Two years ago, when Katherine Barchetti of K. Barchetti Shops, in Pittsburgh, wrote letters to 3,000 people asking why they no longer shopped at her stores, 290 people wrote back. Although it took her a year and a half to reply to each person, she quickly responded to the feedback by saying good-bye to an unfriendly manager and modifying her prices.

"If you're not using the data you're collecting, don't ask for it," Barchetti advises. For the past 26 years she has been gathering client information and using it to squeeze out a profitable $3 million in annual revenues from two tiny clothing stores.
In the mid-1980s , Barchetti's late husband developed a database and pumped 20 years of handwritten customer information into it. Then Barchetti and her staff started analyzing data, such as buying habits and fashion preferences. Paying attention to that information has meant an 8% increase in gross profits in the last seven years, faster inventory turnover, and more focused direct-mail campaigns. A recent mailer to 5,000 top-spending customers brought in 181 shoppers, who purchased $90,000 worth of merchandise in one week -- representing a 96% increase in total sales over the same week the previous year.

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