Andy Wood, MD, Total DM You Asked How important are consumer and/or customer demographics in shaping a company or organization's CRM strategy, particularly in the retail sector?

This is a really important question in a world of marketing where it seems that data is only valued when it has been collected yesterday.

It is crucial to differentiate between descriptive information and behavioural information. Of course, the first port of call has to be behaviour, usually transactions. For any short-term exercise, marketers need to understand who is buying what, and then try to foster similar behaviour. Transactions, or purchases are the starting point. The trick is to link transactions back to profiles – which are made up of descriptive data. That way known behaviours (Mrs X buys product Y) can be replicated (Mr Z looks similar to Mrs Y so will probably be interested in product Y).

Profiles are made up of mainly static or slow-to-change demographic information – gender, wealth, favourite newspaper, holiday preferences, hobbies and interests, house value, etc. But making the link between profiles and likely behaviour – in order to retain a customer, and to sell them additional products - is by no means a one-off exercise. As customers buy more from you, then their profiles change. So updating profile groups and their associated behaviour is usually necessary every six months to a year.

Your best prospects are your existing customers, and profiling provides a powerful tool for gaining greater share of each customer’s wallet.

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