DSW and data: a shoe-in for marketing success

For some consumers, shoe shopping is as much a great American pastime as baseball. Shoe retailers like DSW, therefore, might have it somewhat easier than, say, providers of Neosporin bandages when it comes to generating fan excitement and loyalty. But at the same time, marketing campaigns—no matter how frivolous and fun they may seem on the surface—still need a strong data backing, said Kelly Cook, SVP of marketing at DSW during the Teradata Partners conference.

“What makes it slightly more complicated at DSW is that most other retailers will go to their merchants and buy lots of [seasonal] products, and as soon as it’s sold they replenish,” Cook said. But DSW sells more than 30,000 different pairs of shoes from 400 brands. Products change on almost a weekly basis, meaning windows for customers to purchase certain brands and styles are shortened.

And that’s why targeting tactics can’t revolve around demographics; they have to revolve around behaviors, which Cook outlined.

“Shoes are very personal,” Cook said. “I need to make sure we target people based on how they behave and not put them in a role where they don’t belong.” From a broader gender-based standpoint, DSW noticed that women spend an average of one hour in a DSW store, snaking through the aisles. Men, by contrast, barge in already knowing what they want and purchase swiftly.

“Men tell us they love craftsmanship. They want to make sure the shoes are high quality,” Cook said. “I will totally buy a pair of shoes knowing I’ll wear them one time and throw them away after that.” DSW also discovered that men tend to prefer QR codes over tear-off coupons, are loyal to certain brands, and not surprisingly, disdain marketing flyers featuring red pumps.

DSW’s loyalty program powers the retailer’s ability to discover such detailed breakdowns of customers. Currently, the brand has 20 million members in its program, in which customers get points when they shop and those points ultimately become certificates, mailed in neon green envelopes. And because a tremendous 90% of transactions come from members of the rewards program, DSW has information on nearly all of its customers.

The scope of the data also allows DSW to optimize its retention efforts. The retailer learned, for instance, that customers gave it three chances. “If a customer walks in three times or more and they don’t find [their size], they defect at a very high rate,” Cook explained.

Ancillary benefits

The advantages of incorporating an extensive data strategy extends beyond marketing efforts, as well, Cook said. Previously, she’d worked as VP of employee and customer engagement at Waste Management Inc. and, prior to that, director of CRM at Continental Airlines (“I went from planes to trash to shoes!”).

Continental, for instance, grossly underestimated the ROI they’d get from detecting employee fraud. The airline analyzed data in the call center, tracking the rates of agents who accessed OnePass loyalty programs on behalf of customers. Continental learned that the average agent opened up six to eight OnePass accounts an hour. And then they found an agent opening 40 to 50 OnePass accounts an hour.

As it turned out, that particular agent while on shift accessed inactive OnePass accounts—accounts dormant for more than 24 months—and transferred those customers’ points into his own personal OnePass account. That person eventually served time.

While working at Waste Management, Cook’s team found inconsistencies around services delivered to certain streets. Namely, where a database recorded waste removal services for only four out of five businesses on the street. The company eventually discovered that the driver was taking a cash pay-off directly from one of the businesses, bypassing Waste Management’s sales team.

Social change

The advent of social media and mobility has also changed DSW’s business strategies. “I noticed in the press that there’s some debate whether Facebook is providing ROI,” Cook said, adding that DSW in fact is seeing double-digit growth in sales from its Facebook customers. “Our analytics and ROI on Facebook isn’t a guess,” she said. “We don’t do it by proxy. We know the customers on Facebook and because our database is so rich, we can tie it all back in and understand specifically what those customers mean from an ROI perspective.”

She conceded that part of DSW’s success on social media came because the company retails products that people are naturally excited to discuss and share. There’s a built-in enthusiasm component that other verticals can’t always replicate.

For Cook, the double-digit growth on Facebook was vindication from push-back she got early on, when she first wanted to institute a social strategy. Even within her own marketing group, colleagues wondered why bother engaging with customers who were already engaged? “That implied that people are spending the same amount on Facebook [before DSW’s social marketing efforts] than they were after,” Cook said.

It wasn’t all roses, however. For instance, prior to its Facebook page, DSW often had gift-with-purchase (GWP) promotions, in which the company offered a bonus gift like a purse with a purchase on a certain day. After launching its Facebook presence, DSW promoted its GWP only to fall victim to a failure to communicate internally: though promoted on Facebook, the inventory loads didn’t go through the database at the right time. As a result, customers who were promised gifts didn’t get any and DSW had its first public flaming.

“For the next GWP, we [loaded] it the night before so that customers could get the bag when it’s announced,” Cook said.

DSW has since been bolstering its approach on social media—launching an Instragram account last summer—and its mobile presence. The company will release in 2013 an app for mobile commerce. “That’s one of the most requested thing from our customers,” Cook said. “People don’t shop on [native iPhone mobile browser] Safari, they shop on an app. They’re conditioned to do that because it’s more secure and it’s easier.”

Data limits

DSW is also looking to expand its database strategy—specifically around tying its customer data into merchandising decisions. It’s an issue, Cook said, the company is still in the process of researching.

The other issue where DSW runs into limitations is around identifying multi-user loyalty accounts—for instance a mother sharing an account with her daughter, with different interests and purchasing patterns.

“We could buy householding data,” Cook said, but noted that this had been attempted at Continental, where it cost a lot of money and gave little benefit. However, since DSW serves a wide range of customers—vastly different ages and income levels—if inconsistent buying patterns emerge from a single account, the company will lump that account holder in a “multi-cluster” category. “If we don’t know, we can’t give you one message,” Cook said. “We’ll give you multiple messages.

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