How often do you get an offer that is truly relevant to you? What percentage of the offers that you receive online or in the mail are actually of interest? Of the billions of dollars spent by manufacturers and retailers on marketing, it’s likely that less than five percent of the money spent is actually customer-specific and relevant.

With all of the technology and data horsepower available to track purchases, behavior, and lifestyles — which makes it so much easier than ever before to know which customers fall into which categories and to market to them with specific offers and creative messaging — retailer-manufacturer partnership marketing is still way down on the list of priorities and way down on the percent of dollars invested.

Technology hasn’t overcome the cultural barrier that still exists between retailers and manufacturers — the opportunity to enhance brand sales at retail by targeted partnering. The coordination between marketers and retailer hasn’t improved a whole lot and as a result both parties continue to waste money.

Here’s the irony: More than 70 percent of retailers have some sort of loyalty program that tracks customer purchases and yet few brand companies are working with retailers to target customers with items and offers that make sense relative to their purchase history and profile.

On the other hand, billions of dollars are being spent to target customers online based on tracking site usage without purchase behavior to guesstimate what customers might be interested in.

While many retailers have improved their targeting, many more have not, and even those that have improved continue to facilitate co-op marketing that allows brands to sell everything to everyone. Why is it that brands and retailers can’t just get along? Let me count the ways:

Cheap Eyeballs. Because all of the new electronic media are so inexpensive, there is a tendency to say, “Let’s just send it to everyone!” The problem with this mass-marketing thinking is that it’s destructive to the process — customers get frustrated!

Sending an offer for eye-shadow to a male in the hope that he’s going to give it to some female he knows is silly. Sending a coupon for a frozen turkey dinner to a vegetarian is likely to run afoul of the customer. The fact that it was cheap for the marketer to send is demonstrated to the customer by saying, “We don’t really care about your time or what you’re interested in.” Then, adding insult to injury, the communication is highly personalized, blaring the customer’s name in 48-point type that this is just for you!

It also creates more noise in the system. The more junk we see, the less we see, and we see a lot of junk. It also diminishes the likelihood that when the marketer does send out something relevant, the customer has already put that marketer’s “from” address email in their junk folder or relegated the direct mail to the same pile of tossed circulars received the previous Sunday.

More Eyeballs. Every brand sales person or brand regional marketing person in the field wants to be able to tell management that they cut a deal with a retailer that will reach gazillions of people. The more gazillions, the more pats on the back. It doesn’t sound as good to say, “we will reach 10 percent of the retailer’s customer base who are known purchasers of this category and are among the best customers across the store.”

If the promotion were targeted, it would get a double-digit response and generate incremental sales — versus the usual meager response from hitting the “all button” that most of the time isn’t even measured. But as long as there were a lot of customers in the pool, everyone looks good.

When the promotion is not targeted, everyone suffers further. Retailers are forced to carry inventory that won’t sell but that they must carry as part of the deal with the brand. Brands pump out an excessive and unnecessary number of items and line-extensions that are costly and eventually force a rationalization process by the retailer that delists some of the items. The customer gets a headache from looking down the aisle, trying to figure out if the new unscented is the same as the original unscented.

Retailer Revenue. Retailers like it when brands want to reach everyone, because then the brand spends more money that the retailer can co-mingle with other brands, thus keeping some of the trade dollars as pure margin. Because those dollars are looked at as promotional margin dollars built into the retailer’s budget, the more the merrier. If the retailer forced the brand to focus on certain customer segments, the promotional budget would shrink. But then it would be about smart money instead of more money.

Merchants in Charge. In most of retail, the merchandisers have the only key to the gate that keeps brands in the corral behind the outhouse. Merchandisers have milked, shorn, declawed, and harvested all they can from the brands in the form of case allowances, promotional deal dollars, and end-aisle extras.

When the retailer’s marketing department tries to borrow the corral key, the merchandiser is horrified, claiming the poor brand has nothing left to give. The fact that the brand has a mansion over the hill with huge marketing dollars they are willing to spend is a fairy tale, according to the merchandiser. So, the marketing departments in retail are scared away from trying to pursue co-op targeted marketing with brands.

Demonstrate the Value

The merchandising and marketing process shouldn’t be a separate negotiation. Merchandisers should be given a mandate that a percentage of the brand’s marketing dollars have to be allocated to the retailer’s marketing budget for targeted marketing as part of their negotiations on pricing and allowances.

The shopper is in charge — not the retailer, not the brand, and not the merchandiser. Making the shopper happy by delivering the right offers at the right time is the right strategy. Merchandisers have to be persuaded that it’s as important to be right about the communications and offers as it is to be right about the price.

Retail marketing departments need to develop a plan for the brands they want to participate. Retailers should be forthcoming with data demonstrating the appropriate customer segmentation for each brand. Retailers should develop a creative strategy that leverages the retail brand and the manufacturer’s brand and diminishes neither. Retailers should define the process and steps for manufacturers to participate. Retailers should provide the manufacturer with in-depth data analysis of results and performance metrics.

Predictive analytics give retailers the opportunity to demonstrate to manufacturers what an investment in a partnered program would look like in terms of sales, incremental sales and customer penetration. Retailers should create web portals for brands to see what the retailer’s co-op or targeted partnering calendar looks like, to make it easy for brands to identify where they’d like to participate.

This portal would also give manufacturers an opportunity to develop a communications channel to introduce new products that would generate a high rate of trial. Manufacturers could target customers who are users of existing brands similar to the new brand or that tie-in nicely with existing brands.

Retailers are in charge of the process. If there isn’t a disciplined, committed process for partnering it isn’t going to happen, regardless or in spite of how much technology advances the science.