This article was published in the September 2016 issue of STORES Magazine.
They’re called “Fossil Fanatics,” but they’re not the ones doing the digging — they’re the ones being dug up.
Fossil Group, which sells products across 16 brands online and in 600 stores globally, is redefining customer segmentation and uncovering new selling opportunities through data analytics and business intelligence.
“I joined Fossil about three years ago when gathering and using data really didn’t exist. We had an external database with another company that was very rudimentary,” says Carrie Fisher, senior vice president, chief marketing officer and head of e-commerce for Fossil Group.
“We were a bit behind on direct-to-consumer marketing and data acquisition. We did basics like sending out mailers and having an email list. But there was no analytics team for internal aggregation of data or business intelligence around consumers,” she says.
The agenda “was to move forward to more targeted and measurable marketing specific to different consumer groups,” she says. “We had to go through the process of customer segmentation and understanding different behaviors across multiple categories. We quickly found out that watch buyers were very different than our leather goods buyers.”
Finding opportunities
Before that, the company had to deal with issues like an inefficient direct mail budget, particularly in watches, which is a less frequently purchased category.
“Using a recency/frequency/monetary model that was good for [manufactured] products wasn’t great for us, because we didn’t understand why a consumer buys a watch multiple times a year versus once every five years. As such, we were only reaching our most recent buyers — our most heavily engaged ‘Fossil Fanatics,’” Fisher says.
“We were missing the opportunity to get more of them into a fashion mindset more frequently. Additionally, from an infrastructure standpoint, we had different systems across e-commerce. When we started stepping up social media marketing with contests, campaigns and promotions, there was no integration of customer data. That was a real blind spot for us. We had all that data sitting in different places that couldn’t be paired up,” says Fisher.
For instance, Fossil was unable to ascertain “which customers were in our social channel versus direct mail and email. We could see they were different and we knew we were being successful driving business to stores from digital engagement. But we didn’t have a full picture of why we could get certain people in stores and not others.”
“If I have your email I can go out and match it to your Facebook and Twitter pages, and get the full social media and store base view of our customers.”
That has changed, with help from customer science and strategy consulting firm Elicit. “There were a lot of missed opportunities because we weren’t speaking to a lot of customers. Now, Fossil has a central repository that brings all data together,” she says. “So, if I have your email I can go out and match it to your Facebook and Twitter pages, and get the full social media and store base view of our customers.”
The relationship with Elicit began just before Fisher came on board. Fossil CIO Ed Robben had worked with Elicit during his time as CIO of JCPenney. “He had seen them do some great work and brought them here,” Fisher says. “I started by building out the agenda on how we were going to drive targeted, measureable marketing and how to drive traffic to the stores.”
The first step was building an internal system to pull all the data together from different sources. “We started by doing all the segmentation work to help us understand the data and what we needed to build out in the data warehouse in order to drive engagement or activate traffic to stores,” Fisher says. “So by the time we actually put the pieces of hardware and software together, it was pretty straightforward. Elicit then built the model on top of the data warehouse that the IT team put together internally.
Fossil’s analytics team then worked with Elicit “to make sure we understood the model,” she says. “We also cleansed the data by purging millions of old customer records and determining which would be reactivated.”
Driving traffic
The company is just starting to understand who its customers are and how to engage them effectively.
“We’re understanding different segments and we’ve been able to cut our direct mail by 20 percent, but drive 25 percent higher revenue on that 20 percent lower budget,” she says. “That allows me to shift my mix and moves more [resources] to digital marketing while understanding the predictive behavior of our consumers, and use these profiles in conjunction with our media buying agencies.”
The result has been a 20 percent improvement in the return on investment and efficiency of the digital marketing budget over the last couple of years. It has also increased the company’s ability to activate traffic to stores from digital.
Up to 75 percent of the people Fossil engage via email or digital marketing end up making an in-store purchase.
In fact, up to 75 percent of the people Fossil engages via email or digital marketing end up making an in-store purchase, Fisher says. “We’re working in a category that’s more emotion- and-fashion based than a box of tissues. It helps to find out who in the digital realm we are trying to reach and at what frequency, so we can manage the digital spend.”
Fossil can “look at past data like emails opened and purchase behavior to put together trends. … It’s all about stimulating demand” and broadening the customer base.
Fossil has been shifting its consumer profile “more to Millennials, the price points they look at and their digital behavior,” she says. “Over the past couple of years, we’ve grown that segment of our customer base” by several percentage points.
The new system hasn’t resulted in new product lines, but it has guided product assortment marketing. “We see [Millennials] reacting to specific price points, brighter colors and items like handbags that have more personality,” Fisher says.
“We’re micro-segmenting — something we couldn’t do before,” she says, noting heavier use of social media channels for promotions that will reach new customers.
Although the company is experiencing 20-30 percent online growth, watches and handbags can be a tough sell. “We get a lot of people in store to look at the product live, then they go back and buy it online. Once they are in our franchise and know how big a boyfriend watch is or the size of a crossbody versus a tote bag, then they move heavily online.”
When it comes to system refinements, Fisher says Fossil uses a “test-and-learn approach. We pace ourselves with the rest of the organization. But I’d say we were very early in our journey to customization.
The Fossil group consists of 15 brands. To date, “we’ve looked at brands like Michele, Skagen, Zodiac, Relic and Fossil individually since they all have their own customer set, she says. “Now we want to look at behaviors across brands and categories. We now have the infrastructure to look at all cross-category movement and potential.”