SPONSORED BYGrowing the Value ofthe Retail Customer ARTICLE EXCERPTS FROM
Customer-CentricPerspective and InsightThere is a customer revolution underway and it is making a dramatic impact onthe re...
The Impact of segmentation Have Personas Become Chic Again? Featured in 1to1 Magazine Weekly Digest Best Buy brought perso...
another tool in the arsenal to help understand different points        as opposed to less upscale families is an important...
The Impact of segmentation A Question for Start-Ups: Why Will You Have Customers? A blog post by Martha Rogers            ...
The Impact of segmentation Will the Real Customer Please Stand Up? Featured in 1to1 Magazine In the days before social net...
make sure assets are pulled together so customers know they        research. Using MarketTools’ Insight Networks, 400 of u...
who companies can learn enough about to speak to indi-             home value, length of home ownership, and the presence ...
Ford and other car companies that employ such a model ask        recommendations. As a result, conversion rates improved c...
Retail Marketing “next” Practices Multichannel Marketing Grows Up Featured in 1to1 Magazine The shift in marketing budgets...
accelerate time to market. “From a loyalty perspective, as we         er records, but had no way to analyze or leverage al...
Retail Marketing “next” Practices Pushing the “Buy” Button in the Brain Featured in 1to1 Magazine The most powerful and ad...
vice, but branding is a lot of other signals,” he says.                 with smell if the last experience wasn’t a good on...
homogenous vertical market (90 percent of its customers                engaged with the customer). By analyzing past order...
rics to gauge the results of the project. Jacobs says she             they’re representing. “Our operations team is adopti...
York–based Duane Reade (recently acquired by Walgreen                ing learnings from our early rollouts to improve the ...
distribution,” says Jacqueline Flam Stokes, director of mar-             Still, there’s work to be done. To date, many of ...
Retail Marketing Best Practices Barrie “Baazz” Young, President of Sales and Franchising, Snap-on Tools Featured in 1to1 M...
Retail Marketing Best Practices Scotts Gets to the Root of the Problem Featured in 1to1 Magazine Executives at Scotts Mira...
Retail Marketing Best Practices Best Buy Gets Into the Zone Featured in 1to1 Magazine Pity the company that’s so thoroughl...
Retail Marketing Best Practices Tully’s Coffee Brews Loyal Customers Featured in 1to1 Magazine For businesses, gift cards—...
About TeletechFor nearly 30 years, TeleTech and its subsidiaries have helped the world’s largest companies achievetheir mo...
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Retail Compilation Ttec

  1. 1. SPONSORED BYGrowing the Value ofthe Retail Customer ARTICLE EXCERPTS FROM
  2. 2. Customer-CentricPerspective and InsightThere is a customer revolution underway and it is making a dramatic impact onthe retail industry. Regardless of where the customer in their relationship with a retailer—awareness, consideration, purchase or loyalty - they are reaching out to theircommunity of fellow customers, using powerful new social media web channels, InsIde:to get information before they make decisions. The balance of power has shifted The Impact of Segmentationfrom the retailer to the customer (and their friends) and it is creating a new and • Have Personas Become Chic Again?exciting competitive landscape for those willing to take up the challenge. Suc- • Segmentation Pilot Projects: Whatcess in this new world requires relevance and that means that a retailer must Segments to Select • A Question for Start-Upsbe able to leverage customer insights and personalize interactions across every • Will the Real Customer Pleasechannel—in store, on-line and via mobile devices. Stand Up? Let’s face it, everyone is trying to differentiate their brand with unique prod-ucts and services but the only way to effectively do it is with a great customer Retail Marketing “Next” Practices • Multi-Channel Marketing Grows Upexperience. And a great customer experience is one that is targeted to meet a • Pushing the “Buy” Button in thecustomer’s individual needs on their terms—24/7, multi-channel. New tech- Brainnologies and capabilities like mobile commerce are accelerating the trends andcustomers expectations continue to rise. Retail Best Practices So what is a retailer to do? We have prepared the attached compilation of • Deciphering Customer Datacutting-edge articles from the Peppers & Rogers Group library of thought leader- • Prescribing an Updated Drug Store Experienceship to share best practices and new ideas currently in the market. The Peppers • Robert Pearson, Vice President of& Rogers Group heritage of customer-centric thought leadership began with the E-Commerce, Future Shoppublishing of a book, The One to One Future, by Don Peppers & Martha Rogers, • Barrie “Baazz” Young, PresidentPh.D. in 1993. Every day since then, the company has been dedicated to bringing of Sales and Franchising, Snap-on Toolsnew thinking to the market that combines creative ideas with rigorous analysis. • Scotts Gets to the Root of theThey cultivate innovation through the ongoing thought leadership of founders Don ProblemPeppers and Martha Rogers, Ph.D.; work in client engagements all over the world; • Best Buy Gets Into the Zoneand by a continuous dialogue with the market through the efforts of the indepen- • Tully’s Coffee Brews Loyaldent publishing division 1to1 Media. Customers These ideas are being implemented on the front lines every day by thosealready embracing this new reality and they are building deeper more lastingrelationships between retailers and their customers. At TeleTech, we have almost30 years of experience helping our clients turn interactions into relationshipsthat drive increases in loyalty and customer satisfaction. I hope that you find theattached content of interest and welcome your thoughts. Sincerely, David Panitz SVP Industry Leader, Retail, TeleTech
  3. 3. The Impact of segmentation Have Personas Become Chic Again? Featured in 1to1 Magazine Weekly Digest Best Buy brought personas into the mainstream in 2005 when it started designing its stores around customer segments. Jill, More and more companies are recognizing the value the soccer-mom type with an aversion to electronics who is of having a standard set of targets or segments. the main shopper in the family, became famous after Best Buy It’s much easier to align products with them, and designed specific stores with pink balloons and Hello Kitty distribution strategies. Capital budgets can be tied… merchandise to cater to this segment. more easily, as well. While Best Buy still accommodates Jill, she has slipped from the limelight. Personas themselves haven’t received much press either…until recently. Lately companies like AOL, resources. “They’re trying to minimize the number of impres- BMW, and USAA, have discussed how they’re taking their sions to produce a greater number of transactions,” he says. persona initiatives to the next level by integrating them with Adding to the pressure, customers are much more sophis- other company data and layering them with behavioral char- ticated about how they want to be treated, demanding more acteristics to conduct everything from customer acquisition to individual and insightful interactions. “Personas enable com- product development. panies to do that efficiently—to do the right thing, at the right Vidya L. Drego, senior analyst of customer experience at time, in the right way,” Ripa explains. Forrester Research, attributes the growing interest in per- In response, companies are thinking strategically about sonas, the fictitious characters that represent different user personas enterprise-wide, rather than just isolating their use types within a targeted demographic, to the shift toward so- for product development and marketing. Traditionally they cial media. Social media, she says, is a catalyst for companies represented demographic-related information, like disposable to realize the value of doing the ethnographic research that income and age. Now companies use personas to try to mirror feeds into personas. “They actually have to go and under- customer behaviors. stand what their consumers are saying and provide a tailored understanding of that before they make [business] decisions,” discover your customers Drego says. Discover Financial Services, for example, originally imple- Bruce Wilkinson, vice president of media and communica- mented personas a few years back for online marketing pur- tions for Nielsen Claritas, says he too sees an increase in the poses, but now integrates its online personas with those from use of personas and segmentation, because as companies’ across the enterprise and overlaps those with the company’s marketing budgets become more constrained the need to be- business segments. QVC used personas to prioritize the right come efficient is paramount. “More and more companies are features when building its community for frequent television recognizing the value of having a standard set of targets or shoppers; Weather.com leverages personas to show targeted segments,” Wilkinson says. “It’s much easier to align products ads to Web visitors; and the American Red Cross relies on with them, and distribution strategies. Capital budgets can be personas to find people most likely to donate blood. tied…more easily, as well.” But to quote one marketer who prefers to remain anony- According to Acxiom Vice President of Product Manage- mous: “Aren’t personas a poor man’s one-to-one?” Not so, ment John Ripa, the shift in marketing accountability is caus- Forrester’s Drego says. Personas shouldn’t be used as a mar- ing companies to try to generate more results with fewer keter and designer’s end game; they should be consideredFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 3
