data directions: How Loyal are Your Customers?

Not too long ago, the things that filled up your wallet the most were credit cards. Then, we got a little smarter and now we carry only a few select (but maxed-out) credit cards.

But now you need to carry specialty cards that allow the store you shop at to track your activity. This is not “Big Brother” watching as much as “Big Chain” watching.

Oh, you get a 3 or 4 percent discount on purchases, but what does the store get? Lots! Think about it. What is one of the largest collections of reports your organization has? Sales reports. How much was sold, to whom, when, at what price, on what promotion, in what region, by what sales rep, etc. The list is endless. What is this worth? Tons!

Even small retailers are putting together “preferred buyer” or “frequent buyer” cards. This helps show the customer that the retailer cares, while giving it the ability to do information tracking. Unfortunately, not many organizations know what to do with the information. You cannot just do that same traditional sales reporting over this data. So what do you do with it? How do you keep it updated?

Most companies will not sell that information, as many people think. They want to learn over time what is selling, when it is selling, and who is buying it. Why? So they can carry the products that you will buy, and they will have it in stock when you want it.

Why do companies forecast their sales? For production and manufacturing – why make something no one will buy? This information can greatly assist companies in understanding the products to carry. That will filter to the suppliers. In many cases, as the supply chain gets tighter and tighter, the supplier will get this information directly from the retailer. Many large chains do this already.

This information is not the typical sales data that we have been collecting and reporting on over the years. It is more finite and much more voluminous. We are going to need tools and new techniques to collect, store and use this data. This is one of the big reasons for the growth of the data warehouse and data analysis technologies over last couple of years.

Marketing uses this data to determine trends and try to respond to them or lead them.

We need to be able to look at our old data and this new data in different ways. Not all of them will be useful. That’s the trick. Those who can figure out how to use it best will gain the most benefit. Do we do that on our current database, or do we go out and purchase something completely different?

Unfortunately, there is no “one answer fits all,” even though the vendors may tell you differently. The critical thing is to decide it is important and work with someone who has done it before. Then learn as you go. Do not be afraid to learn and throw away and try again. Hard as that is in development, sometimes it is the only way to find out what works and what does not. You cannot always just have an RFP filled out and pick the one with the answers you like the most. If you have no frame of reference from where to make the decision, then you have little chance of making it correctly the first time.

But what do you gain? How great would it be to know how loyal your customers really are? To be sure, you need to rely on your field sales force, but you also need statistics to take the emotion out of it. You also want to make sure you are making money on what is being sold (or at least leverage the loss leader if that’s what the product is).

Most smaller companies do not really have people dedicated to the process of anticipating customer need. They react to building or acquiring the products that they need because their customers are “shopping” for them. As the cost and effort come down in building and maintaining systems that perform this tracking, it becomes more viable for smaller companies to do this. Most smaller companies have a better understanding of their markets than big companies who have large departments that are far removed from the customer.

But the big companies have been relying solely on data to make decisions. If you take that technology and put it into the hands of someone who really does understand the market, they could easily lead that market.

John Bussert is president of Swift Technologies (Marengo, Ill.), a company specializing in AS/400 and Windows NT software.