Gaining B-to-B RFM (959 words)
Gaining B-to-B RFM
Case Study: Interline Brands
by Alicia Orr Suman
Interline Brands is a $600 million b-to-b marketer of maintenance, repair and operations products; it sells goods to several distinct and very different markets through individually branded catalogs, as well as a field and telephone sales force.
Its full-line product catalogs number just less than half of a million copies per year; some titles are mailed annually, while others are biannual. These big books are supplemented with about 5 million periodic promotional sale fliers.
Pam Maxwell, vice president of marketing of Interline Brands, explains the company's unique structure: "Interline was formed in 2000 by the merger of two large direct distribution companies, Barnett Inc. and Wilmar Industries. Both Wilmar and Barnett marketed to different customer segments through a variety of catalog titles. Each distributes essentially the same products but to different markets."
For instance, she says, Barnett sells to professional contractors while Wilmar supplies the maintenance managers for multi-family housing such as apartment complexes. Three of the main direct marketing brands are Barnett, Maintenance USA (which serves facilities markets), and Hardware Express (which sells to hardware stores).
For Interline, which has 160,000 customers, segmentation was a way to refine its marketing efforts within each of the brand markets. Maxwell explains: "We first looked at the idea of segmentation as a way to better target our campaigns. We had done segmentation based on sales contribution only, or what's known as monetary value. We also had targeted by SIC codes, for instance, distinguishing HVAC, electrical , etc., creating distinct market segments. Then we refined that further into five sales segments."
Maxwell admits, "It had become difficult to manage all of those segments and still maintain efficiency in print/mail costs."
Another concern was that segmentation was not entirely matched to customer buying behavior. The company was looking only at the monetary—not recency and frequency—factors, Maxwell notes. "Without a clearer picture of our best customers, it was difficult to identify underperforming customers or model prospects," she says.