Mining in the mountains of West Virginia means excavating underground veins of black gold, but to an outdoor gear retailer with stores in Arizona and New Mexico, mining means turning outdoor enthusiasts into satisfied customers who are happy campers.
The mining practiced by Popular Outdoor Outfitters, an outdoor gear and apparel retailer, is data mining, a popular customer relationship management (CRM) application. Essentially, data mining is using a set of statistical formulas to identify patterns and trends from stored information. As a CRM application, data mining pinpoints customer behaviors from a database of customer information.
The 48-year-old retailer began using MarketWorks, a data mining application from STS Systems, almost four years ago and found that the program opened new avenues for customer interaction for the midsized, family-owned business.
This article explores how the company was able to increase sales and customer satisfaction by tracking trends and targeting marketing efforts.
“CRM was something we always knew was out there. Then STS showed us the product and what it was going to do,” said Mitch Mead, director of MIS for the company. “Once we saw it we knew things were going that way, and if we wanted to have an advantage in the market, we would have to go that way.”
Strip away the complexities
Popular Outdoor Outfitters did not store any customer information before implementing the MarketWorks program. To build the database, the retailer sent out applications asking customers for telephone numbers, what outdoor activities they participated in, household incomes, and number of family members. Mead said the detailed applications were not well received.
“We didn’t have a whole lot of success with people wanting to give all that information out, so we abandoned that. Now all we take is your name and address,” he explained. A name and address is sufficient information for MarketWorks to track repeat customers and their sales histories.
According to Gartner, “By 2002, the number of data mining projects will grow more than 300 percent to improve customer relationships and help enterprises listen to their customer.”
After four years, Popular Outdoor Outfitters has used their CRM system to develop a large database of customer information that they are putting to good use to increase sales and customer loyalty. The retailer started the Happy Camper Club—a free, members-only buyers club to track transactions and dispense discount cards to members who qualify.
The system also generates targeted marketing campaigns based on the customer’s purchasing history.
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Profit from one CRM application
Popular Outdoor Outfitters lacks a formal IT department to run the data mining application. “We run the [daily] maintenance, but if we run into IT problems they (STS Systems) are right there with support,” said Mead.
Launching the program without an IT team in place was something Popular Outdoor Outfitters worked around. “When it first rolled out, we took the Tucson market [three stores] and trained them on how to use the system and how to sell the program,” said Mead. “We didn’t want to roll it out at once and find out that things didn’t work.”
Generally, the implementation of MarketWorks ran smoothly. Mead said the company wants to do more customer interaction and data collecting in the stores at the point of sale (POS). “Sharing the information with the stores was a snag. We want purchase history information to be in our stores. Some of that is there now, but not as much as we'd hoped,” he said.
Can a business get away with just one?
Many CRM applications such as data mining, data warehousing, and sales force automation, are designed to work together. However, some applications can work alone. Large CRM vendors usually recommend a suite of products, but STS Systems, which specializes in solutions for retail organizations, offers a suite of products that can work by themselves or be used together.
Using one CRM product may not work if your enterprise has more than one point of customer contact. However, Gartner does not recommend that an organization implement multiple CRM tools at one time. “If you break it down (CRM) into accomplishable tasks, you can get it done,” said Gartner analyst Donna Fluss. “Break it down into phases that have quantifiable results.”
What can be learned from Popular Outdoor Outfitters’ CRM example is that by implementing one strong program that works, thereby having one successful tool in place, the focus can shift toward installing other pieces.
Using one CRM tool has increased revenue collectively for the 23-store chain, but Mead said that Popular Outdoor Outfitters is looking at other solutions from STS Systems to make their CRM initiative stronger.
Starting a CRM initiative ahead of the competition has been a positive step for Popular Outdoor Outfitters. “Most retail organizations weren’t doing it, and that’s one reason why we got a jump on it,” said Mead.
Are you using one piece of CRM in your small to midsized business? Let us know how it’s working. Post a comment to this article or send us an e-mail.