Remember when the most intimate thing about buying jeans was Brooke Shields flirting, "Nothing comes between me and my Calvins?" Forget about it. Levi Strauss & Co. has redefined customer intimacy-and it has nothing to do with underwear.
Instead, it has everything to do with the intersection of consumer promotion and database marketing. Database management is on the agenda at this month's annual conference of the Promotion Marketing Association for a reason: Companies spend nearly $80 billion a year on promotions, according to Promo (also published by Intertec Publishing), and they're demanding real results in return. As promotion evolves into a more strategic discipline, smart marketers are tweaking their databases to track the subtleties of a shopper's relationship with a brand. That approach changes the way companies gather info, as well as the type of data they collect. Name and address don't cut it anymore-marketers need to know how, when, and why consumers interact with a brand so subsequent promotions talk to the right people. Promo shop Robinson & Maites calls it customer management, using consumer cues to trigger the frequency and type of promotion, as well as the degree of relationship marketing. Data-driven promotions can work for any company that tracks individual accounts, from credit card firms to utility providers. And the boon of loyalty cards also makes it a lucrative option for grocery chains, hotels, and retailers. "It's an effective way to get loyalty in a commodity world," says Alan Maites, president of Robinson & Maites in Chicago.
Levi's story illustrates how a business can flex its database to deliver targeted promotions-and, as a result, gain invaluable marketing insights. The San Francisco-based company embarked on an ambitious pilot program two years ago to test different levels of relationship marketing with consumers. Elements of the campaign continue today, and Levi may roll out the entire program nationally this year. "[The program] is not about volume goals," says Levi's spokesman Jeff Beckman. "It's about the relationships we build and the information we gather." The pilot program has already influenced the design of Levi's online store, www.levis.com. The site puts shoppers in control, allowing them to shape the marketing messages they get through a process called progressive profiling.
Levi pursued the pilot program because it wanted to understand how customer intimacy influenced brand preference, says Scott Waltz, senior vice president of client services at Miller/ Huber Relationship Marketing, the San Francisco agency that handled the campaign. "Two-way promotion begins when marketers differentiate their communications approach and investment based on groups of like-minded people," he says. The company sought out five very different consumer groups for the test. It needed to ignite interest among 15-to-25-year-olds-Echo Boomers who think Levi jeans are for their parents-and rekindle relationships with adults 25 and over who grew up wearing the brand. It also wanted to reach 7-to-12-year-old girls, women using Levi's Personal Pairs custom-fit service (a line now discontinued), and shoppers of Original Levi's Stores.
First Levi set out to create a database specifically for the customer intimacy program. It started with an existing database of Personal Pairs and Original Levi's Store shoppers and supplemented it with folks who filled out online and mail questionnaires. In all, the company registered 100,000 consumers through stores, colleges, events like the Lilith Fair, direct response, customer-service lines, and its Web site. Levi rated individuals by age, brand preferences, and affinity for Levi's, as well as the "doorway" they came through to register, Waltz explains. Each vehicle yielded a different kind of shopper who fell into one of the five groups. Web registrants tended to be younger males hot on Tommy Hilfiger while Personal Pairs shoppers were often older aficionados willing to spend $60 for custom-fit jeans.
With the database complete, Levi and Miller/Huber then ran five simultaneous campaigns. Initial mailings addressed each group broadly, and gleaned more info from consumers' responses to offers and questionnaires. That insight shaped subsequent mailings. Promotions were tailored by the consumer's value to Levi-the company calculated a shopper's worth based on how many jeans he owned, and how many were Levi's-and by the depth of information collected on him. Valuable shoppers earned pricey perks: Personal Pairs customers who gave loads of information at their fittings and paid handsomely for custom-fit jeans were sent a thank-you gift after their first purchase: a planter with flower bulbs and a card signed by the Levi clerk who took the fitting. Fifty percent of recipients were so impressed with the gift that they revisited the store within two weeks and bought an average of 2.3 more pairs of jeans. On the other end of the spectrum, offers e-mailed to online shoppers (mostly fickle Echo Boomers) played up fashion messages and didn't offer expensive premiums.
