Best Buy has assembled a 15-plus
terabyte database with seven years of data on 75 million
households. It captures information about every interaction—
from phone calls and mouse clicks to delivery and rebatecheck
addresses—and then deploys sophisticated algorithms
to classify over three-quarters of its customers, or more than 100 million
individuals, into profiled categories such as “Buzz” (the young technology
buff), “Jill” (the suburban soccer mom), “Barry” (the wealthy professional
guy), and “Ray” (the family man). The firm also applies a customer lifetime
value model that measures transaction-level profitability and factors in
customer behaviors that increase or decrease the value of the relationship.
Knowing so much about consumers allows Best Buy to employ
precision marketing and customer-triggered incentive programs with
positive response rates