Think Customers: The 1to1 Blog

About 69 million U.S. households own a pet. Not all are ideal PetSmart customers. "Some customers are valuable and some aren't," Thompson said. "Why spend equal time with each?" PetSmart's focus is on who it calls pet parents: people who consider their pets as part of the family, who buy their pets holiday and birthday gifts, who let them sleep in their beds, and the like.

The company uses a segmentation model to visualize its various customer groups. High-value customers, who spend an average of $750 a year, are at top; at the very bottom are those who spend a mere $3 annually. "We used to market 'mart' products, now market 'smart with heart' products [like specialty foods]," Thompson said. "We market to the right people, and then convert them up" to higher purchase levels.

PetSmart's loyalty program, PetPerks, is one way the retailer markets to those right customers. About 80 percent of the company's consumers are members. It uses the loyalty program data, along with information consolidated from sources like the 650,000 customer surveys it sends per year, and its on- and offline communities, to create a 360-degree view of customers that enables the company to understand its best customers and treat them differently.

That understanding has led to such offerings as PetSmart's hotel, hospital, adoption programs, and pet birthday programs, as well as such online offerings as highly targeted communities and expert advice blogs--all designed to build customer engagement throughout the pet ownership lifecycle.

"Like pets, customers don't owe you loyalty, you owe it to them," Thompson said. "What are doing to reward them--that's not just a loyalty program--and show them that you value their business? One way is to allocate your budget to the customers who matter most."