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?
The retail space is undergoing a transformation - albeit an often reluctant one – thanks to digital disruption. As customers increasingly become digitally connected and communicative, retailers need to embrace both an omni-channel sales strategy, as well as a unified customer engagement approach to keep winning them over.
It’s this digital track that the director of multi-channel at Athlete’s Foot, Mark Teperson, is running right now.
Athlete’s Foot is a franchised-based retailer overseen by RCG Corporation, a listed Australian retail and wholesale business focused on the shoe industry. The group took its first major digital leap two years ago with an ecommerce website, and followed this up in the last year with investments into digital marketing and technology capabilities.
Teperson was appointed director of multi-channel three years ago and initially oversaw the ecommerce project. It wasn’t an easy ride. He admitted franchisees were initially hostile to launching an ecommerce platform and saw the group’s digital offering as a direct threat to their livelihood. This is despite the fact that Athlete’s Foot profit shares website proceeds with franchisees.
“The executive team knew digital was the unstoppable force, but it was about how we were to approach it,” Teperson recalled during an interview with CMO. “We started with a defensive strategy, not an offensive play, which is how a lot of Australian retailers have approached it.”
The great fallacy about ecommerce is the belief that it’s an easy money play, Teperson claimed. “You have to invest in the infrastructure and you don’t get that right the first time,” he said. To ensure franchisees understood the importance of digital, he also spent a lot of time consulting with them on the benefits.
“You have to invest in the process, and you don’t get that right the first time either. It’s the interactive process of test and learn that makes the difference, and as we gained more confidence and drove better results, we pushed further ahead.”
The next stage of digital evolution for Athlete’s Foot is better harnessing customer information and driving marketing interaction with a digital edge. Over the last year, Teperson’s focus has been on how to restructure the marketing team to become more digitally savvy, as well as investing in the technology platforms needed to drive omni-channel customer interaction.
Teperson explained that when he started, Athlete’s Foot had 1.2 million customer loyalty club members but was running an unsophisticated ‘earn and burn’ program based on physical gift vouchers.
“There was enormous value lying dormant in the loyalty program,” he said. “Instilling that coupon mentality for high-value vouchers meant we weren’t embracing digital, and the costs were astronomical. Instead of investing in giving customers greater value, digitising the experience and getting some economies of scale, the program was still in the dark ages.”
In addition, the marketing function was structured along traditional lines, with a brand manager, campaign managers, and no digital input. Teperson immediately brought on a digital specialist and started investigating campaign management technology, opting for Adobe Campaign (formerly Neolane).
Having the ability to do responsive, personalised digital campaigns was vital if Athlete’s Foot was to keep the in-store experience alive between purchases, Teperson said. The retailer’s average customer purchase cycle is 11 months.
“For us to be able to communicate with customers and have that experience outside the store was the golden opportunity,” he added. “That would then do two things: Reduce the attrition rate, and decrease the purchase cycle. If we’re in front of them reminding them of the great experience, and we can reduce that purchasing cycle by just a month, that has significant ramifications on revenue and profit.
“Those are the big commercial opportunities, but it’s also about focusing back on the customer. If we weren’t going to execute in a way customers could be responsive to, then it was all in vain.”
As well as implementing a new CRM platform, Athlete’s Foot concurrently overhauled its ERP platform, consolidating four disconnected systems into a single stack.
“The CRM journey led us down the path of thinking about what it was we wanted to achieve – extract greater value, communicate, personalise conversations with customers, and all those things us marketers inspire to achieve in having that relationship with customers,” Teperson said.
One challenge with switching to digital communication was the lack of email addresses. Thanks to a six-month franchise roadshow to explain the CRM initiative, Teperson said Athlete’s Foot saw a massive uplift in email capture rates. On 1 June, the group will switch to digital vouchers as the primary vehicle for sending vouchers to customers.
“Where the organisation thought the investment in CRM was it, we know it’s not just that; it’s a stepping stone into the wider marketing cloud,” Teperson continued. “The holy grail for any marketer is the cross-channel attribution. We do so many different activities, but which of them are driving my in-store revenue, how do I optimise my spend and then how do I execute my campaigns?
“Marketing used to be about the emotional and rational messaging, how you bring them to life, and how you use them in the right channels. But that’s the hygiene factor today. What sits behind it is far more complex and it’s technology led and driven. You have to have the right systems and right people in place to be able to execute.
“Once you have everything there to support you, and you can spend more time focusing on how you use the technology to deliver these new experiences, that’s where businesses are hitting their straps. It does feel like an oasis at the moment.”
Having deployed Campaign five months ago, Teperson said the most useful capability to date has been setting up content control groups and measuring incremental revenue.
“We could send an email and generate millions of dollars in sales, but the question is, were those customers going to go shopping anyway? With the control group it’s crystal clear,” he said. “That data is really encouraging about the influence we have over the purchase consideration set.”
Athlete’s Foot has also spent time integrating Campaign with what it already knows about customers and product suitability to better personalise messaging and interaction. “Every shoe sold by Athlete’s Foot is made for a specific foot type with a specific foot condition,” Teperson explained.
“We were able to backfill that information so when we’re doing a campaign for the latest pair of ASIC Kayanos, we only send it out to people who have a foot type that suits that shoe. Or it’s people that bought it in the past, as they’re more likely to respond to the latest colours and styles. Through the data we can better target and identify that user experience.”
Getting executive buy-in
A question repeatedly asked by CMOs is how to get the rest of the organisation to buy into investing dollars into the technology stack they need to drive modern marketing and customer engagement. For Teperson, storytelling lies at the heart of success. And to do this, it’s vital marketers get a handle on measurement and how to action insights.
“There is no playbook for this, and it’s very different for every organisation because of the infrastructure, legacy systems and processes in place,” he claimed. “It’s wonderful to be able to have the resources allowing you to make the investment and the people to use them, but the fundamental thing is being able to measure.
“Arguably, the analytics are the most valuable thing sitting side-saddle with any of these [technology] products. Unless you know what is driving the result, you can’t convey that to the executives, and you can’t justify or measure the return on investment.”
Being able to communicate clear take outs and learnings from the analytics lies at the heart of executive engagement, Teperson continued.
“Good, bad or otherwise, you need to share the results you are generating through the organisation and you need to make it accessible,” he said. “Showing a printout of the analytics is not the right way of going about it.
“It’s making sure the executive team understands the key insights, the successes and failures, and how we need to adapt and change the organisation to take advantage of what we are doing.”
Where to next
The next step for Athlete’s Foot is to invest in more analytics capability to help garner deeper insights into customer behaviour and fuel further personalisation. As well as investing in Adobe Analytics, the team is also looking at how to make better use of its campaign capabilities not just for the Athlete’s Foot brand, but also across the RCG group.
One example of the initial success was Athlete’s Foot ‘Back to School’ campaign, which consisted of two campaigns. Teperson said the school shoe market is a growth business for the retailer and added more than 80 per cent of the customers on its database have children.
“We were able to measure the uplift that had on people buying school shoes with us, and found the additional revenue that one campaign contributed pretty much paid for Adobe Campaign for 12 months,” he said. “That was just incremental revenue, not total revenue generated.
“We are encouraged by what the future looks like. While we had been sending emails every month, we were never certain of the impact in stores. It has been a fantastic win for us and gave us great confidence in the path we were on and that the investment was worthy.”