  4. 4. another tool in the arsenal to help understand different points as opposed to less upscale families is an important change at which customers interact. in attributes.” Drego cautions, however, that companies must first iden- Despite their progress, Wilkinson says, many marketers tify the projects that would benefit from personas and create don’t have complete confidence in their personas efforts. a research plan before integrating them into deliverables or However, he predicts a progression over the next five years to layering them with other business data. Few companies, she where personas will help to facilitate more varied and nuanced says, integrate the terminology into the company’s language communications with different customer sets, as well as the to where it becomes a part of the culture. use of third-party data to drive media choices. “People will To encourage culture change, Nielsen Claritas’ Wilkinson get further away from gender marketing and move to targeted says one of his national retail customers turned its customer marketing,” he says. personas into artwork, mounting them on the walls of its vari- Acxiom’s Ripa agrees, saying that in the long term, perso- ous buildings. This effort has changed the internal perception nas will be used across all media. “The big trend is there is a that the company targeted just one type of customer. “[Perso- shift in using personas in new media. That’s where more dol- nas] changed the way they treat customers,” he says. “Know- lars are being shifted,” he says. “We see that happening each ing when you’re talking about upscale and younger females and every day.” n The Impact of segmentation Segmentation Pilot Projects— What Segments to Select? A blog post by Don Peppers Don Peppers, Founding Partner Peppers & Rogers Group This week I made a presentation to a large telecom client of This is one of those questions that I ought to have answered ours in Istanbul about the virtues and how-to’s of customer a dozen times already, but I don’t think I’d ever been asked, nor analytics and segmentation. As a normal part of the transition have Martha and I actually written anything on this topic. Off strategy to becoming more customer-centric, we usually sug- the cuff, really, I enumerated some criteria, but I’d be very inter- gest that a client should identify one or two segments, and ested if any of our readers could contribute to this discussion. place them into a pilot program of customer management. What I suggested was choosing a segment: By running this pilot project over a number of months, you • for which you have reasonably accurate and complete can work out the kinks and conflicts involved in managing data, customers, rather than just products and channels. You can • with a not-too-complicated set of channel or distribution also publicize your success within the company to help se- conflicts, cure support for the overall transition. • that already tends to buy from multiple business units, At the end of my talk, one of the senior executives asked channels, or divisions, me a question that got me thinking very carefully: Are there • where you think you have a reasonable chance of creating any particular criteria we should employ to choose which significant value, and segments to put into a pilot program? • you can describe easily to non-statistical types. nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 4
  5. 5. The Impact of segmentation A Question for Start-Ups: Why Will You Have Customers? A blog post by Martha Rogers Martha Rogers, Founding Partner Peppers & Rogers Group In my role as Adjunct Professor at the Fuqua School of Busi- to help this group develop a customer segmentation system ness at Duke University, I have the opportunity and the honor —a way to identify who their customers are, to then better to work with talented faculty and exceptional students. It’s offer products to meet their needs. always a pleasure for me to get to North Carolina. Professor Moorman noted in her response that segmenta- After a recent session with MBA students, my colleague tion is valuable when differences exist and those differences Professor Christine Moorman and I received the follow- are meaningful in distinguishing customers on the basis of ing question from a class participant: What is the value of factors that will predict customer involvement with the firm. It segmenting customers and devising a profile of customer is simply a way of focusing the firm on the best prospects. needs when you are a start-up and have “no customers?” We may want to add that in order to start a business, a nascent company must first analyze the need for the The student continues: business—in other words, confirm there is a market. This My mentored study project is at Duke Integrative Medi- research will define the potential and likeliest customers, cine—a year-old organization trying to focus on shifting the and can serve as the beginning of differentiation based on paradigm associated with treating medical symptoms to value—and on need, which is more important to this new one of treating the whole person. As a virtual ‘start-up’, the organization right now. Why will you have “customers?” And organization’s marketing efforts are integral to the program’s in the two general categories you named, what needs will success, and yet the marketing strategy is unclear. As I see different people be meeting (besides medical, generally)? it, there are two populations this group is trying to reach: Now that you have been up and running for a year, you The healthy people (who have a desire to ‘age gracefully’), have the luxury of comparing your actual experience to the and the ‘sick people’ (who are referred by Duke physicians projections before you started, and now setting up more as a supplement to their ‘traditional’ treatment). I would love accurate projections. nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 5
  6. 6. The Impact of segmentation Will the Real Customer Please Stand Up? Featured in 1to1 Magazine In the days before social networks existed, people in chat rooms would often ask each other “a/s/l?” to find out who The purpose of marketing is to harvest cash flows they were talking to. Today, social networks ask users to by changing customer behavior. To do that you provide information on everything from hobbies to favorite have to motivate them to do something, and un- sports teams to memorable quotes so other members can derstanding how to [do so] involves knowing what see who they’re connecting with. your customers’ needs are. A similar evolution is taking place in marketing. For years companies targeted potential customers based on such demographic basics as age, gender, and zip code. That his/her parents’ house in a 2007 Saturn Ion; subscribes information is still immensely valuable, but is no longer to Newsweek, BusinessWeek, and Sports Illustrated; and enough. To keep pace with the growing emphasis consum- reads books about politics, sports, and philosophy for fun. ers place on the relevance of companies’ communication Any guess what our mystery customer’s gender and age with them at every touchpoint, savvy companies increas- are, where that person resides, or what he/she does for a ingly are looking deeper into customers’ personas—and living? Anyone who knows me can tell you the answers: then using micro-segmentation, behavioral or transactional male, 22, Connecticut, and Assistant Editor at 1to1 Media. targeting, and online data gathering to develop a more If those four facts were the only things marketers knew comprehensive understanding of who their customers are about me, what are the chances I’d receive relevant infor- and how to better serve them. mation about their product? Throw in just a handful of the “The purpose of marketing is to harvest cash flows by 20 other details I provided and those chances increase dra- changing customer behavior,” says Don Peppers, cofounder matically. of Peppers & Rogers Group. “To do that you have to moti- “Essentially what people are doing is not moving away vate them to do something, and understanding how to [do from demographics, but combining it with behavioral data so] involves knowing what your customers’ needs are, in a and better information,” says Specific Media CEO Tim Van- deeply human sense.” derhook. “We’ve come a long way seeing who customers But most customers need something as unique as they are and having a more holistic view. We didn’t have today’s are. So, how do you determine those needs and then offer accuracy before, which led to a large chunk of waste by a product or service in the most relevant manner? That trying to appeal to a general audience.” requires knowing more than just traditional demographic Just how far marketers have come depends on which data about your customers, Peppers says. company you’re talking about, but the mainstream is moving Take for example the following person: someone who toward using nontraditional data and data-gathering meth- enjoys golf, tennis, and bowling; plays Guitar Hero and ods. “Many people have had issues in the past with where to World of Warcraft; has seen a baseball game in eight dif- house data, storing it in silos or not having enough capacity,” ferent cities and been to six different amusement parks in says Regina Gray, vice president of scoring and analytics for the past three years; visits a casino about once a month; Experian’s Decision Sciences Group. “[Today] many compa- watches Hardball, The Daily Show, and The Colbert Report nies have attitudinal and behavioral data on their customers, every night; commutes to work 90 minutes each way from but don’t know how to make it actionable. They all want toFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 6
