Online retailer Overstock.com, an e-commerce site that sells discounted goods, went from a two-year-old, $1.8 million startup into a $1 billion enterprise in little more than a decade.

Overstock.com Chairman and CEO Patrick Byrne credits the use of technology that monitors buying habits as a big reason behind the company's recent milestone: In April 2010, the company reported its first annual profit.

Overstock spent more than $120 million on enterprise systems like Oracle and Teradata to support marketing analytics, and RightNow technologies to support customer service.

"Understanding our customers allows us to orient the map," Byrne says, according to Direct Marketing News.

"So much of consumption has been driven by search. Consumers are not waiting for messages. They're getting an idea of what they want and they're looking for it," Byrne said.

Overstock.com CEO Patrick Byrne (AP photo)

"That's where direct marketing becomes more like finding a way to reach people looking for exactly what you have and less about trying to target a million people and convincing a thousand to buy."

Picking a good team helps also.

"If you want to make your company, and its marketing customer-centric," Byrne says, "put your toughest, meanest, most customer-focused executive in charge of customers." 



The company has also relied heavily on television and direct marketing campaigns to inform customers about its offerings.

Not applying sales taxes can help win over customers as well.

Overstock.com recently cut its relationships with thousands of marketing affiliates in five states to avoid being forced to collect sales tax from its shoppers, The Los Angeles Times reports.

Many states say online retailers should be subject to taxes that traditional bricks-and-mortar companies do.

Overstock.com did says it would award free Club O accounts pre-loaded with $10 in Club O rewards dollars to top customers in New York, Rhode Island, North Carolina, Illinois and Arkansas, The Los Angeles Times adds.

Club O is the company’s rewards program.