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Cost of Knowledge

Article By Ari Buchwald September, 2000

Do you remember the days of 16k scientific calculators and Atari? How about punch card programs? Slide rules? Well if you do remember as well as we do, those days of premillennial technology are long gone.


Nowadays, a conversation overheard on the business class section of an airplane will consist of acronyms for technology and techniques that will be outdated before they are implemented. One basic concept that will remain constant throughout all of these microcycles and mini-trends is that businesses sell to customers.


Once a business loses sight of it’s ultimate goal, it will not take long to steer off the successful course. Focusing on the customer is an easy banner to tout, but how can it be maintained? What costs are associated with this type of endeavor? Most costs can be measured in some form, like hardware and software, marketing programs, consulting, training and analytics, but the most elusive of all is the cost of not collecting and acting upon information from or about the customer.


Quote of the day, “Know thy customer or lose thy customer”


Accumulating Data


There are several ways to collect information on your customers and much of the data itself is free for the asking!


Point of sale


Ask questions of your customers and make every interaction relevant. Are you identifying each sale to the customer and product level? Historical sales will show trends such as product preferences, and purchase frequency. Monitoring and analyzing this data can give clues to trends and trends can be used in formulation of communication strategies and sales goals.


  • Track customer transactions and interactions throughout all sales channels.
  • Remember the customer – Show that you know the customer and refer to their past interactions.
  • Don’t let returns or complaints go into a data landfill never to be seen again. Track your customer satisfaction and talk to your customers to make sure that any bad experience is properly resolved.


Marketing promotions and surveys


Incremental information can be collected in small pieces as the customer visits your store, calls in to your 800 number or logs onto your website.


  • Ask the customer what they want or like – poll the customer as to service, variety, convenience, service, price, frequency of contact, and permission to use various channels such as email.
  • Reward customers for completion of additional information surveys • Offer incentives to both customers and employees to increase participation in data collection.
  • Establish an interval of relevant communications such as email, newsletters, or special offers. Use bounce backs to collect additional information. • Remember and use relevant data, anniversaries, birthdays, holidays, etc.
  • Use surveys and comment cards in direct mail or as point of sale handouts. Look for advertising partners such as lifestyle magazines or vendor partners for increased visibility.


Append and Analyze


A good rule of thumb is to not ask for information that can be appended, rather save your precious time with the customer for information that cannot be inferred or appended. Unless your customer is the dog from the New Yorker cartoon who points out that when you are online, no one knows you are a dog, data can be appended to enhance your existing profile. Even so, in the case of the online dog, clickstream data can be captured and analyzed to provide valuable insight to his or her online habits.


Service bureaus offer rather complex matching and tracking methods that can provide valuable demographic information as well as psychographic data. Modeling your transactional data and your enhanced customer database can provide valuable insight as to where to spend your marketing and advertising dollars.


  • Append additional data to better identify and understand the customer. Look to processes such as reverse append to link demographic and psychographic data to the customer base.
  • Model customers to identify high lifetime values and high propensity purchasers. • Identify most profitable segments and communicate relevant offers.
  • Calculate the cost of acquiring a customer, calculate the cost of keeping a customer, and while we are at it, calculate the cost of losing a customer. It is easy to count the new heads entering the door, but what is the cost if those heads pop in, and then out again?
  • Apply analysis learnings to list rentals and marketing campaigns and test for the best methods to reach look alikes to your best customers, and how to keep them.
  • Monitor internet click stream data for additional information on behaviors


Don’t forget that while we talk of the plummeting cost of terabytes and wireless technologies, the highest cost is in not listening to the customer and striving to fulfill their needs. While you may be talking technology and IPO, your competitor may be collecting data on your customers.