February 27, 2009, 12:00 AM

The Broad View

As analytics heads across selling channels, retailers get a non-stop view of shoppers.

Although retail catalogs are still a big business at The Orvis Co. Inc., economic demands are forcing the retailer of outdoor apparel and sporting goods to reduce circulation. It’s a tough call for the brand that started in 1865 as a mail-order house, says Mark Holmes, vice president of information technology, because it risks cutting off valuable customers.

Even in a web world, loyal catalog customers have proven valuable because they spend more, he says. “The importance of the catalog hasn’t gone away,” Holmes says. “We’re proving that someone who gets a catalog buys across our web and store channels, and that the catalog is a material tool for driving people to our retail web site.”

Orvis, which mails dozens of catalog titles to millions of customers, can prove all of that because it’s using analytical data on customer shopping behavior, sales and inventory movement across its multiple channels. The retailer has been able to view the cross-channel value of individual customers, letting it trim its catalog circulation without losing its highest-value catalog shoppers, Holmes says.

“That customer data is gold for a direct marketer,” Holmes says. “That insight into customer history is what really drives our business.”

Progressive retailer

Orvis is one of the more progressive retailers in the use of cross-channel analytics, a process that is still relatively new but growing both in supporting technology and demand from retailers, experts say.

Growth on the technology side of cross-channel analytics is coming from two technology camps-vendors of analytics applications and providers of back-end enterprise software. Analytics vendors including Omniture Inc., Coremetrics, Tealeaf Technology Inc., SAS Institute Inc. and SeeWhy are offering expanded applications for presenting data collected across multiple retailing channels.

Providers of back-end inventory and merchandise planning applications, including Manhattan Associates Inc., JDA Software Group Inc., i2 Technologies Inc., Sterling Commerce and RedPrairie, say their platforms either already support some degree of cross-channel data flow or will, and that they support integration with separate web analytics for combining store sales and inventory data with information on online customer activity.

Like Orvis, more retailers are looking to cross-channel information to help their multi-channel strategies, says Kasey Lobaugh, principal in the multi-channel and direct-to-consumer retail practice at Deloitte Consulting LLP. “This is a hot topic,” he says. “By proving a cross-channel linkage, retailers are able to quickly build a case for investments in the online channel based on gains in the store channel. For every dollar in sales online, roughly $3 of in-store spending is influenced by cross-channel shopping.”

Best Buy Co. Inc. gathered extensive information about how customers shopped across channels during the 2008 holiday season by using Discover OnPremise for Retail, a new web-based cross-channel analytics application from Omniture.

James Fry, analytics manager at Best Buy, said during a presentation on the Omniture application at a National Retail Federation conference earlier this year that the cross-channel analytics produced better understanding of how customers shopped on the day after Thanksgiving, while making it easier to create custom reports.

Omniture says the new Discover OnPremise application helps retailers better understand cross-channel customer behavior to improve merchandising plans and promotions throughout a store chain as well as online. Patti Freeman Evans, vice president, research director and retail analyst at Forrester Research Inc., who has reviewed the Omniture tool, says it offers an unusual capability to quickly produce easy-to-read cross-channel analytics reports. “It tells a visual story in a way I haven’t seen before,” she says.

Driving value

Getting the most value out of cross-channel analytics, however, also requires retailers to have the supporting infrastructure and business processes in place, experts say. “Cross-channel analytics can be crucial to cross-channel retailing success if a retailer has its cross-channel infrastructure set up right,” says Jim Okamura, senior partner at retail consultants J.C. Williams Group.

A retailer needs an effective way to identify customers across channels. And, to act on cross-channel analytics data, it needs supporting operations like real-time inventory updates to enable cross-selling promotions and integrated marketing applications that can automatically trigger promotional e-mails, experts say.

Orvis has taken such steps. It identifies cross-channel activity of many individual customers in multiple ways, such as with network cookies, credit card accounts and loyalty programs. It operates on a technology platform that combines analytics data on web, call center and store sales, which enables it to plan and react to sales across each channel, Holmes says.

Orvis compiles the cross-channel data in a business intelligence application from SAP AG’s Business Objects unit that pulls information from Coremetrics web analytics, Manhattan Associates inventory management and merchandise planning technology, a point-of-sale system from Epicor Software Co., and contact center records. It also integrates this information with its Unica e-mail management system for triggering e-mail promotions based on customer activity.

The system enables Orvis to obtain a universal view of both how customers are shopping across channels and inventory availability. This lets it quickly respond to customer interests with more efficient fulfillment as well as targeted promotions. “If we have a customer who has only purchased our pet products in stores but suddenly buys a fishing rod online, we’ll trigger an automatic e-mail to him promoting fishing gear,” Holmes says.

Keeping customers

The cross-channel analytics data also helps Orvis set a more accurate minimum customer purchasing level when deciding how to trim its catalog mailing list. “A few years ago, we might have cut off a customer from receiving a catalog if she only spent $99 through it in a year, but now we may see she spent a total of $275 overall, including the web, stores and catalog,” Holmes says. “So we can see the customer is more valuable than we had thought.”

The system isn’t perfect, and Orvis will still lose a few good customers when it cuts catalog circulation, Holmes says. But thanks to the cross-channel analytics data, he says, Orvis has been able to minimize those losses while maximizing cost savings.


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