However, having a solid database can facilitate a company’s organizational strategy,
particularly in achieving optimal customer service. This ultimately improves profits and the
standard of the company overall.
When a company such as the Hut utilizes the appropriate and most valuable
database applicable to achieving its goals, it is apparent that the company values each
customer’s lifetime value and is interested in making every effort to keep its customers happy.
III. Exception Reporting
A characteristic of database-driven marketing is the measurement of and
accountability for actions. Database marketing is based on the principle that through
collecting and organizing information about a company, it can reduce the cost of marketing
efforts and increase profit.
At Sunglass Hut, the company has a history of “intense self-evaluation to
determine ways to cut costs, streamline processes, fine tune policies, and use technology to
nurture a healthier bottom line.” When business is off, the company reacts quickly. While
most retailers wait for year-end results to identify problems, Sunglass Hut knows by day,
week, and even hour. To accomplish this, the company uses an exception-reporting system
that allows profit management to study sales performance in depth.2
The system, which was actually selected as a loss-prevention program, is
called Exception Based Reporting (XBR) Track by Data Advantage. “XBR seeks out
exception conditions from within the mass of daily operational data. Each evening, it
converts the information recorded by Sunglass Hut’s POS (point-of-sale) system to a
headquartered database that can be queried on a PC-based network using a Windows
interface.” XBR can view, print, or export query results to various file formats, as well as
organize queries into designated topics and archive data for trend analysis. They can establish
trends by store, district, region, time of day, day of week, transaction type, and other
parameters. 2
The Hut uses various types of queries on a real-time basis. For example, top-
level and store-level managers, as well as sales associates, can view sales reports per
employee and per store ranging from hourly to annually reports. Managers can also monitor
associates’ and stores’ UPT’s (Units Per Transaction) to evaluate if customers are satisfied
and valuable to the company, i.e., they are willing to purchase more than just one product
during a transaction. Sales associates can also query through inventory to determine answers
to customer questions, such as if they carry a specific design, if a product comes in additional
colors and/or sizes, if certain items are on promotion, etc.
Associates are also able to investigate, particularly if a customer has a
return/exchange, certain information necessary to complete this type of transaction. They are
able to look up a customer’s contact information and last purchase information, including
what, where, and when the product was bought, and who sold it. From this information, top-
level management can identify what is being purchased, recencies and frequencies of
purchase, amount of dollars spent, and thus, monitor the performance of marketing and selling
channels. They can determine how much to spend on customer acquisition and retention
through advertising and promotion, such as sending out birthday cards with gift certificates
and special promotions for preferred customers.
Furthermore, the system has allowed the company to pinpoint stores with
excessive shrinkage, as well as employees who commit theft through the POS system or use it
incorrectly due to improper training. Sunglass Hut has reduced inventory shrinkage by 43%,
saving over $2 million since introducing XBR. It is also used to scrutinize suspicious
markdowns and to track problems such as late openings, early closings, and tardy employees.
IV. The Web Site
In addition to its internal database, Sunglass Hut International has also taken
advantage of the internet phenomenon with their website, . There,
consumers are able to set up an on-line account to sign up for e-mail alerts in order to find out
about special sales/promotions, information on new product releases from brands similar to
those they have purchased in the past, as well as give personal feedback to the company.
Other benefits of the on-line account include calendars, address book storage for quick and
easy checkout, and order history so customers can “track or view the status of a present order,
or review previous orders and print their receipts.”
V. Conclusion
There is often a translation problem between the languages of marketing and
corporate management. Top-level management wants “to know what a 5% increase in
customer satisfaction will do for the bottom line.” However, the difficulty marketers find
today is translating their qualitative statistics into quantifiable metrics that can be used for
strategizing and decision-making. Database marketing enables organizations to do this and
more. And Sunglass Hut International exemplifies this.
With Sunglass Hut’s global presence in the retail industry, everywhere from
North America to the East and Australia, it is vital for the company to continuously innovate
and maintain its strong customer satisfaction rate. It is apparent that its core values have an
impact on each aspect involved in the business. The marketing efforts it has made to establish
a concrete and reliable database have proven valuable to the Hut. It has experienced
increased sales, and customer satisfaction and retention since it’s implementation in 1997.
Furthermore, inventory shrinkage has declined, as well as dishonest employees. Although the
Hut has felt the same economic slowdown has the rest of the retail industry, it continues to
out-perform its expectations.
Sunglass Hut/Watch Station. 2004. Luxottica Group. 4 December 2004. .
Longmore-Etheridge, Ann. “Retail: Made in the Shade.” November 2002. RDS – Business & Management Practices™. 4 December 2004. .
Luxottica. 2004. Luxottica Group. 10 December 2004.
Ragusa, Daniel J. “Database Marketing Overview.” American Marketing Association. 29 November 2004. .
Barth, Brad. “Sunglass Hut Keeping Tabs on Shady Employees.” Febraury 2002. RDS – Business & Management Practices™. 4 December 2004.
Sunglass Hut/Watch Station. 2004. Luxottica Group. 4 December 2004.
“Connecting Marketing Metrics to Financial Consequences.” 17 November 2004. Knowledge@Wharton. 10 November 2004.