Like many retailers, Macy’s reported strong sales in November, aided by Black Friday discounts and opening on Thanksgiving night. While the sales gave Macy’s numbers a boost last month and drew lots of customers, retailers know it takes more than discounts to keep them.
Macy’s has engineered a sophisticated approach to building customer loyalty, from their “My Macy’s” model of tailoring merchandise to individual markets to tracking customers’ buying patterns to omnichannel integration.
This January at the NRF 101st Annual Convention & EXPO, Peter Sachse, Macy’s Chief Marketing Officer and Chairman/CEO of Macys.com and RAMA Board member, will lead a session that takes attendees inside the complex program and how it revolutionized the way Macy’s does business.
As part of our retail thought leader series leading up to Retail’s BIG Show, I asked Peter to give us a few insights about what it takes to build customer loyalty.
Your session at Retail’s BIG Show is called, Customer Loyalty Is Not a Tactic But a Way of Doing Business: An Inside Look at Macy’s Holistic Customer Journey. Tell us what that means and how the concept evolved.
Macy's CMO Peter Sachse
What it is really all about is putting the customer at the center of all decisions. And what that means is that over the years, many retailers have made a lot of decisions that were good for the short term profit and loss of the company, but may not be good for the long-term customer relationship.
So now we’re bringing customer data into what historically have been merchandising decisions. Questions such as how is the gross margin, is the turnover adequate, etc. don’t traditionally have any customer metrics to them, but when you bring the customer in and ask, do you really want to eliminate that brand from a certain number of stores, don’t you want to see who’s been buying that brand and what else they’ve been buying? And are they your best customers? Are they your second best customers?
What we’re doing is truly putting the customer at the center of all decisions—having him or her at the table every time we meet.
With increasingly mobile, digital and social shoppers, do you think it’s more challenging for retailers to capture a customer’s loyalty?
No, I think it’s the opposite if you’re able to leverage all those things in order to communicate with a customer in a way that she would welcome. There are a lot more techniques out there than we used to have to engage the customer in the business, and to engage with the customer. It’s a much more immediate basis than direct mail or the ways we had before, so I think it should increase loyalty.
What has made your My Macy’s localization model so successful?
We keep working at it every single day. We’re very happy with the results to date, but we have a very long way to go. But if you think about what My Macy’s is, it’s the epitome of customer centricity. It’s saying I’m going to put in your store, what you need and when, not what I think you need and when. Obviously there’s a degree of fashion in our business, where the customer depends on us to show her new things that are out in the marketplace, but there’s also a fair amount of predictability to our business. And we just need to listen better. I think that’s what we do with My Macy’s. We listen better.
Since you launched the My Macy’s program three years ago, customer behavior has already evolved, with the growing popularity of social media, tablets and smartphones. How are you taking advantage of these new marketing and sales channels?
We use all of them extensively. We’re steeped in social media. We have all the appropriate apps for Android and iOS and our website works very easily on tablets.
Based on your experiences, what are some of the most common mistakes retailers make when attempting to build customer loyalty?
I would say first that it is not a short-term tactic. And secondly, to really build loyalty, you have to live and walk the talk of putting the customer at the center of every decision. You can’t just say I’d like to do that, or that it sounds good. You have to live it. The customer will eventually sense it, feel it, and reward you for that.
Macy’s opened up the holiday season with very strong numbers over Black Friday weekend. What do you make of the customer mindset this holiday season?
Well, we all see the same unemployment statistics. The consumer is stretched, so what you need to do is execute all the things I mentioned before—My Macy’s, localization strategies, use of social and digital media, and mobile marketing tactics to reach the consumer and convince her to shop with you versus others. She has a lot of choices, but hopefully through customer centricity, customer loyalty she chooses Macy’s.
Macy’s enjoys a strong association with holiday shopping, strengthened by its “magic of Macy’s” and “Believe” campaigns. How do you leverage that throughout the holidays and beyond?
The “magic of Macy’s” is our tag line, and we believe that is what Macy’s can deliver. And that magic is delivered in innumerable ways. From granting wishes through the Make-A-Wish Foundation in association with our Believe campaign, to a parade on Thanksgiving Day, to having a tremendous experience in our stores or online, to walking into one of our stores and saying, “Boy, they get me.” That’s My Macy’s. So we think we can deliver magic. It’s strengthened by our Believe campaign, but it is part of our DNA all year long.
How do you usually do most of your own holiday shopping?
Late and frantically. But, honestly, I don’t have a lot to do, my wife takes care of most of it. I just need to take care of her.
What do the next five years of retail look like?
It will become increasingly more digital, omnichannel and mobile. All centered around the customer.
In addition to your breakout presentation, what are you most looking forward to at Retail’s BIG Show this year?
I go to the NRF Convention each year because we’re big participants in the National Retail Federation, and I want to support the NRF and the BIG Show. This year, I think I’m most interested in walking the EXPO floor and looking at the new technologies that are available.
To learn more about what’s happening at Retail’s BIG Show, visit www.nrf.com/annual.
4 Comments
Peter Sachse gets customer service. All decisions center around the customer. That doesn’t give permission for the customer to take advantage of Macy’s. It just helps Macy’s employees to make good decisions that are focused on the customer. I always enjoy the Macy’s experience. Thanks for a great interview.
Shep Hyken, author of “The Amazement Revolution”
Great interview. As Peter clearly lays out, Macy’s is thinking differently, focusing on the consumer, working the corners and every little detail and it is no surprise, the results show. Congrats to everyone at Macy’s on emerging as big box retail thought leaders and changing the paradigms on how to best satisfy consumers.
I’m surprised at the lack of comments on this story…I agree with Shep that having a customer centric mindset when making business decisions makes sense.
When building customer loyalty, why would you pay a company like groupon to provide you with an expensive marketing campaign that largely discounts your product? That tends to bring the wrong kind of customer into your store, the bargain shopper that is only interested in a hand out.
Being able to connect with your customer, identify who they are, and what they purchase will allow you to have the items on hand that your customers are most likely to buy. Talk about streamlining your supply chain and maximizing the shelf space!
Great story Macy’s!
Peter Sachse makes good points on customer service. Macy’s in my neighborhood focuses on having older mature employees. Unlike Some retailers, if you ask a question, the sales associate will give an intelligent answer or find the answer for you. Macy’s at square one Mall just North of Boston seem to have their employee mix, just right. Putting knowledgeable, experienced mature employees in the right departments. These employees are conscientious, courteous and offer their help with a sincere effort rather than the look of annoyance you receive from a young eighteen year old associate elsewhere. Let’s face it most of us who are shopping and have the resources to shop Macy’s are not the same customer mix which shops at other stores. Macy’s has realized what other Big Box Retailers have forgotten. That Customer Service and a team of great employees matter.