What does a young, single male think about a clothing company that keeps sending him mail-order catalogs for childrens wear? Or a woman who keeps receiving lingerie catalogs who would never dare order such personal items through the mail?
The answer is, nothing were allowed to print.
Unfortunately, the direct-mail business will never be an exact science. But it has been the goal of Eddie Bauer Inc., of Redmond, Wash., to avoid alienating customers by targeting its marketing as accurately as possible. Eddie Bauer has multiple catalogs, ranging from womens wear to sportswear to home furnishings, and recipient lists that range in length from 3 million to 10 million customer names, according to Harry Egler, Eddie Bauers vice president of CRM (customer relationship management). Those figures dont add up to chump change: The cost of printing and mailing catalogs runs up to $1 apiece, Egler said, making prudent spending in the direct-mail business an absolute must.
The problem isnt that Eddie Bauer lacks CRM systems. On the contrary: Each of Eddie Bauers channels—physical stores, direct-mail catalogs and an online store—has its own CRM setup, each of which is a hybrid of proprietary and commercial software. The problem is that the data being generated by each of these channels settles into its own respective repository. Thats meant that, until recently, the company had no unified view of a customers shopping behavior across all channels.
According to experts, Eddie Bauers issue with its incomplete CRM solution is not unique. CRM is great for generating all sorts of customer data, so company employees, be they executives or salespeople, can have customer information at their fingertips, said Sheryl Kingstone, an analyst at The Yankee Group, in Boston. But, Kingstone added, "Most CRM solutions lack the ability to provide deep analysis of data across multiple channels to help companies best leverage that collected data."
Additionally, Eddie Bauers CRM setup "didnt recognize one person shopping in two, or all three channels, as the same customer," Egler said. Instead, the companys view was that of two or three separate customers, which meant that, without merging that data, "one customer could receive two or three issues of the same catalog," he said.
The companys solution has been to strengthen its current CRM efforts by employing a dedicated analytics team to work with a customizable software application from SAS Institute Inc., in Cary, N.C., to help analyze data across multiple channels. The SAS application allows analytics experts to pull data from the disparate CRM systems together to form a unified view of the companys customers.
As a result of the implementation of the analytics software, Eddie Bauer can now regularly generate reports of detailed customer buying patterns that can be accessed electronically or printed out. Such reports can help the company determine things such as why one geographical region has higher sales than others, which types of consumers spend more and why, or why a customer will drive a certain distance to purchase an item in a store instead of buying it online.
Combining data from all three channels also helps the company keep a list of more active customers for its catalog distribution. Each time the company does a catalog mailing, it analyzes its mailing list and generally swaps out about 5 percent of catalog recipients who appear unlikely to buy with about 5 percent of names far more likely to buy, Egler said. "Its that incremental difference that can mean everything for a retailer in reaching profitability," he said.
Egler stressed, however, that using a combination of software and people smarts is the key for Eddie Bauer.
For example, he said, "It was our analytics experts that recognized that returning merchandise purchased through catalogs to physical stores was not a negative thing."
Instead of concluding that these customers were simply unhappy, the companys analytics staff found that those returning catalog merchandise to physical stores were often the companys most loyal and profitable customers, Egler said. Store managers are now expected to ensure that these customers are not treated as a nuisance when they come in to return things.
Heres another bonus of analytics: It can sometimes bring out concepts that are downright counterintuitive to retailers, Egler said. A case in point is a customers tendency to do rapid-fire ordering.
"When a customer buys from you, youre likely to conclude that they wont want to buy again from you any time soon," Egler said. But it turns out thats "absolutely wrong." According to the companys analytical findings, customers are far more likely to buy again if you reach them soon after a purchase, as opposed to waiting a few months, Egler said.
An analytics implementation of Eddie Bauers scale doesnt come cheap, though. Egler estimated that implementation and consulting and training fees ran into the several-million-dollar range.
It took "about a solid nine months of cleaning and migrating data" from the companys legacy systems into the SAS system, Egler said. Data integration is regularly listed as a top challenge for companies implementing analytics, said Yankee Groups Kingstone. But this problem will be less prevalent as more CRM vendors begin to partner with analytical application specialists and as CRM vendors begin beefing up their own analytic offerings, she said.
So far, Eddie Bauer thinks the results are worth it, Egler said. "Its impossible to make things perfect. But you can certainly learn a lot more about making your customers happy along the way."
And hopefully that will mean no more childrens catalogs for young single men—unless, of course, thats what a given young, single man wants to receive. After all, as Eddie Bauer well knows: The customers always right.