UP THE CHANNEL: There's gold in that there data

UP THE CHANNEL: There's gold in that there data

Specialist IT resellers frequently lament that no amount of newspaper, radio, TV or Yellow Pages advertising (at least on the scale that they can afford) brings them any more business. And with profit margins barely reaching 10 per cent, you have to sell a lot of product just to pay for an advertisement.

More enterprising retailers are moving away from mass marketing because they can't hope to own that space and compete with mass market retailers.

Data mining and customer relationship management can produce more targeted campaigns to drive marketing dollars further.

What is data mining? Since the advent of GST, most resellers have a computerised accounting system and that data can be mined to reveal a lot about their market. Start by setting up some rudimentary reports that tell you things like sales by postcode, average invoice value, top-selling products by volume and price and repeat customers.

The postcode report will reveal your catchment area. For the average reseller this will be about a five- to 10km radius, based on a major transport corridor, containing between 10,000 and 20,000 households. Costly mass market advertising reaching millions of readers is not effective when only a small portion of them are going to consider your store on their shopping list.

Average invoice value is really important. You may find that your market is changing from big ticket sales (such as PCs) to lots of smaller sales (like peripherals and printers). You can then decide what market you are in and modify your message.

Data mining requires something to mine in the first place. Start by collecting the right information for every sale (even a cash sale) - name, address, postcode, phone number and email address. Remember that customers are getting more wary and you have Privacy Act obligations as well - no unsolicited junk or email.

Ensure you have a clear privacy policy. Customers are generally happy to provide contact details for warranty purposes but that does not allow you to contact them for marketing purposes unless you have asked their permission to make occasional contact first. The Privacy Act is based on "opt-in", not "opt-out".

In order to gain that permission, consider setting up a club with some benefits for frequent shoppers such as loyalty discounts, a newsletter, information on promotions and product release notifications.

Electronic newsletters are a great way to promote a business. You don't have to be a good writer (just ensure you use spell check), but regular, short, informative newsletters drive sales and awareness. Aim to do this monthly and drive the customer to your website, where you can capture sales.

Mine the data to find if customers are buying complimentary products. For example, pull a list of Canon printer owners and offer them loyalty discounts on ink and paper. Create another list of all PC purchases in the past 12 months and offer them a low-cost system check and even a warranty extension. Use a list of people that buy certain parts regularly to see what you are missing out on.

This is not rocket science, but it is amazing how many resellers are missing out by not data mining. With the cost of a business card-sized newspaper advertisement now typically over $1000, it is time to be smarter with your marketing dollars.

Next month, we will look at how to use websites more efficiently for low cost marketing.

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