for individualized codes that can only be used once. But for generic codes, the door is wide open to discount sharing. There are actually websites out there dedicated to doing exactly that. Coupon fraud, like forged coupons, can also be a problem. A number of coupon clearing houses, such as NCH (which grew out of the Neilson empire), can help streamline and audit the administration of coupon programs.

Identifying Potential Customers with Newsletters

One way to generate lists of potential customers is to offer a newsletter. This approach has two advantages. First, in order to receive the newsletter, customers have to identify themselves. These days, the vast majority of newsletters are delivered electronically, which requires an e-mail address. And because the e-mail channel is so inexpensive, these newsletters can be delivered at very low cost.

What’s more, these tend to be pretty good leads. By requesting a newsletter, the customer is signaling that they have some interest in your products. This means that when you design marketing communications to them, you know they already have an interest in what you have to offer. You don’t have to waste your breath on brand recognition or product awareness messages. The newsletter does that for you.

Offering Physical Information Packets

You can expand on the newsletter approach by offering potential customers more actual physical collateral with information about your products. Videos, CDs, planning guides, or even product samples can be shared with your customers.

The advantage of sending a physical packet of some kind to the customer is that it requires them to give you their name and address. This is the core information that you need to create a robust customer record. And as in the case of newsletters, a request for such information signals an interest in your product. These are hot leads.

This approach is used frequently in connection with television advertising. So-called direct response TV advertising involves asking the viewer to call in to order a product. It can also be used effectively as a lead-generation tool. The viewer can be asked to call in to order their free information guide.

These advertisements are typically run on cable channels whose audiences have specific demographic characteristics. By targeting the advertisements to segments that fit your customer profile, the leads you get tend to be of very high quality. Another advantage is that you have additional demographic information on these leads that can help you design re-contact messages.

Encouraging Web Registrations

As I discuss in Chapter 13, a vast amount of data is available on how your customers use your website. You can learn a great deal about customer browsing behavior without requiring consumers to be registered or logged in on your site. But if you want to use this information to communicate with them directly, you need to have an e-mail address.

One of the biggest mistakes you can make in designing a registration process is to make it complicated. Because you can start a conversation with your customer using just their e-mail address, allow them to register with just an e-mail address. The more information you ask for, the more likely it is that the user will bail out of the registration process before completing it.

You can encourage this sort of “light” registration by simply restricting full access to content on your website. The pizza delivery store I usually use requires me to log in to see the weekly specials, for example. The newsletters and information requests discussed earlier in this chapter are also good ways of encouraging web registrations.

Once a customer is registered, you have a way of communicating with them. You’ll have many opportunities to collect more data about that customer as the customer browses your website in the future. Detailed address data, for example, can be captured when the customer actually makes a purchase. In the next section, I discuss other ways of adding to your customer’s online profile.

Building a More Robust Online Customer Profile

If a customer is registered, you can actually tie future browsing behavior to that customer record, even if the customer isn’t logged in. As I discuss in Chapter 13, cookies are small files that you can place on a user’s computer that allow you to tie browsing sessions together. Simply put, you drop a cookie on a user’s computer when they register. You can then recognize the user every time they come back to your site, logged in or not.

Once the customer is registered, you have access to what pages they’re looking at. You know what products they’re searching for. You also know what ads they’re clicking on. You can learn a lot from studying this behavior.

But you can learn more. One way is to allow the user to customize their preferences. Let them tell you what they want to hear about. Let them tell you how often they want to hear from you. Are they primarily interested in discounted offers? Do they have an interest in a particular type of product?

Another way of getting a broader picture of your guests’ product interests is to provide planning tools or apps that assist them in doing business with you. I recently bought furniture from a store whose website allowed me to enter the dimensions of my living room. I could then drag and drop various pieces of furniture into the image and plan how I wanted to arrange the room. My home improvement store allows me to store information about my water filter numbers and air filter sizes so that I can access them at the store.

Customer Data and the Call Center

There’s a great deal of information that’s exchanged between customers and call center representatives. Making customer profile information available to your call centers can help your sales and service agents immensely. It can also cut down on the length of phone calls, which in turn brings down the cost of running the call center and improves the customer experience.

Conversely, it’s very helpful to your database marketing efforts to have access to the information that call center reps collect from customers. Those reps can be trained to ask for key pieces of information about customers. If a customer asks a call center rep about a specific product, for example, that could trigger an offer from you. But only if you have access to this information.

A variety of software systems available for call centers facilitate the capture and sharing of customer data. These are frequently called Customer Relationship Management (or CRM) systems. They typically require a significant investment to implement, both in technology and training, but the investment may prove worthwhile.

When evaluating the possibility of implementing call center data capture systems, you’ll need to understand the business case for doing so. When building the business case, take into account the value of the data that you capture as it relates to database marketing campaigns. But you also need to consider the benefits at the call center. The call center may (or may not) expect to shorten call times. But these systems can also be used to drive up sales efficiency.

Customer Data at the Point of Sale

Like call center reps, the frontline salespeople in your stores can also benefit from having customer data available. And you can benefit from the data that they might capture.

The grocery store loyalty swipe card connects my past purchase data to the transaction. This allows the point-of-sale system, by which I mean the cash register, to spit out coupons that are relevant to my buying patterns. This cross-selling technique is quite effective.

Auto parts stores do this very effectively. By collecting information on a customer’s car, they can easily identify which parts are needed. They can also tell when certain parts are likely to need replacement. This information can trigger marketing communications to remind the customer to change their wiper blades, for example.

Purchasing Customer Lists

When all else fails with your lead-generation efforts, you can fall back on third-party list providers. You can buy lists of names and addresses of potential customers or e-mail addresses from a wide variety of companies.

These lists can be targeted in the sense that the consumers on the list meet certain criteria. Depending on the list provider, the level of targeting varies. The simplest (and cheapest) lists are simply geographically concentrated. You’re selecting addresses within a given set of zip codes, for example.

But list providers can be a great deal more sophisticated. Age, income, marital status, presence of children, and other demographic profile information can be used to select lists that meet very specific profile requirements.

When you purchase a list, you are not really purchasing it. It’s more like you’re renting it. After a given period of time, the list vendor will expect you to purge the list from your database. They do this partly to make sure they keep up with data privacy and opt-out best practices. The exception to this purge requirement is that the names of consumers who actually purchase from you are yours to keep.

Purchasing Demographic Data

You can also buy demographic information on your customer base. Several companies compile consumer data from a wide variety of sources. They look at census data, public records, warranty cards — literally any data they can get their hands on. Several of the big players in this space have records on virtually every household in United States.

Because of privacy concerns, some of the data that these companies have cannot be provided to you at the individual customer level. They get around this issue in one of two ways. They either aggregate the data or they provide you with a targeted list of prospects (I discuss prospect lists in the previous section).

The aggregation I’m talking about involves using the individual customer data to create customer segments. These segments are relatively small groups of consumers who share deep similarities in their demographic makeup and purchase patterns. They create literally hundreds of such segments. They can even tailor customized segmentation schemes to your particular business goals.

What they provide to you is a classification of your customers according to which segment they belong to. They also provide a detailed description of each segment. By comparing these segments to your purchase data, you can identify hot segments from a targeting perspective. In addition, the detailed demographic descriptions of these segments can help you craft relevant messages for different segments.

Not all demographic data is created equal. And prices vary widely for this data. Sometimes, particularly with census data, it may appear that you are getting individual customer-level data. But this data may well be aggregated geographically. All the households in a city block or group of blocks may contain exactly the same data. It’s important to understand at what level data is aggregated when you evaluate different data providers.