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Cataloging Customers

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Online purchasers leave behind a wealth of information about their shopping habits: how frequently they purchase; whether they typically pay full price or shop for deals; and their average order size, among other data points. The challenge for most retailers is capturing the information in a way that allows for intelligent analysis and action.

Online fashion, beauty and entertainment lifestyle publication StyleBluePrint, aimed at affluent women in selected southern cities, features local stores, restaurants and events. The site started as a blog by co-founders Liza Graves and Elizabeth Fox in 2009; one year later, “it was a five-day, 50-hour-a-week hobby,” says Jay Graves, Liza’s husband and StyleBluePrint marketing consultant. After realizing that writing about local businesses resulted in a flood of customers, the two decided to offer Groupon-like deals tailored to readers in each city. The sites would capture some revenue when readers took advantage of the deals.

At the outset, however, it wasn’t clear whether readers who took advantage of these deals would be profitable readers and sustained customers, so the company began using marketing analytics tool Custora. Focused on online retailers, Custora was developed to “make marketing relevant and actionable,” says co-founder Corey Pierson.

Custora analyzes customer behavior to determine the value offered by different customer segments and identifies the types of customers most likely to return, those who probably will order only occasionally and the amounts different customers are likely to spend.

“It almost builds a dictionary of customer types,” Pierson says.

The software then matches new customers against those it’s already analyzed, grouping together customers with similar ordering behavior. If the software notices that a group of customers joined and made purchases once a month for three months, but didn’t purchase anything for two subsequent months, it will check whether that lapse is a sign they’re likely to fade away, based on the behavior of similar customers. If so, the retailer probably will want to reach out to the group.

What’s unique about the software, Pierson says, is its ability to analyze historical data, develop a predictive modeling tool and then facilitate marketing action based on the analysis. “Insight is only part of the puzzle,” he says.

Custora integrates with many e-mail marketing providers, so if an analysis shows a segment of customers slowly dropping off, the marketing team can reach out to them through a targeted marketing campaign. “It really closes the loop,” Pierson says.

To do this, software-as-a-service (SAAS) Custora has to integrate with the retailer’s order or transaction databases. “That’s where the rich information on patterns lives,” Pierson says. “You have to integrate with this information to get things started.” The software connects with most major vendors in this space, as well as with most popular e-mail programs, he says.

Making this connection is fairly straightforward, according to Graves. It typically requires uploading two data files: one of customers, and one of transactions. “Most businesses can do this” pretty easily, he says.

Safely growing the business
Graves says he initially looked into Custora based on several recommendations he saw on Twitter. After downloading information from the StyleBluePrint database, “I was blown away by the dashboard Custora put in front of me,” he says. “It was what I always wanted.” He says he especially appreciated the ability to determine which customer groups offered greater value.

Graves found that StyleBluePrint readers who took advantage of the deals offered are, indeed, profitable in the long run. “We found that they’re highly engaged with the brand,” he says. “It was a surprising finding, but in retrospect makes sense — the more interaction with our brand … the better customers they are.”

Based on this information, StyleBluePrint refined its customer acquisition category, developing more targeted and frequent strategies. The analysis “had a significant impact from a customer acquisition standpoint,” Graves says.

In fact, StyleBluePrint went from no revenue to well into six figures within a year, Graves says. It currently enjoys about 400,000 page views and 100,000 unique visitors each month, and employs five full-time and 10 part-time workers. “It’s gone from blog to content-driven commerce,” he says.

Even as many other deal sites have fallen on hard times, StyleBluePrint’s deal business was up 15 percent last year, Graves says. The business also appears sustainable, providing Graves with some confidence as he calculates the amount the site can spend to acquire each customer. “We can grow the business and do it safely.”

Graves also has been begun using the software to break out results by metro area and test different marketing campaigns.

Among the most recent additions to Custora are new techniques for customer segmentation, Pierson says. The application can identify a retailer’s best customers and see which products they are most likely to purchase. For an apparel retailer, the software may find that some customers focus on expensive jeans and boots while others gravitate to athletic apparel. Having uncovered this, the retailer then can determine how valuable each type is. Are the athletes better customers over the long run than the fashionistas? What is bringing each type of customer to the retailer?

As Pierson says, “It gets the marketer closer to the types of real people at the end of their business.”

Custora’s benefits have been clear, Graves says. “I just haven’t been around many systems that have easy-to-explain benefits that involve customer data,” he says. “When we analyze data, we find areas of customer acquisition that we never would have found without Custora.”