Database Marketing Manager
Northern Tool boots up marketing
Real-time analysis of marketing data improves response to catalogs
By eliminating the $500,000 cost of outsourcing data analysis and improving customer segmentation, Northern Tool and Equipment Co. paid for its purchase of SAS® Marketing Automation with the first three different catalog mailings it sent out. Since then, it has dramatically improved revenue and profit from a loyalty program and increased marketing campaign response rates tenfold.
Northern Tool began as a mail-order catalog company for the construction trades. Its product line has now evolved to include 40,000 products available by mail, 85 retail stores and a Top 100 Internet Retailer. It has 10 million active customers and $1 billion in annual sales. Until 10 years ago, when Northern Tool purchased SAS Marketing Automation, the company couldn’t link information from its three main sales and marketing channels – online, retail store and catalog. Because many of its customers shop through more than one of these channels, Northern Tool knew it was missing opportunities to market effectively.
"We knew our catalog customers, but we didn't have good data on the retail customer. We had about 20 million retail transactions, and we didn't know who those people were," explained David Hildebrandt, Database Marketing Manager. Marketing for each sector – retail, Internet and catalog – was managed separately and in a vacuum, he said.
We would not be able to grow our retail and mail-order business as quickly with a third party as we can with SAS Marketing Automation.
Before using SAS, the company outsourced its campaign management functions. The data was six to eight weeks out of date by the time it arrived. The reports were static, and the marketing department was restricted in what questions it could ask because each round of questions cost money. "And it took a lot of time to initiate the request, explain what we wanted and then wait for them to run an update," Hildebrandt said.
With SAS Marketing Automation, Northern Tool consolidated customer information from all its channels and made it available in real time. Now, the company is able to market to specific customer segments more successfully than ever. "If we’ve got a customer that’s interested in a certain product, they’re going to get a promotion that pertains to that product," Hildebrandt said. "And we can see trends that we couldn’t before. For instance, we might discover that people who purchase power washers online purchase the fluids, nozzles or pump oil in the stores." With data available on a daily basis, the company can execute and update customer segments quickly and efficiently – never missing a sales opportunity.
In addition, Northern Tool uses SAS® Customer Intelligence for:
- Revenue attribution: Allows Northern Tool to track customer purchases across channels – and understand if a catalog may have led to a purchase on other channels. The company has seen a tenfold increase in response rates for retail catalog mailings. Previous response rates for some mailings were 0.5 percent. Today, it has seen 4 to 5 percent response rates for some segments. There is no question about which catalog mailings work and why.
- Streams analysis: Northern Tool can optimize the number and type of catalog mailings based on behavior. “We know which customers head to the stores because of the catalogs and which customers never need a catalog to keep them loyal – or require only 50 percent of the mailings to keep shopping with us,” Hildebrandt said.
"We would not be able to grow our retail and mail-order business as quickly with a third party as we can with SAS Marketing Automation," Hildebrandt said.
Northern Tool wanted to bring marketing automation in house and merge data from its retail, catalog and Internet operations.
The company realized cost savings over its outsourced process within the first three campaigns. Response rates to mailings have increased by double digits, and automation of cross-sell and up-sell opportunities dramatically increased the profitability of a loyalty program.