2013-04-25 / News

Attract customers by collecting data

Important info gathered with each swipe of card
By Ken Shane

Jonathon DiOrio Jonathon DiOrio Jamestown resident Jonathon DiOrio spoke to an audience of about 30 at the Narragansett Café earlier this month on how smaller businesses can use electronically captured data to compete with larger companies.

DiOrio was the final presenter sponsored by the Jamestown Chamber of Commerce for its winter breakfast series. Previous speakers were U.S. Sen. Jack Reed and U.S. Attorney Peter Neronha. This year’s series was unique in that all three of the speakers are Jamestown residents.

DiOrio, the vice president of business development for the Providence based company Swipely, answered the questions: What is big data and why should we care? He laid out today’s commercial landscape where new technologies like the Internet, smartphones and social media have transformed the business environment.

The new technology, he says, has resulted in key shifts in consumer behavior and access to information. As an example, DiOrio pointed out that consumer comments on social-media platforms like Facebook, Twitter, YouTube and Pinterest can have a powerful impact on local businesses, whether good or bad. Positive comments can be leveraged to improve sales, he said.

DiOrio said many local businesses delete important consumer information with the close of business each night. Information – captured for the most part through credit-card transactions – can tell a business owner who the best and most recent customers are. Statistics like recent visits, average money spent per visit, and lifetime value of a customer can be determined.

“When I walk into a restaurant and swipe my card, that’s public information,” DiOrio said.

The data can also help a business owner determine whether marketing programs are working effectively, he said. DiOrio used Newport Restaurant Week as an example. By capturing data during the promotion, restaurant owners can measure their business during the week in comparison to regular weeks. The data will reveal how many new customers resulted from the promotion.

“If you own a business you have this information,” DiOrio said. “Technology can unlock this data.”

While much of the data is extracted from credit-card transactions, cash can be harder to track. The only way to effectively measure the impact of cash customers is to gather and input data on the customer manually.

“All of that data exists today,” he said. “It’s just not extracted and utilized.”

According to DiOrio, point-ofsales devices have now replaced the traditional cash register. There are processing costs associated with capturing data, and many companies compete in the processing field. The largest of these companies is Micros – it controls about 12 percent of the data-capture business.

According to Sandra Zoratti, vice president of marketing at Ricoh, a recent Nucleus Research study reported that an incremental return on an investment can be generated by applying data to business decisions. Zoratti said the Columbia Business School found that 91 percent of chief marketing officers believe that data-driven decisions are crucial to creating successful brands. Despite these findings, Zoratti wrote, only 11 percent of marketing professionals take advantage of data to make their business decisions.

DiOrio discussed the variety of customer-care programs that are offered by companies. He mentioned CVS as a local example with its popular Extra Care cards. While the programs benefit consumers, they also benefit the company because they offer a way to gather data on customers.

The customer-care programs do not have a big impact on the average amount of money that a customer spends in a trip to a store, DiOrio said. Where they do have an impact is in the frequency of visits. By offering coupons and other promotions, the stores manage to get their customers to come through the doors more often.

Since the costs of the promotions are borne by companies whose products are being offered at a special price, it’s a no-lose situation for the company offering the coupon. For example, if CVS offers a special price on Colgate toothpaste, the cost of that promotion is paid for by Proctor & Gamble, which makes the toothpaste.

According to DiOrio, companies are also using email program providers like Constant Contact to gather data about their customers. The software allows companies to determine whether customers are reading and opening their emails. They can also gauge responses to the emails. Constant Contact, the largest of the players in the email arena, presently has about 700,000 customers using its program.

In the wake of the 38 Studios loan scandal, many people have questioned the wisdom of bringing a high-tech startup company to the state. DiOrio has heard those questions.

“People think I’m crazy for doing another tech startup in Rhode Island,” he said. “We wanted to bring high-quality jobs and smart people to Rhode Island, and to help the state’s economy organically.”

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