In its second-largest acquisition, Amazon buys the company for $970 million.
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A customer could be in one database with an old address and e-mail address, and another database with newer information. And, like most companies, much of the information was flawed, with names misspelled, invalid addresses or duplicate data, such as a customer identified as Jim in one file and James in another. AMR Research Inc. estimates 30% to 50% of customer data in multiple systems across retail companies is dirty, and REI’s data quality was on that order, says Jennifer Cofer, business intelligence analyst for the customer data warehouse project.
“We had to clean all that data, so it’s standardized,” Cofer says. “It’s been a bit of a nightmare. But the end result is nirvana.”
Once fully functional, the data store will let REI deliver highly targeted messages, such as to a customer who signs up for an Adventure canoe trip. “We’ll know what supplies they’ll need and from their transaction history we’ll know what they’ve already purchased from REI,” Cofer says. “Then we can target e-mail them to let them know what they might need for the trip, along with promotional coupons.”
“Before we could see this information, but we couldn’t tie it together,” says Ben Viscon, online merchandising manager. “We could see what you bought online, but to see what you bought from retail we’d have to look into separate places.” REI can track most store purchases to an individual by member number because the 3.4 million active REI co-op members-who receive annual dividends based on their purchases-account for about 85% of transactions.
The data store will maintain the last six years of transaction data, plus the current year’s. Members eventually will be able to access their data online, perhaps next year, Cofer says. Four full-time REI staffers will maintain the database, ensuring data quality and helping REI departments use it effectively
Implementation required 15 to 20 REI employees and outside consultants, including six working full-time. To facilitate easy communication, the company moved the team into a single building and tore down cubicle walls to create an open space.
“We all just sat next to each other, with a big table down the middle. If we needed to have a meeting, we just turned our chairs around and rolled in,” Cofer says.
While not all projects have the scope of Petco’s or REI’s, other multi-channel retailers also have integrated customer data into a single repository in the last few years. Several of those projects required upgrading store point-of-sale systems so they can more easily capture data and exchange it with other systems.
Other retailers will likely have to do the same, based on a January survey of 175 retail companies by Aberdeen Group that found 60% have POS systems older than five years, with 35% being older than 10 years.
The obstacles posed by old POS systems can be as simple as requiring a store clerk to switch to a different screen to capture a customer’s e-mail address, making it less likely an employee would take the time. That was the case at women’s sportswear retailer Title Nine, which deployed a POS system from Micros Retail that provides space for e-mail address and phone number on the main screen. Micros also provides the retailer’s centralized data store, implemented last April.
Having a single vendor for POS software and the data warehouse makes data integration simpler, says Dave Finnegan, chief information officer at stuffed animal toy retailer Build-A-Bear Workshop Inc., which uses systems from NSB Group, now part of Epicor Software Corp.
NSB also provides the sales audit feature that checks each transaction for mis-keyed transaction amounts or invalid SKUs. Build-A-Bear plans to add more data-cleansing technology that, for instance, suggests valid street names as customers type in addresses on the web, minimizing spelling errors.
Build-A-Bear, which operates 370 stores in the U.S. and abroad as well as BuildABear.com, has made headway in identifying customers in store and online with a loyalty program, the Stuff Fur Stuff Club, that offers rewards based on a combination of online and offline purchases. In less than two years, 5.6 million customers have signed up, Finnegan says.
Title Nine store associates ask for customer information at checkout, and explain that being in the retailer’s database allows customers to return or exchange items without a receipt, check out previous purchases, and receive advance notice of sales.
In the past year, the retailer has captured customer data on 70% of transactions in stores, and 94% overall, and has e-mail addresses for 75% of customers in its data warehouse, says Renee Thomas-Jacobs, chief financial officer. Still, the retailer is considering introducing a loyalty program that would have “every customer clamoring to identify themselves, regardless of channel,” Thomas-Jacobs says.
Having data about many customers’ cross-channel behavior opens up the possibility for more effective marketing for the growing chain, which just opened its tenth store and also sells via catalog and the web.
The retailer now knows that 30% of orders from customers who live near stores are placed online, which means the retailer could market to those online customers via e-mail rather than by mailing expensive catalogs, Thomas-Jacobs says. However, she says the retailer would move prudently before taking someone off the mailing list, making sure, for example, that the customer is opening and responding to e-mail offers.
2nd Wind Exercise Equipment Inc., whose 104 stores in the upper Midwest account for most of its sales of treadmills and other exercise equipment, has begun feeding customer data collected in stores into a data warehouse maintained by Juice Media Worldwide’s JuiceMetrIQs product, which then uses e-mail marketing to drive additional sales, including online.
The first e-mail after a purchase thanks the customer and asks for feedback on the buying experience. If customers respond, “we’ll send them a teaser e-mail based on what they bought, saying, ‘Here’s information we think will be valuable to you, and, by the way, people who bought this typically bought this and this,’” says Adam Lindquist, director of business development at 2nd Wind.