Sam’s Club's Personal Touch

Today, most retailers offer across-the-board discounts or deals aimed at categories of customers. But industry experts say they expect retailers to move toward more individualized offers. Tailoring discounts to individual shoppers based on their buying history promises to maximize marketing budgets, build customer loyalty, and increase sales. Sam’s Club is giving this a try by offering personalized discounts for buyers through its eValues card.

The eValues program is the latest iteration in the fast-growing field known as predictive analytics, which uses vast amounts of data to spot trends and anticipate consumer behavior. Of course, retailers have long tried to decode consumer behavior, through surveys or test panels, or by using crude forms of data analysis. During the last decade, many retailers have amassed huge amounts of data through loyalty programs or membership cards. But they have done little with the information, other than using the cards as a branding opportunity or to offer broad discounts.

Some retailers, however, have used the data to figure out the right product mix and layout for their stores, or to offer discounts to categories of customers. Sam’s Club officials say they are “among the first to offer individualized discounts on such a large scale. A major challenge in creating eValues was the scale involved: the permutations of customer, product, location and discount exceeded one trillion possibilities for Plus members alone”. Sam’s Club worked with FICO to improve their ability to predict what each customer will buy and the time frame in which that purchase will occur.

The discounts are available to “Plus” members and can be printed from the member’s email, the Sam’s Club Web site, or from a kiosk located in the store. Using historical data on the shopper and predictive analytics, Sam’s Club is offering these customers discounts on the products or product types they generally purchase and even tailoring messaging to include product attributes known to be of interest to the individual consumer.

Customers are finding the discounts to be highly relevant to their needs. Additionally, these e-offerings are triggering needs customers didn’t know they had. One shopper, for example, came into Sam’s Club to buy food and left with two televisions because he couldn’t resist the $300 discount on a $1200 set.

Linda Vytlacil, vice president for member insights and innovation at Sam’s Club, said coupon response rate has risen from less than 2% to as high as 30% for eligible customers.

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Sam's Club is a chain of membership-only retail warehouse clubs. Founded in 1983, it is owned and operated by Wal-Mart Stores, Inc., and is named after Wal-Mart founder Sam Walton. Sam's Club chain operates in 48 of the 50 U.S. States serving more than 47 million U.S. members. Sam's Club ranks second in sales volume among warehouse clubs.

Indus Insights is a specialized consulting firm that assists organization in leveraging analytics to drive business performance. They use state-of-the-art mathematical and statistical techniques to unlock game-changing insights hidden in data; and then translate these insights into actionable strategies.

Retail businesses can use analytics to flourish despite economic crisis

Retail businesses rarely see the kind of economic stress that is facing them in their markets today. The economic crisis has forced consumers to be very selective about buying. The most successful retailers will be those who are adept at data optimization using advanced, database-driven analytics.

Companies have uniquely valuable information assets which, when examined and leveraged through detailed analysis, can contribute dramatically to positive performance.

So, specifically, on what type of analytics should retailers focus? Bill Franks offers ten tips on programs that can engage the shopper. Learn which relationships to fight for, which to grow and which, if any, may be futile.

In the article, he highlights the benefits of mobile marketing, pricing optimization analytics, forecasting, demand chain management, and shelf-space planning among other ideas. He emphasizes the importance of an enterprise-wide approach to data management. Now more than ever, retailers must see the whole profit picture! Technology has made big strides in data warehousing capabilities; but most organization’s ability to manage, analyze and apply data has not kept pace.

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Bill Franks is Managing Partner of the Retail Advanced Business Analytics Practice for the Americas region at Teradata Corporation. Bill has extensive background helping clients derive value through the use of data analysis and modeling.

Indus Insights is a specialized consulting firm that assists organization in leveraging analytics to drive business performance. They use state-of-the-art mathematical and statistical techniques to unlock game-changing insights hidden in data; and then translate these insights into actionable strategies.

Best Buy uses analytics to boost sales

Best Buy’s enterprise-wide approach to analytical decision-making has contributed to maximizing its financial performance. Most recently, they have introduced free financing offers for entire shopping cards full of items – rather than one product at a time.

As the recession spiraled, consumers’ spending habits changed dramatically. Many stopped spending altogether and those who were still hitting stores showed some disturbing patterns. The number of customers signing up for financing on such purchases as big-screen TVs and computers surged. At the same time, the number of shoppers spending over $1,000 per trip plummeted. In response, the electronics retailer introduced the free financing offer to convert as many shoppers to Best Buy purchasers as possible. Best Buy Chief Marketing Officer Barry Judge said "We realized that storewide financing could be a powerful differentiator in the marketplace.”

When the economy was booming a few years ago, Best Buy decided to forgo short-term revenue to dig deeper into customer habits. They removed the annual fee from its bonus card and nearly 10 times more shoppers signed up. Armed with more customer data, the company understood its shoppers better and was able to align merchandise accordingly. In another instance, Best Buy collected data on 60 million US households through customer interactions. They used insights from this information to develop eight customer profiles. This was used to train store associates to have the right conversions and target the right demographics based on needs.

It is more important than ever that business decisions be made based on analysis of rapidly changing customer preferences & behaviors, and be optimized for sales growth without compromising margins. A single poor decision on which products to promote can make the difference between meeting or beating expectations. Analytics have had a tangible result at Best Buy: Its strong culture of analytics has enabled it to withstand a tough retail environment with minimal damage.

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Best Buy is the largest consumer electronics retailer in the U.S., with about 20% of the $170 billion market. With the 2009 acquisition of 50% of the Carphone Warehouse's retail operations, the firm increased its stake of the $700 billion global consumer electronics market to roughly 6%. The firm also operates under the Future Shop and Five Star trade names in Canada and China, respectively, and Magnolia Home Theater, Pacific Sales Kitchen and Bath, and Geek Squad in the U.S. It was formerly known as Sound of Music, Inc. and changed its name to Best Buy Co., Inc. in 1983. The company founded in 1966 and is headquartered in Richfield, Minnesota.

Indus Insights is a specialized consulting firm that assists organization in leveraging analytics to drive business performance. They use state-of-the-art mathematical and statistical techniques to unlock game-changing insights hidden in data; and then translate these insights into actionable strategies.

Australian retailer Myer to target customers using data analytics

Australian department store chain Myer is adopting leading-edge marketing techniques used in the US and UK to target customers. Data analytic tools will use customer information collected through its co-branded credit card, point-of-sale transactions and its loyalty program.

This capability will provide a better understanding of customer behavior and spending patterns. Myer plans to analyze these trends to launch campaigns targeted at specific geographic areas or consumer groups. These campaigns would be closely monitored and would provide the foundation of major targeted marketing drives leading up to Christmas. At the heart of the new marketing push is Myer's customer information warehouse, which was moved to the company from former parent Coles Group.

“If you want to be a customer-centric organization, you’ve got to… take a really big step forward on customer analytics and loyalty” said Myer Director Timothy Clark.

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Myer is Australia’s largest department store group and a leader in Australian retailing. With approximately 16,000 team members across Australia, Myer offers an unrivaled choice in the latest national, international and exclusive to Myer brands. It operates 65 stores across Australia with a turnover in excess of $3 billion annually.

Indus Insights is a specialized consulting firm that assists organization in leveraging analytics to drive business performance. They use state-of-the-art mathematical and statistical techniques to unlock game-changing insights hidden in data; and then translate these insights into actionable strategies.