  7. 7. make sure assets are pulled together so customers know they research. Using MarketTools’ Insight Networks, 400 of understand the multichannel relationship.” those panel members were invited into an exclusive com- How companies implement changes to take advantage of munity based on how they described their relationship with the wealth of information available about customers varies their dogs. About half visit the site at least once a week, according to industry, needs, and goals. Using micro-seg- where they can enter contests, upload photos, talk about mentation, behavioral targeting, and online data gathering, dog shows, share their buying habits, and comment on interactions based on customer insight have come a long new product ideas. The site is intentionally lacking any Del way. Here are three ways of using, finding, and acting on Monte product branding so customers remain objective in customer information that wouldn’t have been possible 20 their assessments. At least two marketing plan changes years ago. came from insight the community provided. “We were told by the people on the site that our Snaus- Online communities provide targeted insight ages Breakfast Bites packaging should point out the health Where besides cyberspace can you assem- benefits of the product,” Amoroso says. “We ble a huge group of consumers willing to Sometimes targeting also used the frustrations people had with interact and share information in ways they customers doesn’t traveling with their pets to shape our pup- never would in person? Companies are now always get you who you friendly campaign.” Del Monte learned that realizing that if they attract customers online want. You can learn a lot people want to do everything from attending and give them something of value, they’ll from letting them drive a ballgame to staying at a resort with their respond to ads, offer feedback, promote a the segmentation. dogs, which led to, among other things, “Pup- brand, and provide information about them- Night” at Pittsburgh’s PNC Park as part of the selves in return. company’s “quest to make the world more “People are more honest and they have their guard down dog-friendly.” online,” says Jeff Hilimire, CEO of SpunLogic. “The feed- Del Monte made the decision not to promote its prod- back is more real, people don’t hide who they are like in ucts on the site, but that wasn’t the case for the makers traditional researching, and they’re more likely to promote of Lunesta. Increased sales of the sleep aid were among products to their friends because it’s as easy as a few the goals of creating an informational site to find and gain clicks.” insight on potential customers. Using a poll created by Pro- Pet food maker Del Monte and Sepracor, the creator of spectiv, Lunesta asked visitors to a landing site how they sleep aid Lunesta, are two examples of companies using slept the night before. Depending on the answer, they were online audiences in very different ways to meet the same asked additional questions or asked if they wanted infor- goal of learning more about who uses their products. mation about Lunesta. Del Monte wanted to understand the relationship “Sometimes targeting customers doesn’t always get you between “pet parents” and their dogs, so the company who you want,” says Prospectiv CEO Jere Doyle. “You can created an online community called Pets are People Too for learn a lot from letting them drive the segmentation.” As a research purposes. “We wanted to go deeper from an emo- result of the information Lunesta gathered on its site, the tional standpoint with our customers,” says Gala Amoroso, company stopped using direct mail and saw the value of senior consumer insight manager. “We needed a bigger arming customers with more information before they visit picture of the relationship between pets and owners other a doctor. Doyle emphasizes that, although Lunesta did than just what they do at feeding time.” Customers in the increase sales, the true success of that growth was based “pet parents” group consider more than price and avail- on providing online content that supplements the brand— ability in choosing what to feed their dogs, and Del Monte that is, giving customers information they could use to help sought to learn those motivators. them sleep better. Del Monte worked with MarketTools to select the appro- priate consumers to survey from a customer panel of 8,000 smaller segments yield bigger results people the two companies had jointly created for past The online channel is an excellent source of customersFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 7
  8. 8. who companies can learn enough about to speak to indi- home value, length of home ownership, and the presence vidually. Micro-segmentation (focusing on smaller groups of children and pets instead. of customers based on a single commonality) came out “Head to head in a test against the old way of doing of increased storage capacity for data, more comput- things, they had a 46 percent increase in response rate,” ing power to process multiple variables, and the ability to says Genalytics CEO Ray Kingman. “Two hundred franchi- personalize marketing messages. Speaking to people in sees shifted their ad dollars away from the yellow pages much smaller groups gives them the individual attention and into very targeted direct marketing.” The company saw they want and allows for a custom message which, when a 105 percent increase in ROI as a result. designed correctly, increases the chances a lead will turn into a customer. Finding customers by how they behave, not who they are One company that benefits from personalizing messages Behavioral marketing, transactional marketing, attitudinal for a handful of customers at a time is Digital Insight. The marketing. They all revolve around observing the customer, custom content provider, recently acquired by Intuit, cre- and can be highly valuable even when the information can’t ates personalized marketing campaigns for credit unions be used to identify a specific person. “Companies [should] and small banks that can’t compete with the build opportunities into a program to interact budgets of such behemoths as Wachovia, Tracking behaviors online with customers to enrich the understanding of Bank of America, and Chase. To accomplish and serving up relevant their ultimate needs,” Peppers says. “Whether that, Digital Insight customizes messages for advertising focuses on they prefer more choices, how they want to 2,000 different financial institutions whose customer needs instead be contacted; those helpful things in a behav- customers have little in common. of customer traits. ioral database.” “The ability to customize on this level is rev- One place this insight is useful is in TV olutionary in terms of these small banks having access to advertising. Like many companies, some local Ford dealer- this kind of technology,” says Diane Stuckey, vice president, ships advertise on television trying to reach as many people database marketing. “The major changes in computing in a zip code as possible with network and cable ad buys. power mean we’ve shifted from mass marketing on our Aside from asking everyone who comes in if they saw the schedule to personalizing messages on the customers’ ads, there was no way to know if they were reaching the schedules.” Using ClickTactics to create interchange- right people. As a result, many of the dealers in the North- able parts in their marketing messages, Digital Insight can east are using Navic’s Admira product via cable and satellite accommodate five age segments, 11 message themes providers to target viewers and offer interactive advertising. (from environmentally conscious to patriotic), and deliver Admira measures impressions via set-top box information, communications via the customers’ preferred channel. and allows viewers to opt in for information about Ford and Because of constantly updated transactional and prefer- other sponsors via their remote control. ence data, the banks can also monitor their customers’ “Back when television was appointment-based, it was financial state to immediately detect risk of defection. For effective to buy a time slot and know the demographics of example, if they begin paying fewer bills per month online who you were getting,” says John Hoctor, vice president of that may indicate they’ve opened an account elsewhere or business development and marketing. “Today with TiVo taking have experienced an income decline. away viewers...that’s no longer the case.” Instead of buying a Sometimes segmenting customers down to individual 30-second spot during Monday Night Football, for example, traits isn’t enough, especially when location is the most Navic tracks who watches Monday Night Football and then important difference between a company and its compe- targets those consumers at various times of the day, billing by tition. Adding insight beyond demographics improves the impression rather than by the time the ad was shown. After a chances of boosting response rates. For example, one viewer has responded to one type of ad, he can be targeted cleaning service that used to advertise in the yellow pages by companies seeking a similar customer base. The metrics and sent direct mail to customers who earned more than for interactive television advertising are very similar to online $100,000 per year was able to target further based on metrics, with clicks or leads as the goal.From the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 8
  9. 9. Ford and other car companies that employ such a model ask recommendations. As a result, conversion rates improved customers to select what kind of car they might be interested in the double digits and customer service receives fewer in during commercials, then follow up on the lead with direct calls. “The ability to keep customers from having to search mail and sales calls. The immediate results also allow them to through pages and pages of products is especially help- refine target groups to increase the likelihood of responses. ful in our market because there are just so many choices,” Tracking behaviors online and serving up relevant adver- Nashif says. “We want to make it easy for our customers tising focuses on customer needs instead to become educated and make relevant com- of customer traits. US Appliance, an online “We want to make it easy parisons when making decisions.” retailer offering more than 7,000 products, for our customers to be- Not every source of customer insight will needed a way to help customers sort through come educated and make be right for every company. The most likely everything available without individual sales relevant comparisons answer is that some combination of behavioral calls. “I didn’t want to just sell everyone the when making decisions.” targeting, micro-segmentation, and online same items,” says founder Joe Nashif. “I data gathering will yield the highest results. wanted to show them what was popular and they might No matter how you collect, analyze, and act on customer like, and then have the functionality of cross-selling without information, the most important thing to remember is that having to use more salespeople.” building a relationship is still important. If increasing sales The company added recommendations and “most popu- is the only reason you want to learn more about the people lar” features to the site using software from Baynote. Now who use your products or services, the effort will fail. when customers look for a product, the search automati- “If you want to learn about customers’ needs and desires to cally narrows down their selection based on what they’ve serve them better and bring them value, you’ll sell more stuff, said they prefer and what other customers have purchased. but the overall objective has to be building value,” Peppers & The software doesn’t recognize a trend unless at least seven Rogers Group’s Peppers says. “That’s the first and last ques- people choose the same thing, so there are few obscure tion you have to ask with any of these activities.” nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 9
