Data Management for Analytics: An Inside Perspective Chico s Has Customer Loyalty In the Bag

Data Management for Analytics:

An Inside Perspective

Chico’s Has Customer Loyalty ‘In the Bag’

Insights from a webinar in the SAS Applying Business Analytics Webinar Series

Originally broadcast in September 2011

Featuring:

Barb Buettin, Director of CrM-enterprise information Management for Chico’s

Mark Troester, senior Product Marketing Consultant for Cio/iT, sas

“For 25 years, we’ve helped millions of women look as great as they feel. Our chic prints, artisan jackets and wrinkle-free Travelers collection have built quite a following at our boutiques – but we hear it’s our combination of great style, one-of-a-kind details and warm, personal service that has captured the hearts of women nationwide.”

That’s the word from Chico’s, the specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, accessories and gift items. Chico’s was founded in 1983 as a small boutique selling Mexican folk art and cotton sweaters on sanibel island in Florida. The store’s friendly environment and unique styles connected with customers in a special way that evolved into nearly 600 Chico’s boutiques and 79 outlets nationwide, a monthly catalog, and round-the-clock online shopping at chicos.com.

Today, Chico’s Fas (for “Folk art specialties,” reflecting its origins) includes three additional fashion brands: White House | Black Market, which operates 356 boutiques and 25 outlets, plus online and call center catalog shopping; 76 soma intimates boutiques; and, as of september 2011, the Boston Proper brand for online and catalog shopping.

although the brands serve very similar clientele, there are subtle distinctions. For example, the White House | Black Market customer tends to be younger. The vast majority of Chico’s customers are baby boomers. More than half of soma customers are also Chico’s customers, but 40 percent are not – yet.

all the brands attract customers with incomes higher than the us median, a clue that they will probably expect personal treatment. in fact, Chico’s Fas is known for sales associates’ relationships with their boutique customers.

not surprisingly, Chico’s found that its top customers shop and spend several times more than an average customer. Keeping these customers engaged – and identifying more like them – is paramount. But customers shop differently across multiple channels within a brand, across the various brands and in different areas of the country.

Chico’s marketers needed a holistic view of customers across brands and geographies, to be able to answer the questions that all retail marketers face:

• Which new customers have the greatest potential to be our best customers in the future?

• How should we be stratifying and customizing our product lines for the greatest in-store benefit?

• How can we reduce markdowns while more effectively targeting our clientele?

• What type of interactions do customers want to experience when shopping

with us?

The organization’s traditional data infrastructure generally couldn’t provide those answers, and where it did, it didn’t do it fast enough. lack of data wasn’t the problem;

Chico’s had a treasure trove of data from multiple systems and sources. What it lacked was a way to find and quickly work with the data to make rapid decisions.

Limitations of Legacy Marketing Systems

“Before sas, we had Chico’s and soma data in one database, and White House | Black Market in another database,” said Barb Buettin, Director of CrM-enterprise information Management for Chico’s. “We had a locked data model. We couldn’t add any elements to the data model; we couldn’t add columns, we couldn’t change columns, we couldn’t integrate in other databases. We were sort of stuck.

“We couldn’t do a lot of things that we needed, such as make midpoint corrections, understand how to bring lapsed customers back and cross-sell effectively among our brands. These things sound simple, but with our disparate and disconnected databases, we had no holistic visibility into the customer and what she looks like as a total customer.

“anything that we wanted to do had to be done outside of that particular database, and that just created integration nightmares, or we had to ship the data out. We would send data out to prospect against our own file, which seemed a little erroneous.”

The time was ripe for a change, Buettin recalled. “our marketing team was stretched to the limit, resources were tight, and visibility into the data was nearly impossible. The business teams and marketing wanted to upgrade their toolset. They’d had the same toolset for about 10 years at that point.”

Chico’s wanted a solution that enabled business users to work with the data without needing help from statisticians and programmers. The solution also had to have a proven track record in managing and integrating large volumes of data, without requiring a time-consuming installation.

sas ^® onDemand: Marketing automation fit those criteria. The hosted solution enables marketers to plan, test and execute marketing campaigns of any size or level of complexity – taking advantage of a full set of predictive analytics and data mining tools.

■ Before SAS, customer data was not aggregated across brands, the company couldn’t manage large volumes of data, and customer modeling was being done externally, with models out of date by the time they were returned to the company.

The in-house processes were labor- intensive, and the company couldn’t change direction mid-promotion.

Marketers relied more on intuition

than solid information about their

customers and what motivated

them to buy.

