Bang & Olufsen - A Great Dane Wises Up
Who are Bang & Olufsen buyers?
In the mid-1990s, Bang & Olufsen began an aggressive campaign to expand its share of the audiophile market. When building a business, it's a good idea to 1) know who your customers are and 2) go where they are.
At the time Bang & Olufsen was operating on the assumption that its typical buyer was a single professional male between the ages of 25 and 30 with an average income of $50,000.
For example, at the time we bought our first B&O rig, I was 42; when we bought the table model 15 years later I was 57. And although I probably mailed in a warranty card back in 1977, it was a period well before sophisticated analysis and modeling. B&O probably stuck me in a shoe box in a warehouse and forgot about me.
In any event, the company opened 17 retail stores across the country and, by guess and by gosh, built a little database of 32,000 customers.
Who were their buyers?
In 1994, Bang & Olufsen decided to survey its customers to find out more about them. An outside research firm designed a survey on single sheet of paper with a business reply envelope and mailed it to the list. Thanks to the incentive of a free CD for completing the survey, it generated a 20-percent response from which it was deduced that the typical buyer earned more like $70,000 than $50,000.
Less wrong, but still very wrong.
A Manufacturer Turns to Direct Marketers
In 1997, Bang & Olufsen decided to get serious about developing a customer profile. Chicago-based agency Lighton Colman brought Metromail and Bang & Olfusen together: Lighton Colman's John Tomkiw suggested that B&O needed database enhancement and recommended INSOURCESM, a co-branded product created by Metromail and Experian (née TRW) that contains more than 300 individual data elements on 95 percent of the 100 million households in the U.S. When the housefile was run against INSOURCE, the results astounded Bang & Olufsen (but not me):