JC Penney: Finding the right customer engagement strategy

US department store chain shares how a growing disconnect between brand and consumer behaviour has led to a new data-driven digital marketing strategy and brought IT and marketing together

A growing disconnect between brand and customer behaviour has proved the trigger for a marketing technology overhaul at US department store chain, JC Penney.

Speaking to CMO during the recent Oracle Marketing Cloud Interact event in San Francisco, JC Penney’s vice-president of customer strategy, Elmer Smith, said the decision to adopt a new customer-centric digital marketing model based on data was a no-brainer after a number of missteps with customers in the last two years.

“If you go back and analyse what we did wrong, the main theme is that we didn’t make or drive decisions off customer insights and data,” he said. “Anywhere you looked, we weren’t resonating with the core customer. And it showed in the customer’s view; we were losing active customers, lapses were increasing and we weren’t acquiring new customers.”

Not only are customers changing in terms of how they want to engage, Smith admitted his team was going off in a different direction with product marketing from every standpoint.

“We knew we had to change. It was therefore an easy business case for me to make that we had to get much more relevant and embrace data-driven marketing,” he said.

JC Penney partnered with Responsys (now Oracle Marketing Cloud) last year to implement the Responsys campaign management platform, which went live in May. Core aspirations included aligning email strategy and targeting with the retail group’s overall customer strategy and insights, as well as better leveraging email as part of an omni-channel approach that helped grow sales.

The company was also looking to communicate using behavioural triggers and preferences in order to shift away from a ‘batch and blast’ mentality to one-to-one customer marketing across all digital marketing channels, Smith said.

The company looked at range of vendor solutions including those from former its email provider, Cheetah Mail, plus Epsilon and ExactTarget, before deciding on Responsys.

“The quality of folks in the room every time we met with Responsys was clear,” Smith commented. “They came with a roadmap and forward-thinking, multi-channel approach.”

Related: Oracle; Marketers are overwhelmed by marketing technology choices

JC Penney’s first priority was getting all relevant data across into the Responsys platform. This included linking key data feeds from JC Penney’s CRM database into Responsys “so we can do the really good stuff”, Smith said.

“The company’s view previously was to promote all 10 of our divisions and if someone liked women’s products, we put that at the top,” he explained. “So it has been a question of how we promote that relevant product material to the customer.

“This [Responsys rollout] is really a mindset – all of the company has bought into the need to get to a relevant message and product for that customer, rather than present everything or just priority content for us.”

Smith’s next step is to launch its new go-to-market approach in August, allowing JC Penney to use template-based systems to target specific customer groups. One of these is the ‘activity’ segment, which he said will drive and define messaging based on whether a customer is active or inactive.

“Whereas communication across the behavioural segments will be driven by things like past purchase, click through on the site, and browsing behaviour,” Smith continued. “We’re also bringing in the customer rewards program, where you have certificates to redeem. So we’ll have more dynamic, variable fields to work with.”

While campaign management technology was vital in delivering this new level of personalised customer interaction, it is just one piece in a much wider technology transformation occurring at JC Penney. The company has also simultaneously transitioned its entire customer data warehousing environment across to a third party.

“We had an internal database system and all the loyalty information outside of that and we had a very fragmented customer database internally,” Smith said. “Some of the online data was coming into that, but some wasn’t. So we moved to a hosted model and now we have our core customer information, loyalty data and core metrics tied into that as well.”

The substantial changes needed to product, people and process has seen JC Penney’s marketing and IT teams come together into a much more collaborative way.

Smith said his team is now “attached to the hip with IT”. Marketing and technology teams meet once a week, and marketing is involved in all project meetings. Smith and his CTO also jointly present to the capital approval team.

“I have a small group working now with IT to work on change management within each of any of the platforms. I’m also blessed to have my own campaign technology team,” he said.

Related: Brands demonatrate a hotpotch of marketing and IT relationships

To prioritise and manage the changes necessary, “swim lanes” were established around areas like campaign management and data feeds. Certain people were also put in charge of each internally and cross-functional teams established.

“We had to do this for the brand,” Smith added. “We were broken from an infrastructure point of view. I previously couldn’t have two campaigns being developed at 3am, let alone trying to do any analytics without the whole thing coming to a halt.

“Having this platform has been a breath of fresh air for our team.”

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