Inside the Cloud

A growing number of organizations are investing in software as a service (SaaS), whereby a provider – in this case, sas – houses the servers and software for data management, modeling and reporting. Business users at Chico’s have secure access to their data, models and reports over the internet.

This deployment model is changing the way businesses consume software-based services, making high-end business analytics affordable and accessible for a greater variety of organizations – and financed as an operational rather than a capital expenditure. Cloud deployments enable iT to do more with less, and are especially attractive for organizations that need to get up and running fast, in days or weeks rather than six months or more.

“The exciting thing for me, being in iT, is i don’t have to worry about the servers being up; i don’t have to worry about upgrading to the latest version; i don’t have to worry about any kind of database issues, because sas handles all of that for us,” said Buettin. “That’s a beautiful thing in iT, to not have to worry about that, so we can help the business focus on integrating the data, developing insights from that data, and creating the marketing that we need.”

Figure 1. In this SaaS deployment, SAS houses the data management, analytics and reporting capabilities for Chico’s.

■ “ Our IT and business teams worked closely in partnership to evaluate and select a solution. It was a pretty exciting place to be. But when we had the project in the approval state, we were getting a new CEO and COO. We were worried our decision could be reversed. Actually, the new executives were thrilled with our selection of SAS, quickly approved it, and we moved forward with it.”

Barb Buettin Director of CRM-Enterprise Information Management for Chico’s

sas Data integration studio sas/aCCess

sas enterprise Data integration server

sas Marketing automation sas

enterprise Miner sas

enterprise Guide sas Data Management

is used to discover, access, cleanse and format

the data for analytics

Foundational enterprise

& analytical Data

Warehouse

Buettin described the capabilities the sas hosted solution provides for Chico’s, from data integration to structured model development, advanced analytics and self- service reporting.

Data Integration for a Comprehensive View of Customers and Markets

sas data management capabilities pull data from many different sources and cleanse that data as it comes into the analytic environment, explained Mark Troester, senior Product Marketing Consultant for Cio/iT at sas. “Master data management capabilities rationalize data by key assets, such as customers or products. All of that sits on top of an enterprise data access foundation that makes it very easy and seamless to access multiple data sources.”

in addition to the usual array of internal data – such as demographics, campaign responses, sales, revenues and other customer data – Chico’s now integrates the following types of information into its customer data warehouse:

• Competitive landscape. “We bring in several hundred variables about our customers that tell us a lot about what type of merchandise she is buying, our share of wallet, her personality and lifestyle,” said Buettin.

• Online behavior. “We are one of the few organizations that has actually integrated clickstream data into our customer database,” said Buettin. “it has been very powerful for us to know where our customer is clicking on the Web, what she is buying – as well as what she is looking at, clicking on and not buying, which represents a tremendous marketing opportunity.”

• Trade area. Knowing the customer’s zip code, Chico’s can determine the location of the nearest store, whether a customer shops in her trade area, is gravitating to online channels, or tends to shop Chico’s when away on vacation or snowbirding.

• Local market. What other kinds of stores are available in the customer’s trade area, and what are their sales? is Chico’s the only game in town, or is there notable competition, and if so, how are they faring relative to Chico’s?

internal data comes from packaged and custom applications being run on-premise at Chico’s headquarters in Fort Myer’s, Fl, as well as cloud sources. external data comes from diverse sources as well, such as: epsilon/abacus (external customer data), saP (planning and allocation), JDa (workforce scheduling) and adobe (clickstream data from online shoppers).

“We’re very excited to be able to bring all of this data into the database,” said Buettin. “With our prior solution, we couldn’t quickly integrate data at all. it all sat in disparate data sources, and it took a technical team to get to that data and to have any understanding – or we exported it out to vendors to do the work for us. The sas solution enables us to get our hands on it ourselves and understand it. While we have the normal scheduled business rules and integration schedule, if there’s some data that needs to be quickly integrated into the database, my team can actually write to this database. That’s what they cared about the most.”

■ “ With our previous solution, our data integration and data quality was nowhere near what it is today.

We’re doing so much more now than we were doing before. The two scenarios are not even comparable, because we’re 10,000 years ahead of where we were.”

Barb Buettin

Director of CRM-Enterprise

Information Management for Chico’s

Controlled, Structured Development of Marketing Models

Business users and analysts develop and test their models in an “analytics sandbox.”

This practice typically involves an iT administrator setting up an analytic database somewhere within the broader data warehouse environment, then sourcing it with data requested by a business analyst or other user. The analytic user can then work within the sandbox without unpredictable performance hits on the data warehouse.

