The Art of Marketing to Individuals
Building Customer Relationships is Key in the New Century
By Sue Coons

Home Furnishings Executive - February 2000

While you sleep competitors are compiling information on your potential customers. They know their names, addresses, and telephone numbers. They know their professions, birthdays, and the furniture they may be looking to buy in the near future. How do your competitors find out this information? They ask, and more importantly they use the information they gather to learn more about these customers - and to establish an individual 'relationship' with them.

The marketplace is now demanding this "mass customization" approach. As Carol Krol writes in the May 17, 1999 issue of Advertising Age magazine, "[The relationship marketing] process has picked up steam because of the fragmentation of media, increasing channels of communication, and consumer choice availability."

"For many of those reasons, consumers now have more control over what they want from companies, how a product or service is to be delivered, and how they wish to communicate with the marketer," she continues, "Conversely, many companies are seeking to establish as direct a dialogue as possible with customers." Salespeople in the furniture business used to be adept at establishing relationships with their customers. "In the 'old days,' salespeople would have a clientele book and would know tremendous amounts of information. It was just recorded with pencil and paper," says George Lucus, Ph.D., president and COO of U.S. Learning in Memphis, Tenn.

In the name of efficiency, though, much of this system has fallen by the wayside. Now relationship marketing, called "contact optimization" by some experts, is coming back, pushed into the limelight by the emergence of electronic commerce over the Internet. "This one-to-one relationship is the way of the future," says Joe Capillo, vice president of client development for the Shepherd Management Group, Atlanta. "And while it isn't clear yet who is or is not going to be successful in that area, someone will be." Successful businesses will be built on the ease of interaction, and on retaining information about customers and actually using it to serve them in the future.

Creating the database
Relationship marketing is similar to another theme of the new millennium - specialization. Most retailers, for example, know they have to establish their store as a brand image. "If there is nothing distinguishing about them that is unique, different, exciting, or compelling, [customers} won't come, especially in the Internet world," says Elizabeth Goodgold, president of the Nuancing Group in San Diego, Calif, "You need to have a compelling reason, which means furniture retailers need to decide what they are offering customers better than anyone else on the market." The search for a store personality results in some retailers becoming more niche-oriented, such as becoming specialists in country or contemporary furnishings. They find that trying to be all things to all people doesn't work in today's business world.

So is it with mass marketing. Why send a flyer to everyone in your area when you can send it to a target group that fits your demographic profile? Better yet, why not send one to consumers who have shown a previous interest in the product?

The catch is that you have to know the needs and preferences of your customers. If you have established relationships with them and have collected data on both your buyers and non-buyers, this information should be at your fingertips.

This is why a "customer relationship management" or similar system is so important.

"A customer relationship management system (CRMS) is a set of policies and procedures that guides all the interactions between the store staff and the customers or the prospects," explains David Middlebrood, vice president of AAAA Development in Colchester, Vt. "Only through systematic data collection and analysis can you understand fully the type of relationships that the various categories of buyers and non-buyers want

" As Middlebrook explained last year in the October issue of Home Furnishings Executive, a CRMS should have an Up management component, a contact management component, and a fully integrated sales analysis and reporting system. An Up management system is the initial entry point by which customer and prospect information is entered into the store's database.

A contact management system permits you or a salesperson to track buyer and non-buyer contacts. This includes contact letters, a history of previous sales, conversations, and promotions sent. This component also includes notations on customer preferences, interests, and problems.

The sales analysis and reporting system provides the ability to report and analyze sales, rejections, Up traffic, staff close-rates, average tickets, and overall performance contributions to the store.

Once collected by the CRMS, the information provides feedback for things such as how to staff, what stock to carry, how customers respond to different forms of advertising, and how customers perceive the store in the community.

"It becomes the repository of all data for interest, objections, advertising - all pieces that make your store go, " Middlebrook says.

Such information is needed for salespeople to help customers make intelligent furniture purchases, Capillo says, "[The salespeople] should know about [the customers'] rooms, their plans or dreams for them, and their like and dislikes."

Furniture is often sold without knowing those things, he adds, "It's probably the largest disconnection our industry has with its customers. We sell a lot of stuff but we don't understand a lot about our customers."