  10. 10. Retail Marketing “next” Practices Multichannel Marketing Grows Up Featured in 1to1 Magazine The shift in marketing budgets from traditional channels to digital channels will continue to rise this year, according to The recession has forced consumers like you and I to be a recent report from ExactTarget called “2010 Marketing more selective. If we are not getting a good experience, Spend.” In fact, 66 percent of marketers surveyed reported we are looking elsewhere for that good experience. that they will increase their digital marketing budgets. The report is among a mounting list of evidence that multi- channel marketing is moving to the forefront in organizations. Vineyard Vines gets a cross-channel view of customers Fueled by the recession and the rise of social media, compa- Vineyard Vines, a specialty apparel retailer, started to ad- nies are increasing their budgets and shifting their resources dress its cross-channel challenges in 2007 when its nine to focus on multichannel, with the goal of delivering a consis- retail stores, catalogs, contact center, and Internet opera- tent experience to customers. tions grew so rapidly that company executives realized they Mark Fodor, CEO of CrossView, explains that if companies needed a platform to manage it all. In addition, they needed don’t obtain a single view of their customers, they cannot ef- a way to analyze and leverage the data flooding in from the fectively market to them. “A lot of retailers are disappearing,” channels. “We wanted [customers’] preferences in one place Fodor says. “The recession has forced consumers like you to make shopping easier, and so we can have a clear picture and I to be more selective. If we are not getting a good expe- of our customers,” says Dave Ruback, director of IT. rience, we are looking elsewhere for that good experience.” In 2007, Vineyard Vines deployed CrossView’s cross- Unfortunately, the same challenges that plagued organiza- channel solution. Then in a phased approach, starting in July tions during the past decade and kept them from achieving 2008, the retailer integrated the contact center and then the true multichannel integration still loom today. Data silos, or- website in September 2009. “Quite simply, we rolled out this ganizational misalignment, and ailing infrastructures are the system in phases because it made the most sense strategi- typical culprits in blocking channel integration. cally based on our available resources,” says Lindsey Worst- “With the rapid acceleration of channels, what is per- er, director of brand communications. The last channel—the ceived as an opportunity on one hand is frustration on the POS systems—will be integrated this summer. other hand,” says Jeff Chamberlain, vice president of prod- Ruback says the marketing team concentrates on consoli- uct marketing at Aprimo. “The pressure on the marketing de- dating customer information across channels and sending partment has intensified to prove ROI, and it continues to be communications with offers that match customers’ prefer- a big challenge to manage that with all the new channels.” ences and shopping history. One of the goals is to encourage CrossView’s Fodor advises companies not to integrate customers to use different channels. “We feel there’s value in all channels at once, but instead take a phased approach turning customers into cross-channel customers so we can to a cross-channel strategy, integrating one touchpoint at a target them a multitude of ways,” Ruback says. time into a marketing platform. “Cross-collaboration needs For example, online shoppers are presented with in-store to exist,” he says. “At the end of the day, you can have the offers and retail store shoppers receive coupons to shop on- same promotion, but if the customer starts in one channel line. While Vineyard Vines has yet to calculate ROI, the retailer and then gets something else in the store, it’s a fragmented expects these changes, as well as improvements to the Web experience.” store will increase customer satisfaction and sales, as well asFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 10
  11. 11. accelerate time to market. “From a loyalty perspective, as we er records, but had no way to analyze or leverage all the grow, we definitely want to make sure they’re getting a great data. David Rebolledo, loyalty program and CRM manager experience that is consistent,” Ruback says. at Grupo Posadas, says that during the past four years the company has evolved from a product-focused organization TNA Wrestling relies on multichannel as a differentiator to a customer-focused one. That transformation required TNA Wrestling, which launched in 2002, wanted to deliver a new tools that would help leverage its customer data to consistent experience for its customers from day one, and improve the customer experience. In addition, when Grupo needed to stand out from its competitor WWE. At the start, Posadas sent various marketing communications to custom- TNA was focused primarily on building its database and em- ers, the company didn’t know which was the most effective ployed a few vendors that sent out SMS and email blasts to in driving revenue. As a result, it was becoming difficult to promote its events to its opt-in customers. encourage repeat bookings. “The thing that we had to solve Soon after, however, TNA increased its pro- was ‘how we can use the data to improve motions to include corporate initiatives, tele- the customer experience in our communi- vision air times, pay-per-view specials, and The thing that we had to cations and hotel…in every single point of live events via Twitter, Facebook, emails, text solve was ‘how we can use contact with them,’” Rebolledo says. messages, its website, and television ads. the data to improve the With the help of Neolane, the hotelier now Dan Stevenson, director of marketing at customer experience in our automates its email campaigns, personal- TNA Wrestling, says the database quickly communications and hotel… izes the messages to a variety of segments grew beyond what the vendors could handle. in every single point of con- (e.g. high-value customers, most recent visi- In addition, he says, the company wanted to tact with them.’ tors), and tracks the results across channels. bring all marketing outreach under one roof Grupo Posadas can track whether custom- and start using geo-targeting to reach the ers who receive the email offer book the right customers for communications like invitations to attend trip through another channel like a travel agency, because live events. “It’s a lot of different communications points to hit the platform integrates all its interaction channels. Custom- our consumers and we looked for a way to control it and bring ers receive up to four email campaigns per month, which it in-house,” Stevenson says. include offers based on preferences indicated in ongoing A year ago the company began using Knotice on-demand customer surveys. software to power a direct digital marketing strategy that In addition, the direct mail campaigns feed off the same in- spans email, mobile, and Web channels. Today the compa- tegrated data as does email. As a result, marketing now sends ny markets to 80,000 customers in its email database and the most relevant information to customers, such as special 100,000 in its text database, and the messaging is consistent offers for customers’ preferred accommodations. Marketing across channels and targeted based on geographies. “We’re also can track how customers respond to offers via direct seeing a lot of results like knowing who the fans are versus a mail. The next piece of the strategy includes adopting mobile broad stroke that radio and TV gives,” he says. in the second quarter to send customer surveys. Stevenson reports an increase in attendance at live events The benefits so far have been clear: Increased profits in and a jump in television ratings, as well as a rise in website bookings and reservations and a 3 percent increase in cus- traffic, since improving its multichannel marketing efforts. He tomer satisfaction. In the past, email marketing deliverability says the company’s growth strategy will focus on sending was 85 percent. Now it’s 96 percent. In addition, open rates customers the right messaging. As a result, he plans to see were 12 percent and now they’re 22 percent; click-rates grew even greater attendance, an increase in pay-per-view buys, from .9 percent to 5 percent; and most important, conversion more merchandise sales, and higher Web traffic in the future. rates jumped from .1 percent to 1.7 percent. That means for every 100 customers, 1.5 books through an offer. Grupo Posadas tracks 5 million records across channels “We had a bunch of data, but we weren’t using it,” Re- With more than 100 properties in South America under bolledo says. “Now that we are using it correctly we have seven brands Grupo Posadas amassed five million custom- great results.” nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 11
