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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | AUGUST 29, 2000 SMART ANSWERS Cashing In on E-Customer Data Online marketing info needs to reflect customer behavior, not just names and addresses. But be upfront with customers about any data you collect
Q: How do I get plugged into the marketing companies that buy demographic data from the Internet? I'm starting an Internet retail/e-commerce site that will be gathering demographic information, and I'm looking for the best way to capitalize on it. --Edward Arrington, Philadelphia A: Any plan to simply sell names and demographic data -- such as customers' ages, income levels, and locations -- is not going to be very fruitful, experts say. Not only are myriad brokers already hawking such information, broken down into complex subsets, but Net marketing is not driven by straight demographics. "The Web is not like traditional media. Marketing there is fueled not by demographics but by psychographics: peoples' preferences, tastes, values, and interests. It's not as quantifiable as typical demographics," says Rob Frankel, a new-media branding consultant and author of The Revenge of Brand X. Gathering attitudes and behaviors -- along with names -- is what you'll need to do to have valuable marketing data to sell. Rather than just selling a client list, you'll want to collect additional information about your customers: What did they buy on your site? What else do they buy online? What Web sites do they visit? What kinds of chat rooms or newsgroups do they frequent? What are their hobbies? What sports do they play? Mining that kind of detailed information -- along with traditional demographics -- will truly add value to your marketing data. Before you collect such details about your site visitors, make absolutely sure you fully disclose what you plan to do with the data. "The people who are buying from you won't do it again unless you tell them that their names are being harvested for sale," Frankel says. "If you don't let them know, it's suicide. You'll never get a sale from that person again." FULL DISCLOSURE. When clients register at your site, make it clear that you plan to share their data with other companies and give people the ability to opt out if they don't want to get on additional mailing lists. If they do decline to participate, respect their choice and keep their data in-house. If you need an incentive to get your visitors to fill out a short survey that will give you added consumer information, you might reward them by entering their names in a weekly drawing for a free gift or gift certificate. Responsible Web sites now post their privacy policies, says Michael Lerner, an e-commerce expert with SmartAge.com, as customers have become increasingly reluctant to divulge personal information unless they know how it will be used. In fact, pending legislation would require sites to notify customers about data being collected and its use, with violators facing severe penalties. Consumer studies have shown that the public takes this issue very seriously, Lerner says. Once you have collected the data from your Web site, market it to companies that offer products or services that are related to your own. "If you sell widgets, you'd approach widget aftermarket sites, widget-accessory sites, Widget Weekly, and all the sites you can think of that your customers might logically have an ancillary interest in," Frankel says. Identify yourself in a polite, personalized e-mail and explain the value that the data you're selling would bring to the company. One more tip: Don't approach the company's advertising staff or outside ad agency, Frankel says. They're interested in selling ads on their site and will not see the benefit of the data you're marketing. "Go to the V-P of marketing or above. You want to talk to someone who is involved in strategic planning and interested in doing reciprocal strategic alliances. If your communication is very, very personalized and you've chosen the right targets, you'll do O.K." Have a question about running your business? Ask our small-business experts. Send us anail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.  By Karen E. Klein  | | |
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