An in-depth understanding of consumers sits at the heart of what we all need to do, but we know it’s not always easy to uncover insights that will unlock a true innovation opportunity.
Outdoor products retailer, The North Face, has been on a quest to tap data insight and become more relevant with its marketing.
During the recent ADMA Global Forum, CMO caught up with the brand’s senior manager of consumer lifecycles, Ian Dewar, to discuss the steps it’s taken to improve communications and spend over the past three years, and the cultural and skills impact it’s had on the marketing team along the way.
Switching the loyalty emphasis from dollars to engagement
One of the initial steps The North Face took was overhauling its customer loyalty program. Dewar pointed out loyalty is an important as a tool for two reasons: Data collection, but also as a way to engage known customers.
“We can’t just collect personal identifying information without anything in return,” Dewar commented. “Just asking customers periodically to sign up to our email so we can send them information about our events just wasn’t getting us a lot of information.
“The loyalty program became a mechanism by which we could give customers some real value in exchange for receiving more communications from us.”
To do this, The North Face has placed an emphasis on engagement in its VIPeak loyalty program, encouraging customers not only to keep shopping with the brand, but also get more actively involved with the outdoors. Instead of being rewarded with discounts or for dollars spent, customers also earn points based on how often they participate in events organised by the brand. These can also be used towards physical events.
Dewar said this was important because customers don’t shop with the retailer that frequently.
“The biggest problem we have is our stuff is too good,”he said. “We needed a loyalty program that had benefits beyond just dollars spent. Getting $10 off the next purchase was less of a driver than updated information about events, films we sponsor, tips about outdoor activity, or the opportunity to meet some of our athletes. So when it came to program design, we’ve evolved over the three years by encouraging loyal members to do with us or on their own and to get outdoors.”
Finding correlations within transactional data
When it came to tapping data for customer insights, Dewar said The North Face began by looking for correlations in transactional data for customers that bought A and B, and whether that meant they were likely to buy C.
“We started by looking at what key products customers bought that give an understanding of activity preference, versus products that don’t help us,” he explained. “For example, a ski jacket is a good indication you’re interested in skiing or running shoes, but a fleece vest could be worn for any activity.”
It became quickly apparent the retailer needed additional data sets to help better identify what activities customers were undertaking. So it conducts customer surveys to sense both their interest for new product development as well as what they are doing in order to tailor marketing.
“We can’t use survey data to predict what everyone is doing, but we do get a good response and we can use that data to get a clear baseline of actions that a broad section of customers are doing,” Dewar said.
“We found about 50 to 60 per cent engage in running in some format… so we used that as a starting product, then looked at how much running product they buy and we found it was really small. Only 8 per cent are buying running products from, which is just 5 per cent of our sales in total. So there is a huge gap here of customers who buy from us, trust our brand, give us high scores in their reviews online and when asked about products, but they’re not buying our running products from us.
“When we asked them why they haven’t, many don’t know we make running products, so there’s an opportunity.”
Dewar said there are similar gaps in customer who are skiing, and customers who buy ski products from The North Face.
Identifying wider activity behaviours
If transactional history is a good starting point on purchasing behaviour, the second is behavioural, Dewar said. And that’s where The North Face started looking wider activity involvement data sets and advanced analytics.
“We started looking at Web browsing, email opens, event registration for event we own or have a partnership with, and social media,” he said. “Ultimately, it’s about identifying behaviours, not just their purchases. Then we can talk to them about the products they’re most interested in buying next, not what they recently bought from us.”
This has seen The North Face seek wider data insights, and Dewar admitted without a gigantic data set of runners or skiers, this isn’t an easy task. But there are data sets out there, such as magazine subscriptions, event registration, as well the retailer’s our own tracker behaviour insights against known customers from its email list is helping to fill the data gap.
Adopting increasingly sophisticated segmentation
To date, The North Face has undertaken its first two pilots to move beyond transactional segmentation and drilling down to the right product, to behavioural segmentation using first- and third-party data.
“It’s not that we’re right all the time, but we’re wrong less often,” Dewar said.
Shifting the emphasis from marketing to customer engagement
Behind the scenes, The North Face has been refocusing its retail marketing efforts, splitting priorities between known and unknown customer activity.
“Your traditional lifecycle of engagement of awareness, acquisition and re-engagement still works for our anonymous customers and we still have to spend money on acquiring customers, but we really want to keep a focus on existing customers and bring them back for something else,” Dewar said.
Research had also shown the customers most valuable to the brand are those buying from the most product categories. “We also found a lot of customers do more than one activity,” he said. “Now we know that, how do you action that and find them?”
As a result, The North Face has made a big cultural shift from a broadcast-oriented marketing approach to an engagement-oriented one. To help, Dewar said it’s brought in additional analytics as well as community and consumer engagement staff.
“That gives us an opportunity once customer has purchase from us, to keep The North Face relevant to them,” he said. “ That is through a steady stream of events and activities.”
Shaking up the marketing mix
This shift is most evident in the way The North Face spends its marketing dollars. Dewar said key areas of focus are targeting customers with relevant messaging about its own events, drivers at the store, and content-led speaker series. All of these also reinforce the outdoor activities it sees as important not only as a brand, but to its customers.
“We’re going out there with a lot more knowledge behind us,”he said. “We’re not just inviting the best customers to our exclusive events, but the right customers to the right event.”
Across the board, The North Face has shifted investment from broadcast channels and billboards that emphasise awareness marketing, to digital touchpoints as well as community events that recognise existing customers, Dewar added.
Using data to change internal thinking
Getting teams to think differently about the way they undertook marketing was clearly a major part of this transformation, and Dewar admitted initial perceptions was that The North Face customers would see its mainstream advertising anyway, lessening the need for targeted activity.
“What the loyalty program has done is supplied great insights into repeat customer behaviour and we could show that our customers were not coming back every year,” Dewar said. “Before we had a more complete data set, the perception was that customers only shop with us once a year but they love us. Ultimately we showed it wasn’t the case.
“But what we did show was the customers we talk to more often are more likely to shop with us e very year. That gave us the ammunition and data to come back to say there’s real value in a more regular cadence of communication to our best customers.
“A sequence of positive brand interactions, even if they don’t include a purchase, over the course of seven or eight months yield up a strong brand affinity when they do start thinking about The North Face. So when they decide they need a product we make, we want to be front of mind for them.”