That was the comment bellowing from an SVP of marketing at one of the largest retail clothing store establishments in the United States.
“Ten percent. Well, that’s incredible. That number is much higher than I would have thought.”
To understand what provoked those remarks you have to go back six weeks in time. As the senior executive overseeing West’s Center of Analytical Excellence, my department, gets brought into all kinds of client meetings. We are the analytical ninjas of the West world — silent, stealthy, almostas potent as the Furious Five from Kung Fu Panda.
In this particular instance, we had a meeting with the client’s chief marketing officer to discuss the importance of understanding their customer base and their behaviors. We also promoted the idea that communication channels (IVR, phone, email, chat, etc.) are self-selected and that people tend to gravitate toward using one channel more than another. To prove our point, we offered to analyze their customer transaction history over a two-year period and once we were finished, we would meet to discuss our findings.
The analysis wasn’t arduous, sophisticated or sexy in any way. In fact, it was really just fundamental frequency reporting. What made this different is that we wanted to really examine channels used, in this case for purchases, by some demographic variables.
We found the following:
- Their products appealed to a broad array of customers both young and old.
- Yet, they had more 75+-year-olds making purchases than 19- to 25-year-olds.
- In fact, 29 percent of the 75+ age cohort used the phone channel for purchases — higher than any age cohort — and this group spent more on average in this channel.
- The 19- to 25-year-olds were much more likely to purchase via retail or factory outlet.
- Further dissection also revealed how age cohorts change in their sales channel preferences — so, to eliminate one may actually alienate a large, loyal group.
To capitalize on the findings, the company made improvements to agent staffing by adding agents specializing in the 75+ age demographic to better serve customers. The retailer was also able achieve funding to expand its data warehousing capabilities.
In the end, our data really reinforced to them that:
- Knowing your customers is vital to growing and sustaining your business.
- You must have complete understanding of all of your sales channels and how they may reinforce each other.
- Conventional wisdom and business-as-usual beliefs can lead you down the wrong path and overlook potential micro-opportunities within your existing customers.