Data-based promotion has infiltrated the supermarket, too. Over the last few years, nearly 9,000 grocery chains have introduced frequent-shopper programs. Now they're rifling through household shopping histories as fast as they can to tell cardholders what's running low in the pantry. Dick's Supermarkets, an eight-store chain in Wisconsin, uses transaction data from its loyalty-card program to personalize shopping lists that it mails every two weeks to nearly 30,000 members. The shopping lists, generated by Relationship Marketing Group's DataVantage software, contain timed offers based on past purchases. A consumer who bought Tide several weeks ago, for example, may be offered a 50-cent coupon to restock. Of course, it occasionally misfires: A Chicagoan who loaded up at Dick's for a Memorial Day party at her vacation home received a shopping list a few weeks later, in Chicago, for another ton of snack foods.
Some grocers are going a step further, tweaking promotions based on past responses as well as purchase data. Last fall, Nature's NorthWest health food chain licensed software from Consumer Card Marketing Inc., a loyalty marketing consultant in Braintree, Massachusetts, to distribute custom-printed newsletters at its checkouts. When the cashier scans a frequent shopper card, the card's transaction history triggers a newsletter reflecting that consumer's purchase history and areas of interest (individuals can check off interests on their application for the card). Bought herbal supplements and organic meat on your last visit? Interested in exercise? Your newsletter might have a schedule of local exercise classes, a recipe for meat, and a coupon for more herbs. The newsletter prints at the checkout counter in seven seconds, faster than a cashier can make change and bag the groceries. Nature's NorthWest tracks which bar-coded coupons are redeemed from the newsletter, and then adjusts the newsletter each time to better suit that shopper.
Marketers without established databases like Dick's or a derriere questionnaire like Levi's can start one by gathering standard demographic information from consumers when they apply for a frequent-shopper card or a similar program. Purchasing histories can be later supplemented with lifestyle, attitudinal, and behavioral snippets culled from surveys of active cardholders. "Shoppers respond well to questionnaires because it's the retailer asking for the right reasons," says Ann Raider, executive vice president at CCMI. Syndicated data can also uncover lifestyle tidbits, such as which consumers go fishing, read a lot, or bike avidly. CCMI is building a customer intelligence index by adding data on consumer lifestyles, attitudes, promotion responses, and geographic locations to a company's transaction info. "We rush to get transaction data as a base, to know which shoppers are important to track," Raider explains. "Then we see who's promotionally responsive, overlay attitudinal data and the rest."
Still, there are caveats to courting promotion-happy consumers. Some play sweepstakes just for the prizes, others would buy the product without a coupon. It's important, Raider says, to find out why a consumer responds to an offer. A loyal customer may not redeem a dollar coupon but might buy more because she appreciated a thank-you gift from the brand.
Attitude lags behind technology The technology for individualized promotions has been around for 10 years, but marketers haven't done much with it because it's too much work, contends Don Schultz, professor of integrated marketing communications at Northwestern University in Evanston, Illinois. "There's still too much mass-market thinking," he says. "Hit one big concept and drive it home." Part of the problem, he says, is that marketers often can't-or don't-access data already in-house. Instead, the data is kept by IT, sales, or customer service, far from marketing. Schultz tells of one hotel chain whose frequent-guest program was funded by customer service, which wouldn't share its data with the folks in marketing. "People have to give up this turf mentality," he says.
In the meantime, genuine growth continues to happen at the grassroots level. When promo consultant Maites brought his new BMW in for its first oil change, the dealership sent him home. The mechanics asked a few questions about how and where he drove, then told him not to waste his money. They promised to track his mileage and call him when it was time to come in. "I had made an appointment and everything, but I left there feeling really good about that dealership," he says. As he approaches the first anniversary of his three-year lease, he's unsure about how he feels about BMW, the company. He wonders if he'll get a letter from BMW headquarters "to build our relationship and keep me in their family," maybe inviting him to trade up when his lease expires. Maybe they'll even ask him to write back.