Sketchers USA: Using Loyalty Programs and Customer Data to Grow Skechers USA, Inc., a billion$-$dollar company, describes itself as $"$an award$-$winning global leader in the lifestyle footwear industry, $[$and$]$ designs, develops and markets lifestyle footwear that appeals to men, women, and children of all ages... With more than $3,000$ styles, Skechers meets the needs of male and female consumers across every age and demographic." Any shoe company could say something similar. What separates one from another? Increasingly, it isn't the shoes. It's the information. Information systems are woven into every part of the Skechers's business. Its recent investment in Oracle applications, including cloud computing $($introduced in the "Telecommunications and Networks" section of this chapter$)$ demonstrates the company's commitment to information systems. Mark Bravo, Skechers's senior vice presideat of finance, says, $"$As we manage growth, we are establishing a business structure that lowers costs and creates more value and flexibility across the business. The $...$ cloud services help us to lighten our IT overhead and enable us to respond more quickly to market opportunitics." Therefore, it was natural that Skechers would turn to information systems to help with customer retention. In a fast$-$moving consumer product category like shoes, using information to understand, attract, and retain customers is even more important than having the latest technology. Many companies use loyalty programs to help retain customers. A pizza shop might give its customers a card that is punched every time they buy a pizza. When the card has $10$ punches, the customer can order a free medium pizza with two toppings. Loyalty programs reduce the chances of a regular customer switching suppliers even if another shop sells pizza for less during a promotion or offers a different advantage. After Skechers decided to offer a loyalty program, its challenge was this: How to design the program for greatest sales impact? The company had to balance case of earning rewards, the value of the rewards, and other factors so it gave away as little as possible while retaining as many loyal customers as possible. In the pizza shop, a free pizza after buying five might cost too much revenue; a free pizza after $20$ might put the rewards too far out in the future to be attractive. Ten is a good middle ground.The loyalty program that Skechers designed, planned jointly by its marketing and information systems departments, is called Skechers Elite. Members earn free merchandise $($$$10$ credit for every $$150$ spent$),$ get free shipping, and enjoy special promotions. In addition, Gold members $($who spend at least $$750$ on Skechers shoes in a calendar year$)$ and Platinum members $($$$1,000)$ get higher merchandise credits, sneak pecks at future products, and carn other greater benefits. Skechers couldn't operate Skechers Elite without information systems. The system that supports this loyalty program records information about members, their purchases, and the rewards they're entitled to$,$ so members can track their participation online. In addition, the system provides Skechers's management with information about the purchase patterns of regular customers, such as shoe designs that appeal to them. The system also lets Skechers send targeted promotional materials to its best customers. Skechers's CEO Robert Greenberg explains, $"2012$ was a remarkable year for Skechers. In $2013,$ the company opened $30$ to $35$ new retail stores. We grew our existing product divisions, broadened our offering to consumers with several new product lines, established an award$-$winning performance division, and further grew our heritage business. We have taken a more focused approach to growing our product offering, added features and technologies that consumers desire, and supported these efforts with effective marketing." Discussion Questions $1.$How did Skechers achieve success by looking at what other companies outside its industry were doing with technology? $2.$What kind of information does the Skechers Elite program use? Aside from its direct benefit in increasing customer loyalty, what other benefits might the program have? How could Skechers use the information in its planning and sales activities? Critical Thinking Questions $1.$In the five years from $2005$ to $2012,$ Skechers approximately doubled its revenue: from about $$1$ billion to $$2\mathrm{.}0$ billion. In the next two years, revenue dropped $20$ percent to $$1\mathrm{.}6$ billion in $2012.$ How do you think these changes in revenue growth affected its spending on information systems? $2.$Skechers CEO Robert Greenberg explains one reason for his company's success in $2012$: $"$We have taken a more focused approach to growing our product offer$-$ing, added features and technologies that consumers desire, and supported these efforts with effective marketing." Apart from the loyalty program, how else can Sketcher use information systems to support marketing?