Thursday 29 July 2010
Case Study: Setting up a database marketing and management information system for Stratford Hi-Fi
Stratford Hi-Fi is one of the leading suppliers in the West Midlands
of hi-fi and audio-visual equipment, from mainstream through to
the top end of the market. Over the years they had meticulously
captured details of sales made, but this was primarily for administrative
rather than marketing purposes. ABC was therefore asked to have
a look at how this data could be made to add value.
The first thing we proposed was to move the data from a ‘flat’ data structure, with one record per item sold, to a ‘relational’ one, with only one record per customer and all items sold to that customer linked to it. This dramatically reduced the number of customer records, and meant that it was now impossible for the same customer to be described differently across different records: Mrs Angela Smith, Ms A J Smith, Angie Smith, etc. We then ensured that all customer records were fully postcoded, since a key determinant of successful mailing database management is the integrity with which you maintain postcoded data.
The second was to move to ‘lookup’ tables of manufacturers and products, rather than these being entered as free text, since this meant that meaningful searches as to ‘who bought what, when’ were rather hit-and-miss. If the sale was of an A-V amplifier, then only manufacturers of amps would appear, and then only the amps pertinent to that manufacturer would be available for selection.
Once the database had taken shape, we then looked at deriving tangible
benefits from it. With a product evening for a high-end manufacturer
coming up we looked at carefully targeting appropriate customers,
based on what they had bought in the past. A mailshot inviting selected
customers took place, numbers exceeded expectations, and these ‘bums-on-seats’
were translated into a level of subsequent sales that more than
justified the cost of the marketing exercise. Then there was a price
drop on some peripheral equipment from another leading manufacturer.
This item was primarily of interest to customers who had bought
a complementary item in the past. By mailing only these customers
the mailshot was quick and inexpensive to implement, once again
translating into a greater than proportional return on the marketing
investment.
Equally important is the improvement in sales analysis, both in terms of speed and power. How did DVD recorder sales compare this year to last? Does one shop sell more of one type of equipment than another? Show me every customer that has bought a DVD player but not a surround amp or speakers; and can I have the answer today!
There are many other ways in which data that has been captured for one
purpose can ‘earn its keep’ against another. Dealers
have to provide returns to manufacturers to document their success
in moving that product range, which in turn is reflected in an incentive-based
discount structure for the dealer. Failing to report even one sale
of a given product can put you in a lower discount band, thus such
returns are actually worth money. Rather more critically are returns
to the TV Licensing authorities; miss these and you could be fined
for each TV, video recorder or set-top box you overlook.
So, if the data is in there, ABC can
help get it out, quickly and in precisely the format stipulated
by the recipient, without having to manually key in data a second
time. Time saved, discounts earned, errors or even fines avoided.
Next steps are to increase the capture of e-mail addresses and for selective product alerts to be sent via e-mail broadcasts to those customers that have opted to receive them. SHF’s managing director, Dirk Washington, observed that “We didn’t think the previous system was that bad, but ABC showed us quite quickly that by making a small number of incremental changes we could get very much more out of the data we were already capturing. More sales, an improved knowledge of our customer base and a better handle on our repeat business — which is higher than we had appreciated!”
The bottom line for this project was:
