GameStop CMO sees CRM as key
Mike Hogan, CMO, GameStop
Mike Hogan may be the CMO of GameStop — the world's largest videogame and entertainment software retailer, with more than 6,100 stores — but people might be surprised to learn that he is not a gamer himself. He is passionate about riding motorcyles and playing tennis, though he practices those activities strictly in the real world.
The veteran marketer, who joined GameStop in February 2008 after more than two decades in corporate sales and marketing positions at companies including Dean Foods and Frito-Lay North America, says he was attracted to the retailer because it was a chance to cultivate one-on-one relationships with a customer base that has moved well beyond young guys in their parents' basements.
"The ability to come to a retailer with direct access to 100 million consumers fundamentally changes the game from a marketing perspective," Hogan says.
When Hogan joined GameStop, he recalls the company possessed loads of data — hundreds of millions of pieces of transactional data, in fact — yet very little of it was actually linked to customer relationships. That's when he started to champion the idea of a loyalty program, something senior management had previously shown no interest in backing financially.
In part because there are simply so many loyalty programs, they've gotten a bad rap in certain circles. "When we started working with Mike, he clearly knew what those pitfalls were and did everything he needed to do within the organization to break those down," says Amy Barnett, SVP of strategic account planning at Brierley & Partners, the CRM agency that began working with GameStop on its loyalty program two years ago.
"He ultimately got senior-level buy-in to invest in a CRM program," she says. "For him, it wasn't about sheer numbers. It was about building a database with quality profiles."
Last October, following a two-month pilot, GameStop launched its PowerUp Rewards program, which tracks purchases of new, used and traded-in products. It offers members points toward rewards including iTunes gift cards and GameStop merchandise. The program also has an online feature called Game Library, in which members can manage and showcase games they have had in the past, that they currently have and that they wish to have.
For GameStop, it provides an added layer of data beyond purchase information, including customers' total spend in the category. Hogan says the data has already been successfully mined for several key campaigns, including an email promotion last Christmas targeted at millions of customers with credit balances (the result of a reservation hold, game trade-in, etc.). It promoted a deal on a product GameStop knew customers wanted based on Game Library selections.
"As you might expect, we had a phenomenally high response and redemption rate for that campaign," he says.
In announcing its full-year 2010 results, GameStop credited PowerUp Rewards, which boasts more than 12.5 million members, with helping propel total sales for the year to a record $9.47 billion. "Our members shop three times as often and spend three times as much as non-members," says Hogan, who will speak about the loyalty program's success at the Direct Marketing Association Conference and Exhibition in Boston this month.
Despite last year's record results, sales growth this year stalled. GameStop's earnings for the quarter ended July 30 were $1.74 billion, down 3.1% compared with 2010, which the company attributed in part to a lack of high-profile game launches.
The company also recently irked consumers and was the subject of bad press after GameStop removed coupons from PC copies of the game "Deus Ex: Human Revolution" that allowed the public to get them via the cloud gaming service OnLive. GameStop CEO Paul Raines apologized to customers through email and a $50 gift card. Hogan declined to talk about the issue with Direct Marketing News.
In March, GameStop acquired Spawn Labs, a streaming technology company, as part of its ongoing investment in digital products and services. GameStop also owns Kongregate, a free online gaming site. The tech site TechCrunch reported last month that GameStop, in a nod to the growing popularity of mobile gaming, will begin selling Apple's iPod, iPhone and iPad in its stores.
Customers can also make purchases online at GameStop.com. This year, GameStop debuted at No. 50 on Stores magazine's "Favorite 50 Online Retailers" survey.
Hogan says GameStop is committed to a multichannel strategy, which is why digitally downloadable games can also be purchased in-store through printed vouchers. Buying in-store offers some benefits, including the fact customers can use trade-in credits toward purchases.
"You would think our digital business would intuitively not be great for our bricks-and-mortar business, but in fact we sell more digital content in our stores than anyone sells online," he explains.
Ultimately, however, Hogan says the plan is to tie all its different channels together through the PowerUp program, so its best customers are encouraged to interact with all the retailer's touchpoints. "It is helping direct us to where we want to go," he says.