Data mining is big business for Kroger

KYpost.com, Posted: 05/27/2010

CINCINNATI - Bill Brown shops at Kroger at least twice a week and without fail uses his Kroger Plus card during every visit.

"It's like VISA - I never leave home without it," said the Amberley man, with a laugh and a smile.

Brown knows the card is Kroger's key to knowing exactly what he buys and when he buys it, but he doesn't think it's an invasion of his privacy.

"Not at all because of the savings on the things I like to purchase in the first place," he stated.

Those savings come in the form of coupons he regularly gets in the mail.

Millions of Kroger customers across the nation get Loyal Customer Mailings at their homes all over the United States as well - and it's not by accident.

They're the product of data mining.

"Our efforts are trying to drive loyalty for life with our customers," said Sukanyua Madlinger, Kroger's vice president of merchandising for the Cincinnati/Dayton area. "Customers are rewarded with offers on what they buy, instead of trying to be sold something else."

It's a complex process to match the best customers with the right coupons. For instance, one recent mailing featured 95% customization.

"You're not going to get the same coupons as I get and I'm not going to get the same coupons my neighbor gets," Madlinger said. "It's going to be based on what I buy."

Data mining isn't new to businesses, but it's rapidly growing as firms seek to improve their bottom line.

For example, 40% of all U.S. households have one of Kroger's loyalty cards.

Mining the data for Kroger is dunnhumbyUSA, a downtown Cincinnati firm in which the nation's largest grocery chain owns a 50% stake.

Stuart Aitken, dunnhumbyUSA's chief operating officer, refers to data mining as consumer insights.

"We're looking for the motivations and the understanding behind what consumers do and buy," he said. "Essentially what you're looking to do is reward the behavior you seek."

Over 330 dunnhumby employees crunch numbers on a daily basis, trying to identify the people Kroger wants in its stores as much as possible.

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