Two Kinds of Data

There are two kinds of data: demographic and behavioral. Demographic data include age, income, presence of children, lifestyle, geography, type of housing, and other such things. In the case of business-to-business files, the demographic data are SIC code, number of employees, annual sales, and so on. Behavioral data usually consist of transactions—responses, purchases, redemption of certificates—plus preferences and survey responses. In business-to-business marketing, transaction data are usually very easy to acquire, since most businesses have accounts with their suppliers. With consumers, the data are often difficult to get your hands on, particularly if the product is purchased at retail stores or through dealers.

There are two ways to obtain demographic data: You can have them appended to your database records by an outside source such as Experian, or you can get the information directly from the customers by asking them to fill out a survey or a profile. The profile method has become so important that a whole chapter, Chapter 14, has been devoted to the subject.

To market to segments, you need a database that includes transaction history. The difficulty is in capturing the data. Many retail stores try to do this with a proprietary credit card. All large department stores issue cards, which they hope their customers will use. In fact, only the most determined customers use these cards. It is a nuisance to carry around 10 or 12 store cards in addition to your MasterCard, Visa, or Amex. The solution to this problem is to get customers to register their bank credit cards with you, so that when the customers use these cards, you will know that they have made a purchase.

iDine (see Figure 8-1) has made a successful business out of this idea.

Figure 8-1: iDine

Members register their credit cards with iDine. Then, whenever they go to any of the 7500 restaurants in the country that are associated with iDine and pay for their purchases using one of these cards, iDine finds out about it and either gives them a credit on their credit card or gives them airline miles. The customers don’t have to say to the restaurant, “Be sure to let iDine know that I am eating here!” The process is so simple that it is amazing that more retailers have not caught onto the idea.