Retailers adopting analytics to target loyal customers

by Deepak Sharma on Friday, November 28, 2008

Retailers are adopting new strategies in targeting its loyal customers (WSJ, Registration reqd) by using Analytics and advertising promotions on an individual basis. This is a shift from earlier times when Retailers would send similar email promotion to all. Retailers like Sears, Gap, Target are using analytics to tap their most profitable customers and shying away from TV commercials

It's an adage of the business: Persuading a satisfied customer to return is cheaper than attracting a new one. Now, in the struggle to do more with less, that concept is becoming even more important.

Acquiring a new customer costs about five to seven times as much as maintaining a profitable relationship with an existing customer, says Marc Fleishhacker, managing director at WPP's Ogilvy Consulting, which designed the campaign for Sears.

Sears and Ogilvy have developed a system to identify the categories of merchandise Sears customers have purchased in the past and to measure the chance that they will buy those sorts of items again this season. That helps Sears determine the type of emails and point-of-sale offers to aim at individual customers.

When customers buy an item online, Sears confirms the purchase with an email including a promotion tied to that product. A person who buys a new appliance at might get an email offering a deal on the store's extended-warranty program.