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Using Point-of-Sale Data to Improve Profitability
Not long ago I made a trip over to the local
Radio Shack to purchase an electronic plug for my cassette
As I paid for my item the retail clerk asked
me for my name, address, telephone number, birth date, and even
my email address (something every retailer should be asking for
Although I felt a twinge of discomfort giving
out my personal information, I went ahead and gave it to him and
went on my way.
Driving home I reflected on Radio
Shack’s checkout process and was reminded of the power of
information gathering at the point of sale.
I had just
given Radio Shack three ways to contact me, not to mention,
information on what I had purchased. In the hands of a skilled
marketer, this information is powerful.
The recent economic slowdown
has brought increased competition to small businesses. And with
that, retailers across North America have described their sales
as "flat." Small businesses should be looking for low cost, high
impact marketing activities to drive prospects to their
One of the most effective and cost-efficient
ways to add profits to the bottom line is the use of database
marketing, which uses information collected at the
Using personal data, purchasing data, and
contact information from a customer database, a spa and pool
retailer can make offers to customers for complimentary products
and services and engage in loyalty marketing activities.
Database marketing has four key elements, (1) gathering customer
data, (2) building a customer database, (3) creating targeted
offers for specific customer groups, and (4) tracking results to
Step 1: Gather customer data.
The easiest way to
begin this process is to develop a simple form for customers and
salespeople to fill out every time a customer purchases a
product or service. Include personal information such as names
of spouses, children, profession, and birthdays, as well as,
product information such as manufacturer, make, and model.
2: Build a database to store your customer information.
Start simple using off-the-shelf software such as Microsoft
Access. Later on you can begin to modify the database to either
include different types of information or to print special
Step 3: Start sending offers and personal messages to your
Don’t wait until you have a large mailing list. Begin sending
notes to customers right away thanking them for their purchase,
to celebrate birthdays, share holiday messages, and inviting
them to come in and take advantage of special offers.
There is an old saying that goes, "Business goes where business
is invited, and stays where it is appreciated." A personalized
invitation to drop by the store to take advantage of a specific
incentive is sometimes all that is needed to keep your customers
coming back into the store.
Instituting a program of
personal, hand-signed notes that coincide with birthdays or
special events addressed to the customer's significant other
that offer gift ideas, can have surprising results.
Step 4: Track the results of your database marketing efforts.
By knowing who you sent offers to and who responded will help
you identify your best customers, allow you to more effectively
allocate your marketing dollars, and help you tweak your
marketing pieces to get higher response rates.
What Information Do I
important to determine in advance the type of information to
collect. To do this, make a list of common special offers you
might be presenting to your customer.
For instance, if
you sold a product in the health industry and many of your
customers have lower back problems you could joint venture with
other businesses to develop special promotions on products that
help to relieve lower back pain.
To capture the fact
that your customer experiences lower back pain, simply place a
check box on your form that says, "Do you experience lower back
If your customer has small children, consider
presenting follow-up offers for products targeted for small
Imagine being a consumer and receiving a
letter from your business with an enclosed birthday card for
little Joey who just turned eight years old and a discount offer
for a basketball hoop or other relevant products. You think to
yourself, "What a great gift. Joey would love that!" This is the
power of database marketing.
Collecting Accurate and Consistent Information
Database marketing all starts at the point of sale. Without
accurate, complete, and consistent data this type of pinpoint
target marketing can’t be done.
To ensure that your
information is accurate and consistent, help your customers fill
out the data collection form and review each information form
You might experience a hesitancy from
your customer to give out all their personal information,
similar to how I felt at Radio Shack.
explaining that the information will only be used to send out
special offers during important events, is completely
confidential, and will not be shared with anybody else, you’ll
find that most of your customers won’t have any problem giving
out their personal information.
Cost Effective Loyal
Marketing to your current customers is one of the most effective
and cost-efficient strategies you can do to reduce your
marketing costs, enhance your customer / retailer relationships,
and produce long-term loyal customers who, over a period of
months or years, become your biggest source of referrals.
About the author:
David Frey is the author of the best-selling manual, "The Small
Business Marketing Bible" and the Senior Editor of the "Small
Business Marketing Best Practices Newsletter." To get your free
lifetime subscription visit