  12. 12. Retail Marketing “next” Practices Pushing the “Buy” Button in the Brain Featured in 1to1 Magazine The most powerful and addictive sound in the world is a Today we know for a fact that 83 percent of all baby giggling. This is the conclusion Martin Lindstrom drew decisions we make every day are made in the in his book Buyology, the result of a three-year neuromarket- non-conscious part of the brain. ing study on 2,000 individuals worldwide to identify the ef- fects of brands, commercials, logos, and advertisements. However, the second and third most powerful and addict- ence associates red with the brand. “It is the most power- ing sounds in the world may surprise some people. They ful device for Marlboro. They are circumventing the rules,” include the Intel tune, followed by the sound of a vibrating Lindstrom says. mobile phone. These results not only reveal how the human Roger Dooley, author of the blog Neuromarketing, contends psyche has been greatly influenced by commercialism, but that while Marlboro’s strategy is powerful, its association with they also shed light on the emerging field of neuromarketing, red wouldn’t work without years of advertising behind it. which studies consumers’ sensory, motor, cognitive, and af- He adds that marketers are aware of the emerging space fective response to marketing stimuli. to varying degrees, but they still rely mainly on focus groups “Today we know for a fact that 83 percent of all decisions and surveys for market research, which he says fail to gauge we make every day are made in the non-conscious part of the more subtle nuances like why a customer bought that the brain,” Lindstrom says. “That’s fascinating because 85 car or that can of Coke. This is due to “cognitive bias,” he percent of communication is aiming at the conscious part of says. “People can’t always explain why they buy it,” Dooley the brain. This is a tipping point.” says. “When asked why they drink Budweiser, they may say According to a study by Gregory Berns, Ph.D., a profes- they like the taste…but people develop a brand allegiance sor at Emory University, consumers make buying decisions from a host of factors ranging from advertising to their ear- based on a fight between the dopamine neurotransmitters lier experiences with the brand.” in the center of the brain, and the frontal lobes, which deal This knowledge will help marketers create products and with the future. As a result, the brain wages a battle between services designed more effectively, and create marketing these short-term rewards systems and longer-term planning campaigns focused more on the brain’s response. Brain- systems. scanning technologies like EEG and fMRI (functional mag- Despite the recent publicity around Berns’ theory and the netic resonance imaging) layered with biometrics technologies increasing volume of psychological literature on the science like eye-scanning devices, are helping some companies tease of neuromarketing, few marketers understand it or how to out these strong emotional components involved with choos- leverage it to tap into the subconscious part of consumers’ ing a brand. brains. Even so, how deep of an impact can subconscious Such forward-thinking organizations recognize what Lind- branding make on customers? strom had determined from his study: The sense of smell Lindstrom thinks a great deal. Marlboro, for example, no and sound are more impactful than sight. Consequently, longer adds its logo to its Forumla 1 racing cars in Europe. Lindstrom recommends that marketers experiment with Instead, the company relies on its fiery red racing cars to other marketing strategies and migrate away from a “logo- generate enough cravings for tobacco because the audi- obsessed world.” “I’m convinced that the logo is one de-From the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 12
  13. 13. vice, but branding is a lot of other signals,” he says. with smell if the last experience wasn’t a good one. Then you Some brands are doing just that, Lindstrom says, and are won’t be doing yourself any favors by evoking that experi- experimenting with new methods of communication, relying ence,” he says. on non-conscious symbolic placement, or “smashable com- ponents,” as he refers to them. He offers Apple as an example. The new generation of branding In the movie Wall-E, there is a robot-like device that coinciden- Academic interest in neuromarketing is growing, and while tally resembles the iPod and even emits the iPod trademark it’s still unknown to some marketers, Dooley expects to see sound. Although Lindstrom has not received confirmation a larger spotlight on the science in coming months because from Apple that the company did indeed use symbolic place- of increasing experimentation with it in large corporations. ment in the movie, Apple also has not denied the claim. This, he says, will spur case studies from which the market- Other brands rely on signature scents to build brand asso- place can learn. ciation. Starbucks, for instance, has consciously created an Lindstrom believes this recognition will lead to three trends: olfactory environment in its stores with the scent of brewing the transfer of brand ownership to consumers, a realization coffee, and Singapore Airlines has created a unique signa- by marketers that the Holy Grail is not their logo, and a move- ture scent that provides an olfactory cue for passengers. ment to appeal to the non-conscious part of consumers’ brain. While these scents go far to provoke strong brand as- “There’s no doubt that the whole concept of ‘logoing’ will shift sociations, Dooley cautions that they must also go hand in to the consumer,” Lindstrom says. “Marketers will start to dis- hand with good service. “You can’t really market a product tribute a whole new generation of branding.” n Retail Marketing Best Practices Deciphering Customer Data Featured in Customer Strategist Any company can collect data; all it takes is a customer base, input fields, and a database. All-State Legal has all We struggled with the analytical skill to have those things, which allowed for the extensive collection of actionable insight into our customer data. customer information. However, drawing insight from that data proved far more difficult. Although it is a relatively small company, it has complex data analysis needs because it staff, but we struggled with the analytical skill to have ac- provides stationery and printing supplies to the legal indus- tionable insight into our customer data,” says Susan Jacobs, try through four sales channels. All-State Legal’s director of marketing and client services. While adept at gathering customer information and asking In March All-State Legal partnered with Peppers & Rog- the right questions, All-State Legal lacked the analytics ca- ers Group’s (PRG) managed analytics team to develop a pabilities to capture nuances in its customer data that would strategy for best utilizing the wealth of customer data the improve its service levels. “We have programmers and IT company had collected over the years. While it serves aFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 13
  14. 14. homogenous vertical market (90 percent of its customers engaged with the customer). By analyzing past orders and are law firms), All-State Legal customers’ needs vary greatly. publicly available data, Jacobs and her team can see which “We expected customer value and behavioral characteris- customers are late for placing their next order, as well as tics to be very similar,” says Lale Dagli, a PRG consultant which customers’ purchases had significantly decreased. who worked on the project. “We were surprised how differ- Using the segmentation and churn analysis, All-State Le- ent they, in fact, were.” High-value customers, for example, gal implemented marketing campaign rules to target different differed greatly in their order cycle stability and their channel customer groups with different messaging. The messaging usage. Some used the Web exclusively, while some ignored was also targeted based on a customer migration analysis, it entirely. the results of which predict how cus- Once Jacobs and her team were armed with tomers will move up or down the value In many cases we hold onto the insight into how customers behave and chain based on their lifecycle stage and customers for decades, which provide the most value, they developed a behavior. Jacobs and her team analyzed but lose pieces of business seven-point plan to improve sales and market- the responses by examining the impact along the way. Focusing ing efficiency, reduce customer turnover, and on sales by channel, product, and cus- our attention on customers increase service levels. “We knew exactly what tomer. So far the most noticeable result who are at risk for defection our business problems were, but we couldn’t is tracking how long conversions typically or reduction is a significant take a particular problem and identify the cus- take; as a result, Jacobs has eliminated milestone for us. tomers who were most vulnerable or strongest customers from the mailing list who don’t in that category,” Jacobs says. “There was no respond within that period. way to pinpoint SWOT (Strength, Weakness, Opportunity, Lastly, All-State Legal developed rules around cross- Threat) aspects in our databases.” selling within its inbound call center. Every call center in- Segmenting customers was the solution. Jacobs imple- teraction includes a promotion for the “next best product” mented a customer segmentation model based on both for that customer, determined statistically, based on similar customer value and behavior, using PRG’s analysis of or- customers’ purchasing behavior. That information is then der data, invoice and shipping logs, and firmographic infor- handed off to the field sales team for follow-up. “In all of mation (i.e., customer data). Customers’ value scores are these implementations, we plan to measure over time what directly related to revenue generation, but their behavioral the impact is by comparing our metrics to before we be- scores include statistics like dollars per order, order cycle gan using analytics,” Jacobs says. “For every dollar that we