With an analytic sandbox, you can have a close association with the data warehouse – administered by the same people and with a lot of the same data – and yet isolate the analytic work from the warehouse, so the performance of the data warehouse is protected, Troester explained. “It is also important to be able to operationalize the analytical infrastructure. You don’t want model development to be done in a one-off situation. You want this process to be structured and governed by iT best practices, with iT involvement.”

The model development, tuning and execution processes are all governed by case management and workflow tools within the sas infrastructure.

Analytics to Transform Data into Meaningful Marketing Insights

Behind the scenes of the hosted solution is the sas core analytics engine, which provides the depth and breadth of analytic techniques for which sas is well known.

To serve large applications and big data, this analytics engine can take advantage of a variety of high-performance computing techniques, such as:

• Grid computing, whereby multiple machines work together to run a massive process, providing redundancy and workload management.

• In-database processing, which takes advantage of massive parallel processing (MPP) capabilities in data warehousing solutions to perform data management and analytical processing directly in the database, which improves scalability and performance.

• In-memory analytics, which has the potential to reduce analytic processing time from hours and days down to seconds. This capability enables analytics on the fly, integrated within an application instead of running as a separate batch process.

High-performance computing redefines the possibilities for incorporating huge amounts of data into rapid decision making, so retailers such as Chico’s can respond to dynamic market conditions.

■ “ More than just reporting and basic business intelligence, SAS provides a proactive approach that enables you to make determinations about what will happen next and the best decisions for a complex problem.

Decision makers can analyze, create and share reports – and use that analytics in the context of strategic, operational and tactical decisions.”

Mark Troester Senior Pr oduct Marketing Consultant

for CIO/ IT, SAS

Figure 2. The SAS core analytics engine capitalizes on high-performance computing.

Self-Service Exploration and Presentation of the Data

Tools and user interfaces for the entire data integration/modeling/reporting life cycle are tailored to the various user personas, Troester explained. “There are role-based tools designed specifically for the data analyst or the data scientist who is doing the data preparation, for the statistician or business analyst who is working with the models, the business user who needs to consume the information, and the executive who needs a dashboard view.

“The results of analytics can also be embedded directly in an operational system. For example, if you have analytics on the marketing side to determine the next best offer to make to a customer, you would want to integrate that knowledge into the call center application that a customer service representative uses to interact with customers.”

■ “ Organizations are not always working with data that’s at rest, so the concept of being able to react to new data based on changes in the environment – to apply analytics to data that comes streaming into an organization – is increasingly important for many of our customers.”

Mark Troester

Senior Product Marketing Consultant

for CIO/IT, SAS

High-Performance Computing

Results of SAS ^® OnDemand:

Marketing Automation for Chico’s

With the sas hosted solution, Chico’s has been able to achieve its goals of

communicating more effectively and personally with its customers, based on a holistic view across brands and across a broader set of data sources.

Understand customer behavior across channels to customize offers.

“Our customers want their marketing communications to be customized,” said Buettin.

“so we are continuously mining data to better understand customer buying patterns to determine how best to market to them. if i don’t prefer jackets, i don’t want to get an offer for jackets. I want to get an offer that’s not only customized, but timely. That requires a quick turn of information back into the database, so we can make those decisions as circumstances and customer behavior changes.

“For example, suppose i’m on the website, i click on “Jackets,” then spend a lot of time browsing and looking at jackets, but i don’t buy one. Then i go into a store the next day but i don’t buy a jacket. That information indicates a marketing opportunity.

I’m obviously interested in jackets, so did the store not have the size the style I wanted, or do i just need a little nudge to go back and purchase that jacket? Having that kind of data on a timely basis is very, very important.

“We can be very specific on some of our collateral, perhaps tailoring it to the store where the customer has most recently shopped, the store closest to her home, or in sending thank you notes from associates for her most recent purchase. Personalizing the communications on that level is really important to us.”

Make mid-promotion corrections.

if a product doesn’t turn out to be a big seller, Chico’s can quickly change its promotional strategy, something it could not do before, Buettin said. “With our old solution, when a campaign was built, if there were any changes, for the most part you had to start from scratch and rebuild. That’s just not sustainable in today’s marketing environment. now we can react really quickly to last-minute changes due to a turn in business. That capability is critical for us.”

■ Using SAS OnDemand: Marketing Automation, Chico’s has reduced the time it takes to create marketing campaigns, created a single view of the customer across multiple brands, and given users control over the data to create new insights for strategy and segmentation.

■ “ We want to make sure we know who our customers are in each and every one of the boutiques, and to serve those boutiques in a way that ensures customers are getting what they’re looking for.”

Barb Buettin

Director of CRM and Enterprise

Information Management for Chico’s

Improve cross-sell success.

