In a recent conversation with a chief technology officer, he asserted all digital technology changes in his organisation were being led by IT and not by marketing. It made me wonder: How long a marketing function like this could survive?
Customer propensity modelling is the next gold mine for marketers and is already becoming a reality for Australia’s largest female fashion retailer, Specialty Fashion Group, thanks to its growing data analytics capabilities.
ASX-listed Specialty Fashion Group (ASX:SFH) has 900 retail outlets across Australia and New Zealand, along with five online stories in Australia and one in the United States. The 20-year old company plays in what it calls the mature and value-based sectors with brands such as Millers, Katies, Crossroads and Autograph.
Its CFO, Alison Henriksen, sits across strategic customer engagement as well as IT and finance, and has both the CIO and the general manager of customer insights as direct reports. She said the company’s decision to invest in SDL’s customer experience management platform was about being able to use data more effectively to drive marketing and sales activities.
At a media event held by SDL in Sydney, Henriksen told attendees one of the clever early moves SFG made was to collect all member data and centralise it into one enterprise CRM repository. The organisation has 7 million members including 2.8 million with email addresses, representing 55 per cent of the addressable women’s market in Australia.
Three years ago, SFG started the hunt for a customer experience management technology platform and chose Alterian (now SDL). Previously, data had been copied into Excel-based spread sheets for basic data manipulation, a laborious and limited process.
Alterian’s platform was chosen because it was cost-effective, Henriksen said, and offered a broad range of features including analysis tools, content creation and management, campaign management, multi-channel engagement and optimisation. The solution was initially managed by a third party but brought in-house two years ago as part of SFG’s investment into an internal data analytics team.
Australia-based Alterian was acquired by SDL 18 months ago and is basis of the vendor’s campaign management and analytics division. UK-headquartered SDL has offices in 38 countries and claims 42 of the top 50 global brands are clients. Its suite of marketing and customer management tools is fully integrated and available both as on-premise and cloud-based.
Today, SFG has more than 180 million customer interactions annually, selling 32 million garments a year. As well as increasing its ability to engage with customers, Henriksen said SDL’s solution allows it to better target and tailor all of its communications, helping to double online transactions in the last 12 months.
Data analytics ensures each SFG brand talks specifically to customers based on their preferences, or ‘propensity to shop’, Henriksen continued. For example, data can identity customer behaviour through price point, frequency of shopping, location, off and online activity, and garments purchased, which is used to tailor email campaigns as well as measure their success.
“With analytics, we can figure out what the customer really is interested in,” Henriksen said. “Our open and click through rates on emails today are 40 to 50 per cent, which is translating directly into sales; we also know where the customer shopped. In addition, we have seen a campaign uplift of 3 per cent in sales in our control groups.
“The financial returns are enormous – in the thousands of per cent for every campaign.”
Henriksen’s focus is now on growing SFG’s online business. To do this, the company is actively employing true propensity modelling to identify who has the propensity to become an online shopper. Using SDL’s data analytics capabilities and information on the behaviour of other customers, SFG can see which members haven’t shopped online before but have a high propensity to, thereby defining a ready-made list to target.
“Our analysis allowed us to see those who had a 90 per cent likelihood of being online shoppers, which is gold for us as marketers,” Henriksen said. “As a brand, we are trying to grow our online business – now we know who to target and what to tell them in order to get them shopping online.”
Another notable metric of success is the jump in members targeted via email in the overall sales pool, Henriksen said. In the last two years, the number has lifted from 35 per cent to 50 per cent.
“Increasing the value of our data and knowing our customers is a long-term journey,” Henriksen said.
“While we understand engagement today, we still don’t know the rest of ‘her’ lifestyle –who else does she engage with in terms of products and services? What we do know is our customer is generally under-served, and we want to leverage the knowledge and data we have to bring new products and services to those women that they can’t get anywhere else.”
This could include other lifestyle products as well as treats like spa packages, Henriksen said. The company is already looking into expanding into lingerie, jewellery and shoe lines.
The push into new territory will also require utilising and integrating in more external data sets, something Henriksen said the SDL platform is well-placed to handle.
The importance of c-level structure
Henriksen is unusual as a CFO in that both the CIO and the head of marketing (in this case, general manager of customer insight) report directly to her. She said the structure works well as it enables both IT and marketing to work closely together in the organisation towards common goals. As a data-driven marketing company, it also made sense to have both IT and marketing united in driving customer engagement. Each brand also has a dedicated marketing manager and team.
The real challenge is finding the analytics talent to continue expanding its efforts. Henriksen said it had hired staff mostly from outside Australia in order to access better retail and data analytics skill sets, but has also recently started bringing on graduates to train up.
The customer insights team has grown from three to seven staff over the past two years, equally split between database managers and analysts.
“The Australian retail sector is behind those in the UK in terms of data, so we’ve needed to bring specialist skills into the organisation from the UK to help us tackle the data analytics,” Henriksen said.