lO ways your computer can improue your marketing

A BUILDINC materials company

Fl usually invests in a new computer system with one specific function in mind. Whether inventory management, point-of-sale order entry or estimating, it's what the owner sees as the driving lorce of his business.

But the computer bought to improve inventory control can also serve as an effective marketing tool. The following ideas have been developed and successfully applied by building product dealers and wholesalers.

(l) Find out where your business is coming from

Surprisingly lew companies actually know the demographics of their customers (especially the walkins) or what brought them there in the first place. Though manually assembling the information would be time-consuming and difficult, a computer system easily stores zip codes, communities, referrals, promotion responsesr etc., as part of the order entry process. And the system can sort the data any way you want. One retailer, in looking through his customer location displays one day, noticed several new customers from an outlying area that had never before generated much business for him. Investigations revealed the community was growing rapidly and its traditional supplier wasn't serving it effectively. A saturation mailing of a flyer to the community produced immediate results. Business became so brisk, the company now schedules weekly deliveries to serve its customers there.

(2) Find out if an area is producing good business

Sometimes population density and sales volume can be misleading. One yard had been advertising heavily in a nearby urban area. The resultant sales volume seemed to justify the newspaper advertising expense until the owner analyzed the margins of these sales and found them to be unusually low. His ads

By Vance Dlggins National Director MAI Team Systems

had drawn "shoppers" who ( I ) concentrated on price leaders and (2) uniformly made credit card purchases.

As a test, the company shifted its ad dollars to other markets for four weeks. The result was slightly lower volume but significantly higher margins.

(3) Determine what to put on sale

This same owner wondered if his promotions were attracting only bargain hunters from what had been one of his principal markets. Pulling up information from his computer system, he designed a special promotion just for the urban market. He prepared a flyer with over-stocked and slow-moving items on sale, damaged goods marked down as red tag specials and a sprinkling of high margin impulse items.

He sent the flyer just to customers in the urban area. lt drew heavy floor traffic and good volumel even the impulse items sold well. Subsequent ads to the urban area featured the type of product mix that worked so well with the test flyer.

(4) Track your promotions

Promotional ideas that seem foolproof may prove foolish and be repeated and expanded unless results are measured closely. With data routinely captured as orders are entered, you can determine sales and margins resulting from each promotion. If a promotion isn't working, it can be discontinued before committing too many ad dollars.

You can also use your computer for test marketing, especially with risky carload sales or other large deals. The computer's zip code or community records permit advertising different promotions in different communities and precisely track- ing responses. Since the computer automatically prices all specials, you can track numerous promotions without confusion at the counter.

(5) Pinpoint individualized mailings to larger customers

Since large contractors tend to deal with several competing suppliers, it's important to stay in contact. Using your system's word processing capabilities, you can readily send personalized letters to key people in the contractor's organization. Although the basic intent is to maintain your reputation for capability, such letters occasionally result in unexpected orders. One firm described a new high quality moulding as the pretext for sending the letter. The timing was perfect. The company eventually won a contract for all finished lumber and hardware for a residential development.

(6) Design package deals for large customers

When you know your customer's current needs, you can design a package dealof immediate interest to him. Your computer stores a record of each contractor's past purchases and your current costs for those materials. Use the data to establish quantity break levels, price schedules for orders calling for deliveries over an extended construction schedule, and other customized features.

The system also provides a projection of the margins on any prospective deal, so you can consider trading off margin versus volume and growth.

(7) Provide individualized marketing to smaller customers

Individualized marketing is as effective with smaller customers as with large ones. A modern computer system makes personal attention to small builders and even do-it-yourselfers practical. For example, a computer can provide names and addresses of builders who have used redwood decking. Sending them a flyer or letter offering a deal on redwood decking might generate sales at minimum time and expense.

/ More important is creating the appearance of individualized market- ing. Mailings and intelligent customer relations over the telephone or at the counter make the small builder feel like he's one of your most valued customers. The computer screen instantly displays his buying patterns, location, delivery instructions and payment patterna complete picture for personalized selling.

(8) Increase the size of orders

When customers place an order to make an inquiry, the computer can display the next price break point on any product and can also display substitute products. You may be able to offer the builder a better deal, simultaneously increasing your margin and/or volume on the sale.

The system can also display associated products. An order for paint can be expanded to include brushes, rollers, dropcloths and other high margin items the customer has overlooked.

(9) Follow up on quotes pending or lost

Time saved by computer estimating allows time to follow up on quotes. Frequently, check backs reveal prospective customers are considering changes and want to know the price impact of changes in quantity or grade of materials. A follow up places you in the position of quoting the change, ususally while the contractor is still on the phone.

Following up on quotes lost to competitors may occasionally re- cover a lost job. One yard's follow up calls revealed a contractor who was very unhappy with the supplier he had selected. The caller prepared a revised quote and won the business when the contractor split the buy.

But the primary reason for following up lost quotes is to find out why you lost. Your computer enables you to generate the best quote possible, given the data you supply it. A flaw in the data will in turn generate flawed quotes.

Story at a Glance

lnventory managernent systems provide numerous marketing op portunities.. how to use it to analyze demograph ics, dircct aclvertisements, focus promotions, increase personalized selling, re oover lost business.

(10) Follow up on lost customers

Many companies give up if they haven't won a bid or received an order from a given contractor for a while. They assume a competitor has the inside track and cannot be dislodged. But situations and relationships change over time. Be in a position to capitalize on that change. Use your computer to periodically design and send the contractor personalized letters and offers. You keep your name in front of him, display a professional appearance and approach, and offer materials he's interested in.

ECAUSE computers generate as many questions as they do pieces of paper, we thought we would begin this piece with a question:

Which of the following is the most diflrcult?

(l) Paying for the computer.

(2) Deciding on which system to buy.

(3) Using the computer system you bought.

Many who would pick Number I probably don't already own a computer system. Those who chose Number 2 are likely in the middle of selecting a system. But if you already own a computer, you correctly picked Number 3.

Actually this was a trick quiz. All three of the choices are arguably difficult. But the real challenge is in using your computer system effectively. So be forewarned. There are challenging times ahead for all computer users, past, present and future.

There are three phases to computerizing your business.

Phase I is completed when you are functionally on a computer. This means that your transactions (invoicing, receipts, ROA's, quotes, PO's) are all processed by the computer.

Story at a Giance

The thrce phaees ol computerl-' zatlon tro rcach system's full potenrtlal, don't ses steps ag rcadblocks.

Phase 2 is completed when the data created by Phase I transactions are verifiably accurate. The easiest measure of this is to ask yourself, "ls the information in my computer accurate enough to base compensation plans on?" You may never actually do that, but your answer to that question will let you know how much you trust the data.

Make The Most Of What You Have

No one wants to make a large capital investment considering today's economic climate. Making the most of what you already have will be the standard for the next few years.

When it comes to the decision to install a new computer system to replace an existing one, it's more difficult than it was lour years ago when you needed the depreciation.

"However, many companies are offering more options than just selling replacements for old products, " says Dave Waddell, Dataline Corp.

For instance, he points out that his company has opened regional

Solution Centers around the country to provide product training and consulting services to lumber yards and building products centers. The new twist is that classes and services are not Iimited to computer oriented topics, but range into true information and business management for anyone with a computer system.

Another example offered by Waddell is the system audit now available lrom Dataline. This is an indepth review of how a business operates with a needs analysis of its data processing system. Many companies have had a turnover of those originally trained on the system as well as having the lly