“With sas ^® enterprise Miner ^™ and sas ^® enterprise Guide ^® , we can now be much more predictive and we can market to that, versus just always looking at what happened in the past,” said Buettin. “That gives us a strong capability, particularly in cross-brand marketing.” For example, Chico’s identifies White House | Black Market shoppers who match the typical soma shopper and markets to them to drive sales at soma.

“We know where the customer is buying the merchandise as well as which brand owns the merchandise,” Buettin said. “For instance, if we sell soma merchandise in a Chico’s store, we see her as a soma customer. The ability to see which brand she is purchasing, not just the store, is very powerful for us in identifying marketing opportunities.”

Ensure that the right merchandise is in the right place.

“if you think about the traditional view of the supply chain, it revolves around issues of merchandise planning: where can we get the merchandise, how quickly can we get the merchandise, how quickly can we distribute the merchandise, and what is the right assortment planning,” said Buettin.

“We have really tried to turn that on its head. We are so focused on our customers and that relationship that we want to get the right merchandise to the right store at the right time. With our rich database, we essentially can assist in merchandise planning at a very granular level, accounting for subtle variances in pricing, culture, color palettes, styles, climate and sizes in different stores and areas of the country.”

Give business users control of the data and end-to-end process.

“Before we were on sas, we didn’t have the in-house expertise to do our own modeling,” Buettin recalled. “We had to send the data out for modeling, and then integrate that data back in. it meant a much longer time frame to be able to get any analytical modeling for a campaign, let alone to deal with last-minute changes. We are now in full control of our end-to-end solution, and that’s very powerful for us.”

a lot of the work is being done by marketing managers and business analysts, not reliant on programmers or statisticians. “We put up sas Web report studio [the intuitive, visual, self-service reporting tool], but once our business users got their hands on the data in sas enterprise Guide, that’s what they wanted to use,” said Buettin.

“This is a little bit of an unusual situation, but with our prior solution, business users very much had to be in the data, so they are very data-savvy. sas is sophisticated, yet relatively easy to use. a lay business person can use the software relatively quickly.’’

■ “There are a lot of products that execute campaigns. The integration and ease of use of the SAS solution was the edge.”

Barb Buettin

Director of CRM and Enterprise

Information Management for Chico’s

Closing Thoughts

What advice would Buettin offer to organizations looking to achieve similar results?

“Don’t be afraid. it’s easy to be overwhelmed when you look at new data elements such as online and click data. if you are well connected to your business partners, it becomes much easier to understand how to integrate that data to address their business problems. Don’t be afraid to go roll up your sleeves with them and dig in to understanding the business as well as using the data.

“The close partnership between the marketing partners and iT was key to our success.

not only do we sit in the same building, you would not know the difference between our two teams, which is highly unusual. our data team is very business-savvy, and our business team is very data-savvy. so we can have very frank conversations with them about the data, and they can have very frank conversations with us about the strategic planning. We are included in strategic discussions at the Coo and Cio level. even though there are a couple of layers between us and the executives, they want to hear our opinion; they’re very interested in what our team is doing.”

They ought to be. Models that once took 30 days to turn around externally now take a fraction of the time. Chico’s tripled the lift on a campaign to bring back lapsed customers. insight gained on customers who shop multiple Chico’s brands has resulted in more successful cross-promotion.

That’s a well-deserved reward for using data wisely to “help millions of women look as

great as they feel.”

About the Presenters

Barb Buettin,

Director of CRM and Enterprise Information Management at Chico’s FAS Inc.

Barb Buettin brings more than 25 years of experience in technology implementations, development and business processes, along with a true love for managing strategic business activities with data. she is responsible for all technologies related to the customer loyalty program, customer marketing data and the management of enterprise information tools.

Prior to joining Chico’s Fas, Buettin managed the development and deployment of the CrM technologies for limited Brands and led its initial development of enterprise data strategies. Before that, she spent 10 years in independent consulting focused on business process redesign and augmenting technologies to support those initiatives.

Mark Troester,

Senior Product Marketing Consultant for CIO/IT, SAS

Mark Troester oversees the marketing efforts for sas Data Management and Cio and iT product offerings. He leads the product marketing efforts for sas Data Management products, which include data integration, data quality, master data management and enterprise data access capabilities. Troester also leads the overall strategy for Cios and iT, and helps manage the sas High-Performance Computing, sas onDemand and sas iT intelligence solutions.

Before joining sas, he led the product marketing and product management efforts for several software startups and independent software vendors. Troester’s passions encompass applying technology for business gain, iT and business collaboration, iT- driven business strategy and determining practical applications for new technologies.

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