With music and movies now available via a quick download to consumers’ desktops, technology has in some ways made it increasingly difficult to bring people into stores, and many entertainment retailers have closed their doors as a result.
Virgin Megastores, however, has turned the tides and successfully morph into a “lifestyle & entertainment” retailer. The retailer has succeeded in large part due its ability to create exciting and innovative promotions to drive in-store traffic, and ultimately, sales. Retail TouchPoints recently caught up with Dee McLaughlin, VP of Marketing, Virgin Entertainment Group, North America, for insight into how technology plays a role in Virgin’s success.
In a retail climate where most merchants are happy with single digit sales increases, McLaughlin report that Virgin is posting double-digit sales gains this year. In addition to continuously innovating in its store experience, she adds that Virgin is now concentrating on strengthening its cross-channel presence as well as expanding the success launch of DeeMcLaughlin 2008.jpgits VIP Rewards loyalty program.
Retail TouchPoints: Virgin is doing well despite the difficulties faced by the music industry. Other stores like Tower have had to shut its doors. How has Virgin transformed to a “lifestyle & entertainment” retailer, and how is that central to its success?
Dee McLaughlin: The consumer landscape has changed so much in the past ten years. Several other similar retailers have gone under because they didn’t change with the times. When we rebranded the stores several years ago and brought in a highly edited and unique selection of products, fashion, electronics, etc, we were looking at how entertainment products fit into people’s lives, how people shop for their entertainment needs. We found that they like it all together and they want a very fun environment to shop in. We’re constantly looking for new innovations to bring consumers in. If you know every time that you walk into a Virgin Megastore or log on to our retail site you’re going to see the most cutting edge products available it’s going to keep you coming back. But that requires constant monitoring and adjusting to an ever changing marketplace.
RTP: Virgin has paid a lot of attention to conversion rates and other measures. What strategies have you used from a marketing perspective to try and influence things like conversion rates and what learning to you gain from the intelligence around those metrics?
DM: Our customers continue to opt-in for the most interactive of experiences–shopping. There is one essential truth at play here, that physical human beings enjoy tangible, tactile, and real experiences. And, with 30 million consumers walking through our stores every year, our customers are doing that in large numbers. Today traditional media is not sufficient for sharing experiences with customers. Our key to creating brand experiences in today’s marketplace is looking at our stores as more than a sales venue. It is an actual medium and consumer touch point, and had to become more than just a point of distribution.
RTP: Virgin has been very innovative with in-store displays and events—integrating digital banner signage, an in-store TV network and kiosks. How have these marketing efforts impacted traffic and revenue and your marketing strategy?
DM: Technology is a big factor. The key to our success in harnessing technology for marketing was that we realized that technology had to be focused on creating a better experience for our customer, not for us, the retailer. The technology isn’t there just to promote, it must inform and entertain. I see communication value in the retail store itself. It’s really experiential marketing. Be it through our 300+ events a year, promotions, advertising, our ever changing environments, etc. it’s all about creating Brand Experiences. As our traffic numbers are up over plan and we are up 11.5% in revenue on last year, this strategy has really worked for us.
RTP: The VIP Rewards program had some unique aspects to it, with unique offerings etc. Have you been pleased with the growth of that program and the impact it has had on business? What are the plans to expand the VIP card?
DM: I believe that loyalty will continue to increase as a point of differentiation amongst all retailers; and it certainly is a very important factor in our marketing. It widens our ability to really understand our customers, to know what they’re worth, study them, give them appropriate benefits, and drive them to the stores. Our VIP program rewards and stays fresh. Its innovation is that it is constantly changing and evolving depending on our customers buying habits. The technology and reporting behind this program is so advanced that we are able to segment each customer by their purchases. We already see customer increase in transactions month over month, and members average spend per transaction is 70% higher than non members. We are currently working on putting the VIP card online.
RTP: How does the VIP Rewards program fit into your overall CRM strategy?
DM: Technology has created a world where consumers no longer have targets painted on their foreheads and the usual marketing weapons miss the mark. Consumers control the who, what, when and where of being reached. Now, consumers actually “reach out” and “opt-in” for the marketing experiences they choose. They are opting in to our VIP program. The VIP email campaign open rates, sales conversion, and post-send spends continue to climb – we are 10-15% higher than the industry on our open rates and our conversion and sales are stronger each month. The program effects how customers shop. The card and email marketing encourages them to shop with us repeatedly. The rewritable card allows us to customize to our locations, time of year, time of day, to change our offers constantly and to instantly inform our customers of timely promotions. We also use email blasts, newsletter, etc.We capture customer transaction data and use advanced analytics to understand our customer segments and their behavior. We can profile by basic demographics but in addition we can profile customers who have purchased a certain product or product line, find affinities in what they purchased which leads to cross selling and propensity analysis.
RTP: How are you developing your cross-channel strategy and how will the VIP program factor into that strategy?
DM: Our new website now means that we can customize and control what we look like online. We have worked hard on rebranding Virgin Megastore as a lifestyle destination filled with great and unexpected products. We are now able to showcase these products online so that the Brand offline and online is consistent. Obviously we now do more targeted e-mails and can better understand our customers. In-store, the VIP program continues to improve repeat visitation and has a very strong ADS. It has been a great traffic and sales/conversion driver and the interest in it from other vendors has been phenomenal. As our membership grows so will the marketing and rewards offline and online.
RTP: How have you tapped into “new media” to drive traffic and awareness of Virgin Megastores—social networks, blogs, music sites, etc.?
DM: This year saw us get more serious about online and blog ads in our media mix which improved our ability to reach new Virgin Megastores customers and target demos. There was however something missing. It felt like a one -way street. We needed a way for our customers to reach us in a fun and compelling space. To be able to relate to us personally, to hear, see and read about what we were doing right here right now. Through our Social Media News room, www.virginmegamashup we offer quick, entertaining and informative information to that audience. Our customers are early adopters and entertainment enthusiasts and we wanted to reach out to both them and the millions of online Bloggers, shoppers and members of the social web. We wanted to create a dynamic place where people can give their own feedback to our top executives, get access to our over 300 a year events, our celebrity photos, and gossip plus exclusive and up to the minute news about Virgin Megastores, our staff and friends. It’s a place not only for our customers but also for our best brand advocates – our employees.