stability, and channel usage. Based on the two scores, all spend on marketing or data analysis, is it developing more active customers fell into one of seven value segments. sales, profit, or some combination of the two?” All-State Legal had a good idea of which customers were Ensuring each dollar is effective means not only studying valuable before, but Jacobs says that adding a behavioral customer data, it also means consistently gathering new aspect to the mix provided a deeper perspective, especially and updated information to avoid wasteful spending. “Data for the sales staff. integrity was a challenge in the beginning because most of Next, the company focused on reducing churn by identi- the data tables and definitions were outdated,” says Onder fying customers who were most at risk, as well as possible Oguzhan, partner, Peppers & Rogers Group Managed Ana- actions to reduce vulnerability. Churn included not only cus- lytics. “Now that it’s current, segmentation and churn anal- tomers who might end their relationship with All-State Le- ysis are repeated monthly, and campaign analysis data is gal, but also those who might reduce their buying. “In many updated quarterly.” All the analytics reports, including the cases we hold onto customers for decades, but lose pieces customer segmentation and churn analysis, are rerun on of business along the way,” she says. “Focusing our atten- All-State Legal’s database regularly to ensure that changes tion on customers who are at risk for defection or reduction to customer information, including those made by the sales is a significant milestone for us.” and marketing teams, are factored into the analytics. The team identified who was most at risk by analyzing Since much of the analysis and segmentation occurred order cycle and recency (i.e., how recently All-State Legal this summer, All-State Legal doesn’t yet have updated met-From the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 14
  15. 15. rics to gauge the results of the project. Jacobs says she they’re representing. “Our operations team is adopting seg- expects to have measurable results soon, and is optimis- mentation, particularly with priority scheduling for high-value tic about the program’s success. Regardless of the hard customers,” Jacobs says. “Our service team has taken a metrics, she says the project has given the company the similar approach, removing or reducing fees for our most opportunity to look beyond how the marketing and sales valuable customers as well.” teams use customer data, and to implement changes on The data is too fresh to measure changes in customer an operations level to make the whole company more cus- satisfaction, but Jacobs says she expects it will rise as a tomer centric. result of these initiatives. “This has done something amaz- Every department within All-State Legal now views cus- ing for how we view customers internally as an enterprise,” tomer data in a different light. The company thinks more like she says. “We’re much more conscious of where we spend its clients, looking past numbers and seeing customers the financial and human resources to optimize the experience same way lawyers see past facts and relate to the people for customers.” n Retail Marketing Best Practices Prescribing an Updated Drugstore Shopping Experience Featured in 1to1 Magazine Here’s a customer-experience pop quiz: What does it take to keep your customers engaged? a) a refreshed, updated There are huge benefits for retailers who take look; b) unique brand offerings; c) better customer service; chances these days. or d) an emotional connection. For three major chain drugstores, the answer appears to be: e) all of the above. CVS/pharmacy, Duane Reade, and of ibuprofen while there, some chain drugstores today are Walgreens have all made changes in recent years that are adopting a more customer-centric approach. These retailers enhancing the customer experience and bringing “one- are rejuvenating their stores in an effort to become exciting stop shopping” to a new level. “There are huge benefits for places to shop—places where consumers can visit a health- retailers who take chances these days,” says Mike Gatti, care provider, buy a $65 jar of face cream after consulting executive director of the Retail Advertising and Marketing with a beauty advisor, and pick up a fresh sandwich or a Association (RAMA). “There is so much competition that it’s bottle of wine, all in one visit. important to cut through the clutter, do the research, and CVS/pharmacy, for example, has expanded its beauty find out what your shoppers really do enjoy and want.” and skincare offerings with in-store Healthy Skincare Cen- Far from the old image of a chain drugstore as a place ters and a stand-alone beauty concept store, introduced in where customers went merely to have a prescription filled, 2008, called Beauty 360. (Beauty 360 stores are connect- and maybe pick up a tube of cheap mascara or a bottle ed to CVS stores by a breezeway for convenience.) NewFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 15
  16. 16. York–based Duane Reade (recently acquired by Walgreen ing learnings from our early rollouts to improve the offerings, Co.) created its own upscale, in-store beauty shop, called and it’s produced good economics for the company.” Look Boutique, in select stores. It also has spruced up its Experts say such attempts to differentiate and improve the image over the past two years by updating its logo and de- customer experience are critical for chain drugstores, whose cor, reformatting stores with wider aisles and lower phar- close physical proximity, comparable mix of merchandise, macy counters, and adding walk-in health care. Currently, and similar expectation of service from customers makes it 30 stores have the new design, with an additional 30 set to a challenge to differentiate. “They’ve made themselves very be remodeled or opened this year; three stores have Look convenient, but they’ve also allowed shoppers to just shop Boutiques, with four more slated to open in July. the sale,” says Candace Corlett, president of WSL Strategic For Walgreen Co., improving the customer experience Retail. “We know from our ‘How America Shops’ research that at its more than 7,000 stores is a key company initiative, cross-shopping is huge: 56 percent of one chain’s shoppers dubbed customer-centric retailing (CCR). In fact, CCR is [also] shop another chain.” Without an emotional connection, so important to the company that President Corlett argues, “they’re indistinguishable and CEO Greg Wasson addressed it in detail from one another. Experts say such attempts during a conference call to report its second- Retailers like Starbucks, Anthropolo- to differentiate and improve quarter earnings back in March. gie, and even Abercrombie & Fitch have the customer experience are “As we’ve said from the beginning, we’ve done a good job of separating them- critical for chain drugstores. looked at CCR as a four-way win,” he said dur- selves emotionally from their competitors, ing the call. “It will improve sales, it will reduce Corlett adds, and drugstores like Duane working capital deployed, it will take work out of the stores, Reade seem to be taking their lead. “They’re creating an in- and it will provide a better customer experience with greater store experience that shoppers want to connect with. That relevancy and efficiencies for our shoppers.” strategy of creating an emotional link to shoppers is the key Wasson also described the four key drivers of CCR: op- to successful retailing.” timizing existing assortments by identifying best-selling, RAMA’s Gatti agrees. “Customer experience is a big high-value products and eliminating others (roughly 3,500 part of any shopping experience in general. If a customer SKUs per store have been eliminated); improving category walks in and isn’t immediately connected to that store or the and product adjacencies to make shopping easier—some- brands in that store, she may not want to come back. [But] if thing Wasson called solution selling; improving sightlines that same customer comes back after some changes have throughout the store; and finally, updating stores with new been made and notices softer lighting, more products that décor, contemporary colors, and signage. are organized in an effective manner, and friendly staff, she The CCR concept has been rolled out to 700 stores, at a is more likely to come back again and again.” cost of $40,000 to $55,000 per store; parts of the concept That’s important any time, but especially right now, when have been implemented across the chain. New product of- many shoppers are still feeling pinched financially. “We ferings like beer and wine, for example, are already available know from our research that shoppers are pulling back and at more than 2,500 stores. taking the cautious pause, saying do I really need that?” But according to Wasson, the benefits go beyond the new Corlett says. “They’re trying not to browse when they’re in a offerings. The initiative has decreased the amount of out-of- store. So all of this translates to the need to give shoppers stock products and the time employees spend restocking— more reason to spend and distract them from their budget, which in turn allows them to focus more on customer ser- and all of that has to do with emotional connection.” vice. More customers are saying the converted stores feel In some cases the changes are allowing these stores to open and spacious and are easy and pleasant to shop in, compete not just with each other, but also with retailers like and sales in pilot stores are up. Sephora and department stores. “Drugstore models, like “Our early results absolutely show we’re moving in the CVS’s Healthy Skincare Center and Duane Reade’s Look right direction,” Wasson told conference call listeners. Boutique, are completely changing the face of beauty re- “Customer satisfaction has been positive, we’re incorporat- tailing and blurring the lines between mass and prestigeFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 16
