As the financial meltdown spiraled in September, spending habits changed quickly. Many consumers stopped spending altogether. Those who were still hitting stores showed some disturbing patterns that weren't lost on retailer Best Buy. The number of customers signing up for financing on such purchases as big-screen TVs and computers surged. At the same time, the number of shoppers spending $1,000 or more per trip plummeted.
In response, Best Buy began offering free financing for entire shopping carts full of items--rather than one product at a time. "We realized that storewide financing could be a powerful differentiator in the marketplace," says Best Buy chief marketing officer Barry Judge. That left just one question: At what dollar amount should Best Buy start offering the free financing?
To find its answer, Best Buy turned to analytics software. In trials, Best Buy offered financing at different levels: $499, $699, or $999. Every time a customer signed up for payments, the software tracked purchase details and homed in on the answer: $499. Within weeks, the software cranked out data that the stores own systems, with their antiquated databases, couldn't have matched.
Source: CRM Daily
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