Macy’s CMO takes unconventional approach: “We don’t need to get new customers”

5 Comments | This entry was posted in eCommerce, Education, Events, Marketing, Retail Companies, Retail Trends

Before Macy’s CMO Peter Sachse spoke at our Retail Innovation & Marketing Conference about creating a consistent, creative customer experience, I was prepared to hear many of the same great stories and examples that have been told like folklore in countless meetings and conferences I’ve attended for the last year. Company Chairman and CEO Terry Lundgren, who is also the Chairman of NRF’s Board of Directors, visited our office last week and was very candid with our staff about Macy’s goals and objectives. I’d also watched Lundgren speak at Shop.org’s Annual Summit last year and heard Macy’s used as a case study a number of times during our Annual Convention. I wasn’t going to blame them if much of what I’d heard was a repeat.

It wasn’t.

Macy's CMO Peter Sachse

Sachse spent the majority of his keynote talking about a shift in company focus. Instead of its traditional tunnel-vision focus on the product, he said, Macy’s has started focusing on the customer. Sachse’s presentation offered a fascinating insight into how – and why – a major retailer has changed its approach to interacting with and listening to shoppers.

Here’s how it all started: Last year, Macy’s embarked on an intense research project to better understand their current customers. They conducted dozens of focus groups. Talked with nearly a thousand people walking out of their stores. Leveraged data from NPD Group for a holistic understanding of their customers. Combed through all of their transactional data to find themes in buying patterns and shopping habits.

The overwhelming finding? For Macy’s, “What we don’t need to do is get new customers,” Sachse said. Instead, “we realized that all we need to do is take care of those who already love us.”

(Side note: What a smart strategy. I hope my constant head-nodding during the presentation was not distracting to the people sitting behind me.)

The company has set out on a goal to encourage each existing customers to visit the store one more time each year. “Half the battle is won if we can get them to walk into our store,” Sachse said. “And if we convert them during that visit, our comp store sales will explode.”

To accomplish that goal, he said, “We had to get a lot closer to the customer,” which has led to the company’s new strategy of customer-centricity.

Here were some tips from Peter Sachse on how Macy’s is making decisions with the customer in mind. Take a crack at implementing some of these simple tips at your company, and you might be surprised how it changes your way of thinking:

Make merchandising decisions with the customer in mind. Macy’s used to let buyers make merchandising decisions strictly with P&L statements. Today, the company layers customer insight over the sales metrics, which helps buyers make more holistic decisions over how pulling a product might impact customer behavior and overall sales. The product is no longer king anymore, said Sachse. Instead, the customer is queen. (Or king, of course.)

Start all meetings by asking “what will our customer get out of this discussion?” At Macy’s, Sachse says, “If there’s no answer, the meeting is over.”

Create a customer-champion team. Macy’s Chairman and CEO Terry Lundgren calls himself the chief customer officer. Who’s the customer champion in your company?

Use your website as the hub of the brand. “Anything and everything a customer should ever want to do, they should be able to do on Macys.com,” Sachse said. “There isn’t anything more powerful that I have in my hands than Macys.com as a marketing tool.” Throughout his keynote, he illustrated different areas on the website including customer reviews, credit card information and TV ads.

Find a campaign and a cause that your customers – and employees – will rally around. For Macy’s – a company with a long, storied history – that campaign came in the form of its “Believe” campaign, launched during the ‘08 Holiday and again in ’09. For each letter to Santa that was brought into Macy’s, the company would donate $1 to Make-A-Wish. And if the goal of the “Believe” campaign was to bring people to the stores, it succeeded. “I’ve got to tell you, these people came,” Sachse said. “We had classrooms that used the Santa letter as a writing lesson – then they came as a field trip to bring them all in.”

In addition, the “Believe” campaign brought a positive unintended outcome: the pride it instilled in employees. Sachse said the company received thousands of emails from its own employees about how proud they were of Macy’s campaign that gives back to communities. And we all know when employees feel good, that ultimately leads to a better customer experience.

Posted in: eCommerce | Education | Events | Marketing | Retail Companies | Retail Trends and tagged , , , , , , , , , , , ,
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3 Comments

  1. Posted March 5, 2010 at 2:30 pm | Permalink

    Peter hit this one out of the park. Not common for a CMO or even Chairman to sate “we don’t need new customers”. In fact who knows the value of a new customer if a company does not measure the affect of an existing customer. This powerful brand may not need new customers but rather the ability to communicate to they’re existing consumer base with two things, relevance and regularity!
    I love their approach!
    jeff

  2. Posted March 10, 2010 at 5:56 pm | Permalink

    I could not agree more! Macy’s needs to understand the buying patterns of its customers and serve them better. This will result in higher customer satisfaction and higher profits. If you do not know the buying patterns of your current customers, getting more customers is NOT going to help.

    -J

  3. avatar Roberta Sampson
    Posted May 1, 2010 at 8:59 pm | Permalink

    I see these statements were made just about two months ago. I’ll be watching the two local Macy’s over the next year to see whether or not this speech translates into believable action. The store in Boise Idaho at the Towne Square Mall is not supplied by the Macy’s buyers with women’s sizes (14W – 24W) in Alfred Dunner or JMcClintock lines and others. They also now stop many of their size choices in female clothing at a 14, maybe a 16. They do send in some billowy expansive tops in their rather limited Woman Dept on the second floor but that’s about all if you don’t mind feeling like you are wearing a modified sheet. As I said, I’ll drop in at the two Macy’s off and on in the next year and see if any changes are made to actually stocking the floor with clothing for all women.

2 Trackbacks

  1. [...] Macy’s, you practically have CMO Peter Sachse committing marketing treason, saying, “What we don’t need to do is get new customers.” Yet he’s right, because he too has placed the customer at the forefront of marketing’s [...]

  2. [...] Macy’s Strategy to Love the Customers They Have Earlier this year, Macy’s CMO Peter Sachse explained Macy’s ambition to grow sales from existing customers (rather than acquire new customers) by encouraging existing customers to make one more visit per year (rather than grow basket size). [...]

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