Relationship Marketing Group is about to begin its second month of testing the DataVantage database marketing system with 40 marketers and 200 brands. The program began testing last month in eight Dick's Supermarket stores in Wisconsin, but Wilton, Conn.-based RMG plans to be in at least 200 stores by July, said President Jon Robertson.
RMG uses a retailer's scanner data to interpret the buying patterns of holders of a chain's frequent-shopper cards. Then it divides the shoppers into competitive users, switchers or loyal brand users, and targets the type and amount of discount based on the consumer's shopping history.
That history also is used to determine when the consumer last bought a particular product and then estimates whether the household is ready to buy the product again. DataVantage prints out a shopping list containing coded coupon values that is mailed to the household and scanned at checkout.
RMG's program resembles that of InterAct Systems, operating in supermarkets since 1996 and perhaps the first to track buying history.
The key difference is that InterAct's system is accessed through a kiosk in the store. Consumers insert their frequent-buyer cards before beginning their shopping and are given a choice of screens with incentives for participating brands, based on their purchasing history. The savings are deducted by swiping the card at checkout.
"The difference is our targeting engine," said Tom Manna, VP at Norwalk-based InterAct, which now operates in 500 stores including those of A&P, Food Lion, Acme Markets and Grand Union Co. "Ours records on a closed-loop system. When we do change [a shopper's purchasing] behavior, it's immediately updated from switcher to loyal user. We update the database on a daily basis."
Another difference: InterAct's participating marketers are charged 8 cents per redemption only if the paperless coupon is redeemed. RMG is charging less, 4.5 cents per redemption, but charges whether the coupon is redeemed or not.
"We have the costs of postage and distribution," Mr. Robertson said.
RMG is likely to get its biggest boost from its influential board members, who Mr. Robertson said have helped sign up clients.
The board includes former IBM Corp. Chairman John Akers; former PathMark Supermarkets Chairman Jack Futterman; Campbell Soup Co. veteran and now Tetley USA Chief Operating Officer Charles McCarthy; Robert Savage, former president of Compton Advertising; former Nabisco Brands President Peter Rogers; Rick Kurz, senior VP, Advo; John Capozzi, president, JMC Investments; and George Garrick, former president-CEO of IRI North America.
Former board member David Jenkins is the Shaw's Supermarkets chairman known as the father of the grocery industry's Efficient Consumer Response program.
No marketer or retailer has an equity stake.
ROOM FOR MORE
Mr. Robertson believes there's room for new players in the coupon industry despite current controversies. Redemption is down to 2%,
Mr. Robertson said his system is about to sign new retailers in whose stores the program will co-exist with competitors InterAct and Catalina Marketing.
"The consumer will determine, in the end, how the data are used," Mr. Robertson said. "He's king, and whatever system he favors is the one that will win."
Contributing: Debra Aho Williamson, Ira Teinowitz.