Retailers shift their ad spending from TV, radio and print ads to digital ads.
Keeping customer data in one place can help retailers serve customers more effectively.
Mountain Equipment Co-op already has what many multi-channel retailers are striving for-a single view of all customer data. Every piece of customer information, whether it comes from the e-commerce site, stores or call center, is integrated in one database. As a result, the merchant is able to better focus on the customer and operate more effectively, it says.
For example, the outdoors gear and apparel retailer segments its customers into numerous personas to focus its marketing and promotions efforts. If a customer spends more than $500 a year in more than six product categories, he is labeled an outdoors enthusiast. Or if a customer spends the same amount but in fewer categories, he is labeled an outdoors participant.
The retailer recently was trying to figure out which customers to send a promotion to, along with additional product and store information, and it needed complete and accurate data to ensure customers were properly segmented. It was aiming for outdoors enthusiasts who shop more than one channel.
“The people who shop multiple channels are our most valuable customers and shop more broadly with us. By being able to pull all information together in one place, we’re getting a true picture of activity by individual,” says Georgette Parsons, CIO. “If we had customer information in separate places, we would be segmenting people very differently. Having a single view takes a whole step out of the analysis.”
Mountain Equipment Co-op is an exception to the rule: While many multi-channel retailers are working to bring together all customer data in one place, most maintain it in separate, channel-specific databases. This is not the most efficient and effective way to run a retail operation that should be focusing on the customer, experts say.
“Best-in-class retailers operate a really solid business by building a single system of record for all channels,” says Sahir Anand, a senior research analyst at the Aberdeen Group who specializes in multi-channel strategy and technology. “A lot of retailers put customer data integration on the back burner. But for a retailer, nothing can be more pressing than having an integrated view of the customer if they want to scale their multi-channel operations to an excellent commitment to the customer.”
Not an easy task
Getting that integrated view of the customer, though, is not an easy task, which is why many retailers have yet to take on customer database projects. Such projects take a lot of time and money. Indigo Books & Music Inc., for example, is completing its customer database initiative after almost three years of planning, creating, implementing and testing. And the cost of its project is in the millions of dollars.
Once such a project is completed and a single customer database is ready to go, retailers must educate staff about the importance of having all data in one location in the first place to best make use of integrated customer information.
At Mountain Equipment, 90% of sales come from stores, with 10% from the e-commerce and catalog channels, mostly from e-commerce. This created a bias in thinking among management and staff to focus on stores, Parsons says. But that bias quickly evaporated.
“In seeing through our combined data just how valuable the multi-channel shopper is, combined with solid growth in our online channel, the data has gotten all kinds of staff to realize the power of the web and what it contributes to the company,” she says. “Now people look at the aggregate data when planning things like cross-channel promotions, and put proper focus on the web to make sure things like sufficient inventory for the web channel are properly taken care of.”
From the beginning
Mountain Equipment is a rarity among store and catalog retailers that launched an e-commerce site: It never had separate data silos because it made the strategic decision to feed its e-commerce data into its existing customer database when it launched on the web in 2001.
“We knew from the start we wanted a single view because we want to track every purchase a customer makes, no matter where it comes from. We wanted to do it right, from the beginning, and not have to go back in the future,” Parsons explains. “If a decision is made in any channel that affects how we interact with customers, the combined data forces us right then and there to think about how it will affect all channels.”
Mountain Equipment was founded in the early 1970s, operating stores and a catalog, and launched e-commerce in March 2001. It charges consumers $5 to become a member of the cooperative and thus be able to shop. When its e-commerce site launched, Mountain Equipment had 1 million members; today it has 2 million.
Mountain Equipment gets a rich set of data from a customer’s registration form, which lays the foundation for a master record for that individual customer. Master records, whether created by a customer in a store, on the phone or on the e-commerce site, are stored in the single database. Using registration identification numbers, transactional data from the various channels is added into customers’ master records.
The retailer used middleware from IBM Corp. to integrate data from its e-commerce system, from Escalate Retail, the store point-of-sale system, from JDA Software, and the contact center order entry system, also from JDA Software. Using XML protocols, the data from the three channels is fed into the single database, from JDA. JDA’s retail management system is the backbone for all company operations.
After the fact
Unlike Mountain Equipment, Indigo Books & Music has customer data from its store and e-commerce channels stored in separate databases. Indigo and rival bookseller Chapters merged in 2000. Complicating matters, Chapters’ e-commerce operation, Chapters.ca, had been spun off prior to 2000 and then reacquired during the 2000 merger. So Indigo had customer data all over the place.
Consequently, a few years ago Indigo shaped a new, overarching strategy: Create a seamless customer experience across channels. 90% of its revenue stems from stores; 10% from e-commerce. The foundation of this strategy is its customer database initiative, which is scheduled to be completed during the first quarter of 2009.