Understanding Behavior

Management at Bon-Ton expects to increase the effectiveness of promotions, better allocate media resources and fine-tune its customer communications by applying business intelligence (BI) analytics to its processes. The SPSS BI software is enabling the retailer to mine hundreds of thousands of POS and customer records to better understand its customers and what motivates, or impacts, their shopping behavior.
"We're hoping that by the end of the year we have a fairly strong sense of what factors are influencing our events, what customer behavior we can understand and how we should change our communications with them," says Mike Hayes, senior vice president of marketing and administrative services at Bon-Ton.
A recent analysis project helped the retailer better understand the effectiveness of specific promotions. In the initial analysis, the company looked at promotional spikes in sales over a period of time and then compared those results with cumulative sales for certain customer groups. "We can start gauging how customers are responding to each week's promotions," Hayes says.
In early spring, Bon-Ton began an analysis project to look at the correlation between shopping patterns and media. As part of the analysis the retailer compared the successes of media campaigns based on the money spent per each media and how many sales the campaign produced. Results enabled the retailer to determine what the return on investment (ROI) is for each media on a per dollar scale. Bon- Ton further analyzed the data to determine the ROI for each customer segment per dollar spent for each media. Based on these analyses, says Hayes, the retailer expects to "get a better idea of how to allocate resources -- for every dollar spent which is the right media to use, and for which events, to get the most return."
Bon-Ton also has recently begun a purchase propensity project. The goal is to determine how often customers return to the store, in order to determine when, and how often, to communicate with customer segments. "For instance," says Hayes, "if we know a customer shops on average every 21 days, why should we communicate with them every week?" The results of the analysis will prevent Bon-Ton from over-communicating with its customers "because the last thing we want to do is barrage our customers with a bunch of mail they don't want to see."
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