Customer research drives sales, promotions at Minneapolis mall

By Scott Bryden | November 1, 1995

Reading time: 5 minutes

Abstract

Ridgedale shopping center in suburban Minneapolis uses quantitative research to increase sales traffic. This article describes how Ridgedale created and uses its extensive database, an effective and powerful tool.

Research Topics:: Data Analysis | Database Development/M.I.S. | Demographic Analysis | Demographic Database | Quantitative Research | Shopper Insights
Industry/Market Focus:: Retailing | Shopping Centers
Content Type: Case Study

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Bridging the gap

Editor's Note: Scott R. Bryden is manager of account services at IQ/Intelligent Marketing Systems, Inc., a Minneapolis database management and marketing firm.

The Minneapolis-St. Paul area is the birthplace of the shopping mall - Southdale, the first enclosed shopping center, opened in 1956 in suburban Edina - so it's no surprise that its 2.2 million residents have an abundance of malls to choose from, including one of the largest in the world. The challenge for each shopping center in the Twin Cities is to differentiate itself from the competition and cultivate a following of loyal, repeat shoppers.

For Ridgedale Mall, a sister mall of Southdale located in the well-to-do suburb of Minnetonka just west of Minneapolis, ongoing, in-depth research, has been the answer.

The 150-store, million-square-foot shopping center decided to learn as much as possible about its customers and potential customers--and to use that knowledge to profile an audience of likely customers to target for promotions.

The strategy has been very successful. Gwendolyn Cowle, marketing coordinator for Ridgedale, believes that this pinpointed information - and how the mall uses it - is responsible for a steady increase in annual sales each of the last five years.

Profiling the "premier" customer

Over that period, IQ/Intelligent Marketing Systems, Inc., a Minneapolis database management and marketing firm, has worked with the mall to build a database that provides an accurate profile of the typical Ridgedale shopper. Constructed from a list of more than 150,000 names that is constantly expanded and updated, the customer profile incorporates detailed demographics and psychographics, including shopping behavior, size of average purchase, etc., to paint an in-depth portrait of Ridgedale's "premier customer," the individual most likely to become a habitual shopper at the mall.

That profile becomes the basis of cost-effective and highly targeted promotions. To keep the cycle going, the mall tries as much as possible to build into every promotion an opportunity to query shoppers for additional information that is fed into the database.

Continuous process

IQ created the database first by purchasing some 40,000 names in the region from commercial list houses as a starting point (later augmented with a second purchase of 60,000 names), and then immediately began the continuous process of adding to and qualifying the database. New entries now come from sales slips, responses to mailings and from in-mall promotions that have a double purpose - to build traffic and also to serve as the occasion for securing more data.

Based on recent updates, the database amassed these facts about Ridgedale customers:

Eighty-seven percent of them are homeowners, living in two definable areas.
The value of these single-family houses is typically between $75,000 and $125,000.
Thirty-four percent of Ridgedale families profiled by IQ have three adults living in the same household, including elderly parents of children older than 18 living with their parents.
Nearly 50 percent said they have bought products through the mail.
Of the 75 percent who are married, a little over half have children.
Of credit card holders, 335 own bank cards and/or a card issued by a store or a gas station.

Research is key to sales

Research continues all year, spinning off responses to promotions. For example, during the Christmas holidays last year, shoppers were invited to pick up a free mug if they stopped by Ridgedale's customer service center and filled out a short survey form that elicited information about purchase habits, income level, occupation, number of children, etc.

The database has also inspired a newsletter, "Right Now," which is mailed quarterly to selected segments of the database and serves three functions:

It communicates advance information on upcoming sales and other events at Ridgedale to these preferred customers.
It bolsters the image of the "premier" Ridgedale customer, who is made to feel part of an elite group.
It serves as a vehicle for extracting further information that will qualify and quantify the database.

Typically, the newsletter will include a coupon good for a free gift or for a gift with a purchase. For example, a shopper might be offered a tote bag upon presentation of $100 in sales receipts from Ridgedale. When the shopper takes advantage of the coupon, it creates another opportunity to learn more about him or her and add it to the database.

Because Ridgedale is so research-driven, the criteria for evaluating a successful promotion is not just an upsurge in sales and store traffic, but also whether it gives Ridgedale an opportunity to learn more about its customers.

Sharing data with stores

Ridgedale provides a service for client stores by segmenting data to meet specific marketing needs. For example, a store that stocks Scandinavian handicrafts can get a breakout of customers with Scandinavian-sounding names or a stated interest in handicrafts.

Ridgedale also disseminates interesting facts or trends relating to customers to the stores, suggesting appropriate promotions to tie-in with them. Based on its latest wave of customer research, IQ/Intelligent Marketing Systems also suggested store promotions that would key into the database.

Plans are to undertake some of these promotions after the Christmas shopping season. Among the promotions recommended is a second honeymoon sweepstakes package for next year's travel season, based on awareness that a significant share of married households in the Ridgedale customer database (75 percent of the total base) like to travel.

The fact that most Ridgedale customers are homeowners suggested promotions to market home furnishings within specific - and upscale - price ranges. Mailing costs for such a promotion would be relatively inexpensive, because it would not be a "blind" broadcast mailing, but rather to specific addressees whom research has identified as better-than-average prospects.

The bottom line question about all this research, of course, pertains to the bottom line: Has it paid off in terms of increased sales and traffic at Ridgedale Mall? The answer is a resounding yes. "Thanks to our database efforts," says Cowle, "we know who is shopping Ridgedale, where they're coming from, how much they spend when they get here and where they spend it. Our database is a highly effective and a powerful tool to have.''