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Using direct marketing to develop customer loyalty

Due to the saturation of the market by so many competing products and services, the simple shotgun approach to advertising is no longer as effective as it used to be. Direct marketing is an effective tool for establishing and expanding a direct relationship with customers.
By Raymond A. Martinez |
<>Makro, which started in 1995 as a partnership between SM Prime Investment of the Sy Group and a Dutch company, SHV Holdings N.V., is a high-volume distributor of both consumer goods and non-consumer products. It carries over 28,000 items and generates about P14 billion in annual revenues.

In May 2005, Makro waived its standard membership fee and started offering free and easy membership to its target markets. According to Juanito "Tito" Villegas, Pilipinas Makro's director for the fresh food business, their free membership campaign resulted in a 25 per cent increase in Makro's membership base. This increase brings Makro several notches nearer to its long-range objective of putting up 22 to 25 stores more in addition to its 15 at present.

Three months before putting up a new store in a particular area, Villegas explains, Makro does what it calls "process canvassing." It sends out anywhere between 50 and 70 canvasser-researchers to the area to do an intensive street-by-street survey of the existing retailers and HoReCas there. This is done for the purpose of signing them up for membership. "Conducting this house-to-house search, which we base on official local government data, is how we build up our customer base," Villegas explains.

Makro's customer development officers later screen the potential customers identified by the survey, validate and enter their demographic entries in the database, and issue the appropriate membership card to the customers based on their respective line of business.

On an ongoing basis, of course, Macro also extensively uses its customer database to determine such things as the volume of purchases of customers at a particular month, the frequency of their visits to the store, the kinds of products they usually buy, and the number of active and inactive clients for a given period.

Two other direct marketing initiatives taken by Makro to cultivate customer loyalty are its HoReCa Day Program-a special event-and its volume-rebate program for retailers. The latter gives discounted rates to specific membership groups and retailers who achieve certain target purchase levels within a specific period. The two programs are complemented by the Makro Mail, the company's bimonthly newsletter for members that also doubles up as a catalog for the company's special product offerings.

Makro's direct marketing efforts are supported by an ongoing telemarketing program, wherein the company's customer relations officers call member-customers who have been inactive for some time. "We target customers who have not gone to Makro for two to three months," Villegas says. "We ask them how they're doing. This way, we also get to know if their stores have closed down and are no longer doing business." Lately, the company also adopted a mobile phone marketing program to keep its member-customers informed of promotions, discounts, product movements, and price changes.

"Direct marketing is very important to Makro's operations," says Villegas. "In fact, we are finding it twice as effective as mass advertising."

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