  17. 17. distribution,” says Jacqueline Flam Stokes, director of mar- Still, there’s work to be done. To date, many of these keting and sales for Lierac Paris, an upscale European skin- changes have been rolled out to just a small percentage of care brand that is sold in 700 CVS/pharmacy Healthy Skin- stores. Corlett says the changes need to come faster. “Shop- care Centers, as well as in Duane Reade’s Look Boutiques. pers don’t just compare one drugstore to another; they com- “Consumers today are looking for variety and convenience. pare a drugstore to the specialty home store that they were in They are looking for quality products and good advice with- two hours ago. Innovative retail keeps ratcheting up shoppers out a lot of window dressing or hard selling, and drugstores expectations. And the last thing you want them to do is cross are serving up just that.” your threshold and ratchet down their expectations.” nRetail Marketing Best Practices Robert Pearson, Vice President of E-Commerce, Future Shop Featured in 1to1 Magazine Robert Pearson knows that true competitive advantage oc- We leverage insight to all areas of the company, includ- curs through the customer experience, not products or adver- ing buyers, merchants, marketing, and operations. tising. Pearson is vice president of e-commerce at electronics retailer Future Shop, a subsidiary of Best Buy Canada and Canada’s largest retailer of consumer electronics and com- The online community is one area that Pearson relies on puters. With both physical stores and an online presence, to create a continuous feedback loop to improve the cus- Pearson’s goal is to provide a personal customer experience tomer experience. “We leverage insight to all areas of the no matter how a customer interacts with the brand. company,” he says, including buyers, merchants, marketing, “The way the brand represents itself is through product and operations. Combined with customer surveys and feed- experts,” Pearson says. “When you walk into a store, you’re back from the sales floor, the company gains an understand- greeted by an expert who helps you with any questions or ing of how it can better serve the customers’ needs. “The purchase decisions.” His mandate is to replicate that personal online community is a very rich tool for accomplishing that,” in-store experience online and ensure that each customer is he adds. For example, customers posted complaints to the served by a product expert. Customers visiting Futureshop. community message board about the user interface on a Fu- com are greeted by a product expert avatar named “Aaron.” ture Shop private label television. The product manager took Customers can ask a question and Aaron will give answers the information back to the engineers in China where it was and guidance. built, and the engineers acted on the feedback to make the Extending its online reach even more, Pearson oversees interface easier to use. the company’s online community, a network of 75,000 cus- “What I’m an advocate of is to look at the business from tomers, employees, technology enthusiasts, vendors, and a customer perspective,” Pearson says. “I stop myself con- product experts who share insight. People can post ques- tinuously, take myself out of my role, and look at our ac- tions about products, services, or usage to be answered by tivities from a customer perspective. And I coach and train anyone in the community. “They can rely on advice around my team to do likewise. It really makes you look at things the purchase of an item, before and after,” he says. differently.” nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 17
  18. 18. Retail Marketing Best Practices Barrie “Baazz” Young, President of Sales and Franchising, Snap-on Tools Featured in 1to1 Magazine Founded in 1920, Snap-on Tools has grown into a $2.8 billion enterprise with 4,000 franchisees operating in 138 countries, It’s important that we are constantly trying to understand selling Snap-on’s 14,000 products. What differentiates Snap- those things that are important to our customers. on from its competition? Rather than traditional retail stores, it operates out of white trucks emblazoned with the Snap-on will recommend them and the franchisee to friends and col- logo. So how does the largest non-food franchise system in leagues. One of the things we know and have learned is…not the world maintain an understanding of the end-user custom- all customers are the same. We’ve got customer technicians er? Here, Young discusses how. who have been doing it for 40 years and they’ve experienced that their customer groups like different things. It’s important What makes Snap-on unique? that we are constantly trying to understand those things that Certainly we have a great product and we’ve become fa- are important to our customers. mous for quality…but we have a unique one-to-one rela- tionship with the franchisee and his customers. There are Do you have high customer satisfaction from these not many companies in which the franchisees have a close relationships? and formidable relationship with their customers. It’s not What we’re working on right now is [finding] a way that our unusual, and in fact it’s very common, that franchisees franchisees can easily serve every one of their customers know about customers’ families and how their kids are do- and measure the customer experience and identify how ing in school. Our customers enjoy that and depend on that they...can deliver better customer service. We’re coming up relationship. with a tool to enable them to survey every single one of their customers. We think it will be...the next step in how we will It’s almost like the franchisees are customers’ personal deliver best-in-class service. assistants. To that end, our franchisees are not just the deliverers of How has the business changed since 1920 in terms of products, but also someone to provide a level of expertise. the technology the franchisees can leverage? It’s true that our franchisees have a good understanding of The business model is similar, but a great deal has changed our customers’ businesses and can anticipate their needs in terms of communications and technology. On board our to some degree. The expectations of the customer nowa- mobile stores is a sophisticated computer system that is days are [about speed]. People want to take their car into a connected wirelessly to Snap-on’s headquarters. [Franchi- workshop and get it back the same day. sees] have a mobile information center that allows them to get ahold of information quickly. There’s also a great deal of What type of customer service training do the franchi- change, particularly around the speed of communication. The sees receive? franchisee can not only search; he’s a phone call away from a When they first join us, we give them a week of formal training national customer care center. We think about our customers at the Snap-on University in Dallas. Once that is completed, all the time. We like to think we don’t just talk about it, but we a specialist spends the next three to five weeks introducing live it every day. We know that without our customers, our them to their customers. In terms of customer training…we franchisees can’t be successful. And without our franchisees’ explain the value of an “apostle customer”—someone who success, we can’t be successful every day. nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 18
  19. 19. Retail Marketing Best Practices Scotts Gets to the Root of the Problem Featured in 1to1 Magazine Executives at Scotts Miracle-Gro saw the potential of cap- turing the data from the company’s 1 million contact center The whole secret was we collected this analyzed data calls per year and started acting on the information a few and served it up to [sales] on a silver platter. years ago. Ed Billmaier, senior director of relationship and interactive marketing for the provider of lawn and garden products, says Scotts established a system of coding that tions, which provides the system that powers Scotts’ busi- scores every piece of data—for example, it scores against ness intelligence solution, says it’s important for companies 1,600 “reason” codes to track issues, such as regions, var- to act quickly without involving IT. “It often takes a lot of mints, and plant diseases. The goal of the scoring was to time to be responsive to a market. It’s imperative to have enable Scotts to leverage the data strategically. information on the fly.” According to Billmaier, the company began by creating To support the targeted sales initiative, Scotts has devel- a consumer insights alerts (CIA) group. The marketing de- oped an email reminder service to customers in affected partment operates CIA, which includes a full-time analyst areas to tell them how they should treat the particular in- examining opportunities in the coded data. festations. Currently 750,000 people are registered for the Scotts then started analyzing and acting on one particu- emails. lar code—infestations. For example, if the analyst notices Future plans include launching a public service announce- an increase in calls in Florida about fire ants, CIA creates ment via radio broadcast next year to warn customers of a presentation and pushes it to the sales force. The sales approaching infestations and (like the emails) to offer treat- team from the affected area assembles materials, such as ment advice. Beyond radio, Scotts is looking at the potential a map that depicts the intensity of the ants, and then takes of leveraging mobile marketing to send alerts and encour- them to the retailers in the area to show the infestation’s age customers to download RSS feeds. Also, its website proximity. The result? The most recent project yielded a will eventually offer automatic infestation alerts tailored to $400,000 increase in sales in two weeks. “The whole se- customers’ plant purchases. If, for example, a customer cret was we collected this analyzed data and served it up grows roses and lives in New York and there’s an infestation to [sales] on a silver platter,” Billmaier says. “We didn’t headed her way, she receives an alert when she logs on to need a whole IT group.” Scotts’ website. In addition, Scotts shares the data with a major home im- It only takes one bug to destroy a customer’s hard work, provement retailer (Scotts declines to mention the name), so for Scott’s, the decision to become more analytical so the retailer can stock products based on approaching made perfect sense, both for customers and the compa- infestations. Joe Sanda, president and CEO of Astute Solu- ny’s bottom line. nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 19
