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BSBMKG515 CONDUCT A MARKETING AUDIT

Questions: What are 'David Jones' measuring in terms of marketing metrics and why?

Please examine the advertising and branding for Australian retailer 'David Jones' below and consider the changes in marketing strategy as offered in the interview with the Chief Marketing Officer (CMO).

CMO interview: David Jones' marketing chief on data, loyalty and turning around a retailer

The Australian department store's CMO, David Robinson, shares how he's investing in significant customer analytics and insights activities, along with loyalty, as part of his new omni-channel marketing strategy.

David Jones CMO, David Robinson, sees his role as one of business leadership and collaboration as much as marketing strategy. Given his 18-year history with the retailer working in "every nook and cranny of this business", it's an unsurprising answer.

For the past two years, Robinson has been leading a transformation of David Jones' marketing function, using customer insights, digital channels, content and data as his tools for change. Before this, he developed and led the retailer's omni-channel retail (OCR) strategy, reporting directly to the CEO and working in collaboration with IT, marketing, merchandising and operational teams.

"I had to work right across the business to facilitate that, and to say where we needed to go, how are we going to get there and then actually get us there," he tells CMO. "That was two to three years of intense change within the organisation. We hadn't invested a lot in the seven years previously, and I said to my CEO that we were really doing the work of 10 years in 10 months by the time we got to the implementation phase."

Today, David Jones has the majority of its brands available online, offers a variety of delivery options and payment methods, and claims digital has become the most profitable 'store' within its portfolio. Out of this program of work, it became apparent marketing also needed an overhaul. When Robinson took up the CMO post, marketing in David Jones was traditional, limited and lacked a digital and data backbone.

"We had one customer segment, which was the David Jones customer, because everyone shopped at David Jones," he says. "And we had three channels to market: Catalogues, TV and press ads.

"We've gone through significant change from a marketing perspective, and that's also why my OCR group executive morphed into looking into after both omni-channel as well as the broader marketing channels. It was recognition we really needed to change from a marketing perspective."

Making the marketing strategy shift

Robinson outlines four key pillars to his marketing strategy. The first is taking a digital-first approach. This year, more than 50 per cent of the retailer's marketing spend will be on digital.

The second pillar is integrated channel activities, targeting key customer segments his team has spent a huge amount of time defining and understanding. To help, Robinson removed channel-based responsibilities within the team.

"Thirdly, it is about content. We have a stated objective within the marketing team and business to become the best fashion publisher in Australia, full stop," Robinson says. "We have a clear plan to get ourselves there and we have some alliances coming up that will help us facilitate that."

The fourth component is data and insights. To make this a reality, David Jones has embarked on a three-stream exercise designed to get to know its customers, and where opportunities exist for growth. "We understood 6 per cent of our customers, or 20 per cent of sales, made by our AMEX/David Jones cardholder customers, very, very well. But we didn't necessarily understand the other percent of our customer base," he says.

Identifying the customer

To achieve this, Robinson and his team embarked on an extensive customer research and insights exercise. He outlines three main buckets of data insight: What's happening in-store, what's happening outside the store with core customer segments, and developing a loyalty scheme that allows the retailer to have a one-to-one relationship with a customer.

"We're working on a loyalty scheme, which will enable us to develop that one-to-one relationship," he says. "We have done an extensive amount of research both with David Jones and with the four Country Road group of brands [Country Road, Witchery, Trenery and Mimco], and across all our customer segments within that. We have done a significant amount of qualitative research, as well as two rounds of quantitative research.

"We have landed on a value proposition and agreed on that for David Jones. At this stage, we're working through implementation and time lines. And we're very excited about it." In the meantime, David Jones needed to concentrate on tapping in-store and outside market insights, Robinson says.

"Firstly, we went to our point-of-sale data... We spent time looking at every single transaction, understanding how often our customers came in, what they purchased with what, and developed a customer profile of frequency, spend, of purchases," he explains. This provided the basis for David Jones' customer segmentation approach. Robinson says it then went to data insights consultancy, Quantium, to top up its knowledge. Initially, this involved delving into credit card information to develop a profile of the customers in-store in terms of age, demographics and background. These insights were then combined with POS data and external market insights from Quantium to understand where core segments of customers were shopping when they weren't at David Jones.

"This helped developed a really clear picture of what our customer base looked like and how they shop with us," Robinson says. "More importantly, we can use that in two ways. Our merchandise team has used it to develop a 16-box grid, which looks at both a value spectrum, and a style spectrum. "What we did is take all that POS, Quantium data and defined brands we view as competitors, plotting each in those boxes to understand the size of the market, what our penetration was, where the brand appeal sat with customers, and if we had those brands in our business or something similar. All of that gave us a very granular view of where we dominate, where we have opportunity, and where we don't want to play."

Robinson admits to a number of surprises. "In areas where we thought we were doing really well, once we got down to a granular level of defining the market in Australia, we realised there was further opportunity," he says. "And in areas where we thought we maybe underperforming in, we weren't. We used that information in determining how we go to market." The work took six months, but validated who David Jones' core customer was - and it was a younger customer than many thought, Robinson claims.

"Historically, if the grandmother shopped at David Jones, the mother then shopped at David Jones so the daughter would shop at David Jones. The question I posed to the board four years ago was what happens if she doesn't? The retail landscape after all has changed so much," he says. "We looked at what we needed to do to attract that younger customer, which covered everything from our merchandise strategy, to in-store and how we take the brand to market. We now know we overindex in those younger demographics [18-24 and 25-34 year old] against the Australian population, and they are our fastest growing segments, accounting for nearly half of all new customers every year."

Similarly, David Jones'POS data highlighted specific segments of customers worth targeting, such as the 'considered shopper' and 'fashion butterfly'. "We did qualitative research, speaking to nearly 3000 customers, and out of that we came up with theoretical customer segments," Robinson says. "We then did our POS analysis and it was surprising as you could virtually lay them out across the top."

Data insight initiatives continue, and Robinson says David Jones has just completed work on one customer segment to understand what purchases they made inside David Jones and importantly, what they're not buying. "We also know a majority of those brands are ones we stock, so there's the opportunity," he says. Turning this into a transaction, however, is not just a task for marketing, it's a whole-of-business capability.

"It's everything from simply communicating that insight to the area on the floor where the people they purchasing, so staff know there is a proportion of that customer base that isn't going to visit another part of the store, to the way we do offers, the way we merchandise and sign those offers in store," Robinson says. "It's not just marketing either. For instance, it changes the way we range, because you need to ensure you've got the right products for the right customer base."

Digital ownership

This belief in whole-of-business change is apparent in David Jones' approach to digital strategy and capability. While Robinson admits his previous role was much like being a chief digital officer, he says David Jones made a conscious decision four years ago to integrate digital into business-as-usual.

"If you look at our omni-channel strategy, buyers buy across all channels, operations are accountable for servicing the customer across all channels, IT is accountable for having the systems stay up across all channels, and marketing is responsible for taking our brand to market across all channels," he says. "That by definition means the executive committee is accountable for our digital transformation across every channel.

"The days of having one single dedicated person or department in my mind, are long gone. We don't have a digital marketing manager - I got rid of that two years ago. If you are a marketer, no matter what you do - even for our catalogue manager - you're just as much one channel as another."

David Jones is about to go through phase two of its digitisation efforts. In recent years, the retailer has invested in foundation technologies for its omni-channel approach, including a new POS system, order management system, Web shop, and warehouse management system.

Robinson says it's now looking at further systems to improve retail management and to pull it all together. "We'll then have a single view of customer that we need to plug in as part of the loyalty campaign management. So work doesn't stop," he says.