Wednesday, May 27, 2009

Multichannel Marketing Class May 26th: Multichannel Retailing

We covered multichannel retailing using a webinar case study from Exact Target on Johnston and Murphy. Johnston and Murphy is an upscale shoe retailer, primarily men's shoes, with three fullfillment channels, store, catalog and internet (I am assuming that they also have a dial-in call center for fulfillment but it was not mentioned). J&M contacts its customers via direct mail and email, in-store promotions and its web site. It did not seem that the company used brand advertising. I would think that the economics of its business is such that direct communication is more cost effective.

The company has 700,000 customers on its database and knows who they are and can contact them directly so direct and interactive marketing make sense. J&M started by segmenting its current business into eight key buying segments with different characteristics. By capturing 60% of customer email addresses at point of purchase it can then use purchase data to determine which segment a customer belongs in and tailor offers to them. All interaction is captured in the customer database; the company uses match back on address, phone number, email, etc. to put all possible information in one place. Three emails are sent to new customers within 40 days and current customers also get a three email cycle, offer, discount 1, discount 2. "Lost" customers are those who have not ordered in two years and they also receive email treatment.

The program has been successful for J&M. The email program is set up and then adjusted every six months or so so the communiation is automated. Data collected from transactions is modelled to determine the best combination of communications to elicit the maximum response. Students in class presentations talked about other retailers doing the same type of marketing effort by building a database, capturing transactions, segmenting and targeting. Student also reinforced the research mentioned in class that multichannel shoppers are typically more profitable shoppers.

This webinar is a good transition to the next two sections of our class. Email and Direct Mail are channels that are 'push' channels and are acquisition oriented. We use military language like 'target' and 'capture' to describe our efforts and the marketer is still somewhat in control. As we began to disucss last night, with the internet as a channel, control shifts to the consumer and we will hear more about that next week with our discussions on internet and social media. Next week we will also learn more about data analytics, which will aid understanding of the modelling efforts J&Q mentioned.
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