Precision Marketing

Database marketing lets you analyze sales trends and profile prospects to target top customers and give them what they want

In the summer of 1994, Mike and Brendan Moylan, co-owners of Sports Endeavors Inc., in Hillsborough, N.C., saw the other shoe drop -- and another, and another, and another. One of the buyers for their catalog company -- they sell soccer and lacrosse equipment -- had purchased 30,000 pairs of soccer shoes, expecting them to sell within two months. But by September, about 15,000 boxes of the cleated footgear were still languishing on the shelves. It wasn't until late fall that the brothers were able to unload the entire order. "That was our summer of enlightenment," says Mike. "When we were smaller, it was easy to know what customers wanted. And it didn't matter if we made a bad purchase. But by 1994, if we missed, we missed big."

That footless summer spurred the Moylans on to a remarkably productive year. With the help of a consultant, they installed a database-marketing system that could systematically and precisely analyze sales trends to help them make smarter purchasing decisions. The system combines a database full of information about customers' buying habits with analytical software that, among other things, gives buyers answers to key marketing questions: which products and colors sold best, which vendors were most profitable, which time of year was best for selling particular items, like sneakers. Armed with that knowledge, the buyers can revamp their sales approach. "With this system," says Brendan, the force behind the technology blitz, "we know we can grow."

It's a path big guys like American Express trod a long time ago: amassing large quantities of customer data in computerized form and then massaging the information to pinpoint their best customers and target them in a more personal way. In fact, through their highly sophisticated use of database marketing, big companies have come close to eliminating their small competitors' main advantage: a close, informed, flexible relationship with customers.

Yet despite the ominous signs, until recently most small companies did not use database marketing. After all, who could afford to buy and build even a simple system? And who had the time? Indeed, five years ago, when Bob McKim, a database-marketing expert, launched his Los Angeles consulting firm MS Database Marketing, he quickly had to change his focus from the Davids to the Goliaths. "With small firms, it was just too much missionary work," he says.

Now, however, small companies are finally starting to get religion, thanks to the falling costs of hardware and software and to more user friendly applications. "The combination of the power of the average PC and the sophistication of new database-marketing systems means that small businesses can have their turn," says Dennis Jorgensen, chief operating officer of the American Marketing Association, a Chicago-based trade organization. Still, especially for small players, building a system is a complicated process, often requiring outside help and a couple of years to produce a real payoff. But to hear the converts tell it, the outlay of time, energy, and money is well worth it down the road.

Know Thy Customer
The Moylans are a case in point. From the beginning -- 1984, when Mike set up shop at the tender age of 18 -- Sports Endeavors has worked hard to keep its finger on the customer's pulse. That was easy when the business was young, but as clients -- and revenues -- grew, it became harder and harder to keep track of who wanted to buy what when. That was one reason Mike brought Brendan into the business: while Mike had big ideas, Brendan had a knack for details and technology. It was Brendan who set as a priority building increasingly sophisticated database-marketing systems to follow and analyze sales and trends.

He had his work cut out for him. In 1990 the then $3-million Sports Endeavors had just one 286 PC, which it used in a distinctly low tech way: Six telephone staffers took orders manually. A keypuncher typed the orders into the PC and then printed them out and delivered them to the shipping department. "We couldn't continue like that," says Brendan.

When a colleague told him about a $60,000 turnkey mail-order management system from Nashbar/Associates called Quick/Order Processor, Brendan decided to go for it. After the software was installed on a new NCR minicomputer, everything from customer purchases to inventory status and vendors' names went into the database. But the system's analytical abilities were almost nil. "We couldn't do anything with the information," says Brendan. "We couldn't even find out what products customers were buying most."

Then came the summer of enlightenment and a startling realization: Quick/Order Processor was actually hindering the company's growth. "We needed a system that could drill down to the most minute level of data," says Mike. "To be useful it had to forecast the direction growth would come from."

This go-round, the Moylans went about the search scientifically, hiring an operations expert to find the perfect technology provider. They ended up choosing a $100,000 two-part system: a uniVerse database (from VMark Software, 508-366-3888), which they installed on the NCR, and an application called the Zircon Catalog Management System (from Zircon, 617-246-5000) to handle daily operations like shipping information and purchases. At the same time, they formed their first official MIS department to help run the thing.

But with all the fancy equipment, crucial players -- specifically purchasing and marketing staffers -- were still in the dark. That's because Zircon could manipulate the information but not analyze it. MIS had to be called in for that. If, say, buyers wanted to know how well shorts were selling, they would have to put in a request to MIS and then wait two or three days for the department to sift through the data and come up with a response. If they wanted to narrow the query down to how yellow shorts were doing, they'd have to go through the same process again. There was no efficient way for people on the front lines to tap into information that could be used for marketing and sales plans.

Enter ProBit, a data-warehousing program from System Builder Technologies (now Unidata, 800-234-5728; price starts at $25,000 plus implementation). Two years after they bought the uniVerse, the Moylans switched over to a $150,000 Data General Aviion minicomputer and hired a Unidata consultant to design a suitable version of ProBit -- one that would let buyers click on a vendor's name, for example, and within seconds see a range of data pertaining to it, or funnel down further to see, perhaps, how well the vendor's cleats sold during the past three months. The consultant installed ProBit on the Aviion and on eight 486 PCs. Now every Saturday MIS updates ProBit so that it has the week's purchasing information.