  20. 20. Retail Marketing Best Practices Best Buy Gets Into the Zone Featured in 1to1 Magazine Pity the company that’s so thoroughly penetrated customer awareness that there seems to be nowhere left to go. The likes We’re learning to flex the message to those segments, of McDonald’s and Starbucks have become so ubiquitous that as well as having better timing when we talk to them. their names now serve as shorthand for overexpansion. Which raises an interesting question: When you’ve achieved 100 per- cent brand awareness, what do you do for an encore? and, when Sadler wins a race, bonus Reward Zone points. Such was the issue facing big-box retailer Best Buy. “As On the drawing board are sub-sites devoted to family and we got bigger, there were fewer customers who had not been technology, and a green-oriented site. According to Smith, exposed to Best Buy in some way,” says Matt Smith, vice offering such sites, and continuing to track customers’ be- president of financial services marketing. “Our population of havior, will inform Best Buy on how often to communicate prospects was shrinking quickly, and we needed to find other with customers, via what channels, what kind of information, places [from which] to drive greater revenue.” Enter the Re- and whether they’d like to gather all supplemental materi- ward Zone program. Previously a simple points program—that als like manuals and firmware online. “We want [RZ] to be had cost $9.99 to join—Reward Zone is now actively used to a place that’s truly representational of the engagement with mine customer data and serves as a launching pad for addi- our products and services,” he says. tional loyalty and rewards programs. It’s also now free to join. The company is also trying to engage customers in more “When Reward Zone went free about 18 months ago one-to-one conversations. Unica’s Affinium Suite helps to membership jumped from about eight million to just shy of target marketing messages by customer preferences of what 30 million now,” Smith says. Today the RZ website “is con- they want to receive. The company is also beginning to more stantly updated, and we’ve upgraded the Best Buy website closely examine behavioral data and purchasing activity to to promote the program. We’re also working more to connect spot trends and opportunities. One segment, for example, the online and offline channels with in-store promotions and buys iPod accessories 45 to 60 days after an iPod purchase. by leveraging our Sunday circular, which reaches 50 million But another segment of iPod purchasers buys the same households a week.” Customers are also finding their own accessories within 30 days, including the day of the iPod way to the content, he says, noting that when the RZ site sale. “We’re learning to flex the message to those segments, relaunched as a free site, it attracted some 1,500 custom- as well as having better timing when we talk to them,” Smith ers having 600 different dialogs with Best Buy staff within says. “When you have a big brand it’s sometimes hard to the first 45 days, via nothing more than a tab on the Best know how customers perceive the brand, both on a broad Buy website. scale and at the individual point of contact.” Best Buy is ex- Now starting to collect customer preferences online through amining ways for its stores to talk with its local communities the RZ site, Best Buy is spinning off “sub clubs” aimed at par- in a relevant way. For example, “we might start offering in- ticular sub-segments of customers. In the past year the com- store or even off-site events to provide training information pany added a bonus-points program for customers’ birthday on digital TV conversion in a non-sales environment,” Smith months, as well as a Racing Club, with access to NASCAR says. “There’s a lot of power we’re trying to figure out how promotions, a blog by Best Buy–sponsored driver Elliott Sadler, to unleash.” nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 20
  21. 21. Retail Marketing Best Practices Tully’s Coffee Brews Loyal Customers Featured in 1to1 Magazine For businesses, gift cards—unlike loyalty cards—often pres- Tully’s employees can personalize the customer ent a lost opportunity to interact with customers. experience to offer immediate, relevant discounts But not any longer. Some companies are combining the or present product offers. benefits of both, adding a loyalty component to the gift card model without adding to the points clutter. Tully’s chain of coffee shops may differentiate itself as a multiple campaigns at once, Walker says. “handcrafted retailer serving small-batch roasted specialty Online, cardholders can create a secure login to access coffee,” but its loyalty strategy is progressive. Customers mytullyscard.com, where they can check their balances and register their information when they purchase a Tully’s Cof- replenish their card. “We’re a small, family-operated busi- fee Card, which can be reloaded and used as a personal ness and ultimately our differentiator is the coffee itself,” he account, not just as a gift card. Tully’s works with loyalty pro- says. “Any time we can offer our customers something like a vider Chockstone on the initiative. The chain also still sells loaded card to keep them connected to the brand, we will.” anonymous gift cards as well. As for results, Walker says, “we carefully track our card sales “We launched our loyalty program in 2006 after selling fixed- as a percentage of our overall business. When we started, denomination gift cards before then,” says Martin Walker, vice it was only about 4 percent of our business; today it’s 14 president of marketing and merchandising at Tully’s. “Our offer percent.” Because of that, he says, Tully’s is looking to ex- to customers with the new cards is that if they load at least pand the loyalty program by adding points and incentives $30 onto it, they get 10 percent added for free.” this fall. Customers register their cards in the store or online with Though Tully’s has yet to tie its loyalty program to a credit their name, address, phone number, and email address. It card, it does use its Coffee Card to collect the same type allows them to use the card instead of cash, and Tully’s can of preference data, from which Walker and his team decide track every item purchased, the store it was used in, and when to offer various promotions, what days of the week to at what time of day. Using this information, which pops up offer discounts, and when to reward loyal customers with a on the register, Tully’s employees can personalize the cus- few dollars off. tomer experience to offer immediate, relevant discounts or “We just did a customer survey and overall we got high present product offers. For example, if a customer typically marks for a positive experience,” Walker says. “We had high visits during the morning, a Tully’s associate might offer him scores for cleanliness, friendly service, and order accuracy, discounts on his favorite items as an incentive to return later all things we strive for in this industry. This loyalty program in the day. This is just one option; the customer database builds on that positive experience and gives our customers can be divided into as many segments as necessary to run another reason to come back.” nFrom the editors of ©2011 Peppers & Rogers Group. All rights protected and reserved. 21
  22. 22. About TeletechFor nearly 30 years, TeleTech and its subsidiaries have helped the world’s largest companies achievetheir most ambitious goals. As the go-to partner for the Global 1000, the TeleTech group of compa-nies delivers technology-based solutions that maximize revenue, transform customer experiences andoptimize business processes. From strategic consulting to operational execution, TeleTech’s morethan 45,500 employees drive success for clients in the communications and media, financial ser-vices, government, healthcare, technology, transportation and retail industries. Our companies deliveraward-winning integrated solutions in support of professional services, revenue generation, customerinnovation, enterprise innovation, hosted technology and learning innovation.www.teletech.comAbout Peppers & Rogers GroupPeppers & Rogers Group is a leading management consulting firm, dedicated to helping its clientsimprove business performance by acquiring, retaining and growing profitable customers. As productsbecome commodities and globalization picks up speed, customers have become the scarcest re-source in business. They hold the keys to higher profit today and stronger enterprise value tomorrow.We help clients achieve these goals by building the right relationships with the right customers overthe right channels. We earn our keep by solving the business problems of our clients. By delivering a superior 1to1Strategy, we remove the operational and organizational barriers that stand in the way of profitablecustomer relationships. We show clients where to focus customer-facing resources to improve theperformance of their marketing, sales and service initiatives.www.peppersandrogersgroup.comAbout 1to1 Media1to1 Media is dedicated to helping organizations realize the greatest value from their customer base. Weprovide resources that deliver current and relevant information on the latest thought leadership regardingcustomer strategy and marketplace trends. Backed by Peppers & Rogers Group, the globally-recognizedleader in customer strategy and relationship marketing, 1to1 Media combines thought leadership, fieldexperience, editorial expertise and global brand awareness to deliver the content needed by our audi-ence of more than 150,000 decision-makers and practitioners. The print, electronic and custom publi-cations published by 1to1 Media and Peppers & Rogers Group explore the best practices, trends anddevelopments from companies who are using customer initiatives to drive bottom-line impact.www.1to1media.com