By Barbara Pellow November 15, 2006 -- Cracking the code to gain actionable insights into individual customer situations on retail credit card usage, participation in educational events, stays at a hotel chain, or travel history with a specific airline is at the heart of cross-selling success. Statistics indicate: * Repeat customers spend 33 percent more than new customers. * Referrals among repeat customers are 107 percent greater than non-customers. * It costs six times more to sell something to a prospect than to sell that same thing to a customer. This data points to the fact that the best way to boost sales quickly is to focus on your existing customers. For example, the individual transaction data collected by a hotel helps the company identify its best customers and cross-sell them other products or know which customers to target with special promotions when occupancy rates are low. It also allows company marketers to target that group for customer feedback. Using that feedback, the company can then make smarter decisions about where to most efficiently allocate its marketing resources. Suppose the data shows that a significant percentage of the customers come from Northern New Jersey and are in their 50s; the hotel can use that profile for more accurate outreach. Analysis of customer data can reveal product combinations that point toward an opportunity for up-sell and cross-sell. Casinos are doing a good job at understanding transaction data. Based on information gleaned from loyalty programs, a number of Las Vegas establishments now figure out who is coming into the casino, where they go once they are inside, what the restaurant preferences are for the specific individual, and what other services they utilize at the casino resort location. It is also important to understand the time-sensitive trigger points for up-selling and cross-selling. An analysis of customer data can reveal product combinations that point toward an opportunity for up-sell and cross-sell. Marketers also want to make sure they know when they are at risk of losing a customer. If certain metrics, such as a participation rate in a financial program or order levels for a consumable product, fall below predetermined levels, it is probably time to go back to the customer and reinvigorate the product offering before its too late. If the customer is not completely satisfied with the current offering, this may even be a good time for the up-sell. Cross selling, up-selling and customer retention are primary drivers for one of the newest digital color print opportunities. Some are terming this concept "trans-promo" communications. These documents combine the information delivery of a transactional document with the data-driven personalization of promotional (direct mail) offers to generate faster responses with higher values. Companies can utilize the white space on transactional documents as selling space to target recipients with specific messages relevant to their buying patterns and preferences. In my recent interview with David Reeves, President of Toronto-based DistribuTech, said, "It is really about leveraging and understanding transaction data to enhance sales effectiveness. It may be effective use of white space on a statement, or it could be leveraging transaction knowledge to trigger a new direct mail campaign. The market focus should be on collecting and analyzing transaction data and effectively using it in promotional activity." Leveraging Transaction Data DistribuTech's tag line is "Enabling Customer Communications." According to Reeves, "Our mission is to enable client communications and deliver quality business service offerings in high growth market sectors to industry leading organizations." DistribuTech was formed in 1992 to outsource marketing fulfillment requirements for a single customer. Over the past fourteen years, the company has grown to be a leading provider of business services including fulfillment, mailing, and digital printing solutions. Today, its staff of 80 provides a wide range of services to over 100 organizations in the technology, financial services, automotive and consumer goods industries. Market focus should be on collecting and analyzing transaction data and effectively using it in promotional activity Reeves started his career at IBM focused on the financial services market. He saw IBM's migration into outsourcing and recognized the trend for corporations to contract with third parties for areas outside of their core competence. As markets became more competitive, organizations recognized that outsourcing arrangements could provide profitable options for streamlining and downsizing non-core activities. An opportunity presented itself for Reeves to take over fulfillment operations for marketing materials for a Fortune 500 company. Based on his entrepreneurial spirit, Reeves seized the challenge. Narrowed Focus DistribuTech housed the clients' collateral in a small warehouse. With Reeves knowledge of supply chain management systems, the company developed a collateral management system and became a value added outsource partner for supply chain logistics. Documentation was migrating to just-in-time fulfillment and Reeves invested in digital printing. The firm already did some lettershop work and started working with clients on data-driven applications, ultimately getting into 1:1 printing. As the business evolved, Reeves consciously decided to narrow his focus into three key areas. * Document outsourcing and post-creative materials management including warehouse management, ordering and fulfillment. * Statements and wealth management information delivered in print or electronically * 1:1 marketing or variable data DistribuTech made extensive investments in systems to support supply chain logistics. It has an in-house web design team focused on providing web-based solutions for client outsourcing projects. Systems are designed and customized to meet specific client needs and then implemented on an in-house Internet infrastructure. DistribuTech's inventories more than 15,000 SKUs and 8,000,000 pieces. Over 1,000 orders are shipped daily, with over 5,000,000 pieces of literature, promotional material and product distributed annually. Manage the Data While starting in fulfillment, the firm also built strong expertise in data management. High quality database preparation was such an essential first step in several of the projects that customers came to recognize the company as an expert database management resource. According to Reeves, "We want to work with our clients and use data to enhance sales effectiveness. A customer's transaction history is the best predictor of future behavior." For example, one fulfillment customer is a large dental supply firm. When the ordering pattern for a dentist changes, it may mean that the relationship could be at risk. That triggers a marketing promotion to the dentist based on order history. DistribuTech also does mortgage processing for a company that supports twelve different brands. The company is struggling with renewals, so DistribuTech incorporates full color messaging about renewal as part of the statement to get a higher level of attention from the recipient. Transaction data is essential to understanding target audiences and plays a defining role in the shaping messages that hit the mark. HP Education is another client. Every day they get three files from the HP Education staff on student enrollments in specific courses and use that information to send out personalized e-mail confirmations. That data is used to trigger cross selling of additional education. If a student participated in a UNIX 1 course, the next direct marketing piece will promote attendance at UNIX 2. DistribuTech has built a business model that combines print, fulfillment, mail and distribution while providing customers the opportunity to sell additional products and services, and build brand loyalty. DistribuTech works with clients to implement these programs cost effectively. Reeves said, "The business has evolved and the market is exciting. With the emphasis on marketing accountability and the technology available, there is significant growth opportunity." Company revenues are in excess of $14 million today with a targeted annual growth rate of 25 percent. Understanding Market Dynamics Firms like DistribuTech understand that helping customers with marketing success and clear differentiation has never been more important. Successful marketing efforts that boost revenue and patronage are the subject of intense focus in today's corporate world and are driven by accurate, timely and meaningful information about the marketplace and consumers. Transaction data is essential to understanding target audiences -- past, present and future-- and plays a defining role in the shaping of campaigns and messages that hit the mark. The utilization of customer data is paramount in cross-sell, up-sell and brand association opportunities. Whether it's a trans-promo document or a high quality direct mail piece, marketing based on knowledge is what will differentiate your customers. It is a well known fact that statements, invoices, checks and pay slips are still the most frequently used communication between businesses and clients/consumers. While these transaction documents are promotional opportunities, the lesson I learned from David Reeves is that the real opportunity lies with leveraging transaction data to augment these utilitarian documents so that they effectively promote the client's messaging.