Your Customers: Who Are They and How Do You Find More of Them?

And How Do You Get Them to Part With More Money? The March 1st edition of this newsletter, “Declaring War on The New York Times: Smart or Dumb?” described Manhattan restaurateur Jeffrey Chodorow’s distress at the review by Times food cri

March 2007 By Denny Hatch

multipage

“Never compete with China on cost,” said guru Tom Peters, “and never compete with Wal-Mart on price.”

Ever since 1962, when Sam Walton opened the first Wal-Mart store in Rogers, Arkansas, the company has operated on a one-size-fits-all marketing philosophy: offer good merchandise at the lowest prices to all customers. And it worked just fine.

In its 45th year, Wal-Mart’s $345 billion in sales is more than the GDP of Austria.

Now Wal-Mart is coming around to the way direct marketers think—that if you know who your customers are, you can serve them better and make more money.

According to Michael Barbaro’s New York Times story, the giant chain is dumping its 200 million customers into three silos:

There are “brand aspirationals” (people with low incomes who are obsessed with names like KitchenAid), “price-sensitive affluents” (wealthier shoppers who love deals), and “value-price shoppers” (who like low prices and cannot afford much more).

Will Wal-Mart’s investment—in the new strategy of stocking and advertising new lines of upmarket merchandise—win it a larger share of market and share of wallet?

My bet is that doing it the old way is better.

A Bang & Olufsen Story
At some point in the 1970s, when we were living in Connecticut, I sold the screen rights to a novel and blew some of the money on a gorgeous Bang & Olufsen (B&O) stereo rig—the one that was in the Museum of Modern Art’s permanent collection.

(Let me add that I wrote and had published three novels; all garnered a number of movie options over the years, but no film was ever made, alas.)

Many years later, I heard or read a story—somewhere—about B&O that resonated in my head. It seems that for years this Danish high-tech electronic company was operating on the premise that its products were being bought by upscale yuppies in the 25- to 40-year-old age group in the income range of $30,000 to $50,000.

Somewhere along the way, the company inserted warranty cards with survey forms in its packaging. A number of these were returned and promptly sent to headquarters where they were consigned to shoeboxes in a storage room.

Several years later, a new marketing person came across these surveys and, on a whim, sent them into one of the big direct marketing service bureaus to find out some information about the people that had filled them out. While many of the forms were out-of-date—people move, die, get married, etc.—enough matches were found to give B&O a picture of its customers.