Advanced math must plays an important role in retail marketing, giving retailers like The Bon-Ton Stores the competitive advantage they need to leapfrog the competition, says Mike Hayes, senior vice president of marketing for the 280-unit department store retailer located in 23 states.
“In the last five to seven years the marketing community has really embraced predictive analytics,” says Hayes, who came to The Bon-Ton two years ago from Accenture, a consultant and technology services company. “By using statistical techniques we can build replicatable models in-house to generate insights into customer behavior, and then we can tailor our marketing programs accordingly.”To become a best-in-class marketer, according to Hayes, The Bon-Ton is implementing a number of key analytic marketing projects.
In the beginning of 2007, the retailer brought on SPSS for its primary analytics functions including data mining and customer relationship management. This year The Bon-Ton is adding Connect3 for merchant ad planning and Aprimo for financials and campaign management.“It was our goal to become best-in-class within two years,” Hayes notes. “We are close to that with the major tool sets we’re rolling out in the next year and the key analytic marketing projects we have completed within the past year.
Analytics facilitate more productive marketing
Particularly in a recession economy, retail projects must be focused on making existing spending as productive as possible, says Hayes. To that end, “we are looking at each of the media channels to determine how to increase the performance of each one.” For example, The Bon-Ton conducted an analysis of its 2007 newspaper ad distribution across the country to determine penetration within target consumer groups. “We readjusted the papers accordingly and saved money while increasing the effectiveness of that media.
”The Bon-Ton also is using analytics to improve its direct marketing campaigns. “We are going through testing to find sales per each name mailed and hope to increase those sales with new predictive marketing models.”
At The Bon-Ton, cross-channel efforts are relatively immature, since the company has gone through a number of acquisitions and recently re-platformed several store websites. Within the last eight years, The Bon-Ton Stores purchased Elder-Beerman, the Northern Group from Saks Fifth Avenue, and some stores from Belk, giving the retailer a presence in approximately one third of the U.S. under eight different brand names.
With the transition to new websites, The Bon-Ton is focusing on coordinating marketing efforts between in-store and online. “We know that a lot of our customers enjoy clipping coupons, so for example in our opt-in email program we offer a 50-50 mix of in-store and online-only offers,” says Hayes. During the holidays, The Bon-Ton combined in-store and online efforts through a variety of promotions. Online consumers could find recipes, play games and engage in other “fun” activities, explains Hayes. In the stores, during one three-week period the retailer gave away free Godiva candy bars in which customers might find a 30 percent off coupon. “People really enjoy these fun promotions, and they are coming to the store for those types of experiences.
”The Bon-Ton also draws customers to the stores while donating to charity. During its semi-annual “Goodwill Sale,” the retailer exchanges customers’ donated clothing for 20-percent-off coupons. In 2007 The Bon-Ton collected nine million pounds of merchandise for Goodwill, which translated to $12.5 million in revenues for Goodwill programs.
Being relevant to consumers
The Bon-Ton’s foray into advanced analytics is giving it the edge it needs to compete more effectively. “By upgrading tools and analytics we can segment our marketing efforts and become more relevant to customers.”Department stores, in particular, must reach a number of different consumer segments to be successful. Automating the process with analytics allows retailers to duplicate winning strategies easily and target different market segments productively.