The Sherpa Image: Mountain Miser proves generous to its best customers

Outdoor equipment retailer Mountain Miser was forced by circumstance to become a one-to-one marketer. The Englewood, CO-based store’s database had grown in the four years since Claudia Goodman and her husband had purchased it, from 5,000 records to over 10,000. Goodman was overwhelmed every time a direct mail campaign was scheduled.

She’d been capturing transactional data at the point of sale, either through customers bringing in mailers or sales reps requesting a customer’s name and address. But it wasn’t until Mountain Miser began using TargetSmart!, the segmentation and mining software package from Denver-based TargetSmart Inc., that the value of each customer influenced the type of offer sent.

TargetSmart!’s built-in analytics allowed the store to divide its customers into four categories: best, frequent, spender and uncertain. While making up less than 10% of the database, the 800 “best” customers accounted for more than 40% of the store’s sales. When customers reach this level of spending – $110 a visit, with at least two visits a year – they are sent a Mountain Miser hat.

Goodman has had to discontinue one practice to best customers. While all still receive birthday cards, the cards are no longer signed with a personal note. They now go out only with the signatures of all the associates. She has noted a 1% to 2% drop in redemption of the 10%-off coupons that accompany the greetings, which averages around 40% per mailing.

“Frequent” customers make up around 25% of the file. They come in fairly often but don’t spend enough on any given visit to qualify for the top category. Goodman has done special discount mailings to this segment that average an 18% response rate. To increase their ability to purchase high-ticket goods, last year she issued a mailing in late September touting a layaway plan that allowed them to reserve merchandise for the holidays.

“Spenders” have proven more difficult to reach. Like frequent customers, they make up around 25% of the file and of the store’s sales. They spend reasonably high amounts when they come to the store, but they don’t come very often. Response rates on mailings to these customers are lower than with the other two groups, and Goodman has not focused her attention on generating incremental sales from them.

The 40% remainder of the database, “uncertain” customers, make up less than 8% of total sales. By restricting her mailings to those within this segment that have been in the store within a three-month window, Goodman has been able to realize substantial cost savings.