During a casual business lunch with a CMO friend, he began to go over his marketing plans with me.
"We have hundreds of restaurants nationwide with a well recognized brand. But some stores are not doing well at all. So we need help in developing a distressed store program to improve their sales.
We know most of the store managers are doing a good job. We also know the competition for most of our stores have similarities.
I say direct mail, because we are active in social media and promote special sales by email to participating customers. But our lists are pretty small."
I then asked him if the email list contained customer names and addresses. It did not. Did he know who his customers were? He answered: "Why of course. We know they have families of X size with incomes of X ..."
But my question wasn't whether he had a customer profile, but whether he knew his customers? Does he know their names, addresses, how often they came to his restaurant? How much they spent? When did they come last? Without these answers, the CMO cannot target either his existing customers or qualified prospects.
Why is that so? His organization does not maintain a transaction database.
Direct marketers use the database to identify the best customers by matching them to external mailing lists. This creates a high quality prospect file by finding people who look like the best customers. This process also shows customer concentration by geography. We can then promote to the prospects in areas with the deepest customer penetrations.
A customer database would also allow the CMO to determine why some of his stores are in distress.
Perhaps some restaurants have too few customers. Or their one time buyers who convert to repeat buyers are lower than successful stores.
Some distressed stores may not have enough qualified prospects within their trade area. This means a relocation is in order and spending more money on marketing makes no sense.
When a direct marketer asks if you know who your customers are, he wants to know what your database contains. Does it have the needed information for prospect targeting and marketing program evaluation.