Eddie Bauer Uses SAS® to Tailor Customer Relationships

Relationships mean the world to Eddie Bauer, especially since the Seattle-based apparel retailer is trying to build one-to-one relationships with more than 15 million retail, catalog and Internet customers.

Customer Success Video

Check out this video to learn more about Eddie Bauer and its successes with SAS.

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Harry Egler
Divisional VP for Strategic Planning, Eddie Bauer

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Using the SAS Solution for Customer Relationship Management, Eddie Bauer is optimizing the shopping experience for its customers to keep them happy while realizing the company's growth potential. To do that, the retailer must know its customers and must view the shopping experience from a client perspective.

A new perspective
"Until 1998, most of the customer data we had resided in a number of different places," says Harry Egler, divisional vice president of CRM at Eddie Bauer. "SAS helped us realize we should operate under a customer-centric point of view rather than a channel-centric point of view."

In 1998, the company developed a common database that provided "some very different strategic information about direction and decisions," Egler says. Methods such as comparing annual sales figures began to give way to customer relationship-oriented measures like determining a customer's current value and projecting her lifetime value. "The point is, we need to rethink the metrics we use to gauge our success and use products like SAS to determine what they need to be," Egler says.

Information drives business decisions
A division of the Spiegel Group, Eddie Bauer was founded in 1920 as a single store in Seattle. Since then, the company has grown to almost 600 stores worldwide. Eddie Bauer publishes 44 catalogs annually with a circulation of 105 million in the United States and Canada. It is a multimillion-dollar retail company trying to keep track of all its data.

An average customer might have placed 20 orders in the last five years, with four items per order. That's 80 items per customer. Now add to those 15 million to 20 million buying histories what you know about the customer: name, age and address, for example. What do you get? More than one terabyte, 1 trillion bytes, of raw data – not to mention a major headache: How do you turn all that data into information that will drive your business decisions?

That's exactly the situation Eddie Bauer found itself in before using SAS to integrate its data mining and data warehousing projects. "We had data in very different places," Egler says. "A couple of people were using tools like SAS to do data mining and bring the data from different areas together, but we were limited in that we didn't have enough people in our department who were using the data."

So managers decided it was time to implement a data warehousing project that, using SAS, could consolidate the disparate data and make it available to everyone who needed it.

Tracking customers
As a result, the company now has a firm grip on data and effective ways of analyzing customer behavior, together with the power to make projections based on that customer information. Data mining, or extracting useful and previously unknown knowledge from data, typically relates to direct-mail campaigns at Eddie Bauer – both within the catalog and the retail sectors. Increasingly, however, such activities also focus on the Internet.

Eddie Bauer can track the way customers make their purchases – no matter where or how. That gives insight into consumer behavior. "The multi-channel picture that's created gives us a robust view," Egler says. "SAS is the best tool that provides us with the expertise to find that kind of information. We can track customers regardless of channel."

The right message for the right customer
Eddie Bauer uses predictive modeling to decide who receives specialized mailings and catalogs. For example, each year Eddie Bauer features an outerwear special, and – thanks to data mining – it can determine which customers are most likely to buy.

Data mining allows Eddie Bauer to determine seasonal buying habits as well. Then the company can identify people with similar characteristics who don't normally buy outerwear and target them with mailings to bring them into the store or encourage them to buy from the catalog.

Customer loyalty
"Customer loyalty is critical to a company like Eddie Bauer," Egler says. If a company has 100 customers, and three-fourths of them purchase items every year, the company might get 75 orders in year two and only about 56 orders the following year. That means that by the third year, 44 new customers would have to be recruited just to make up the difference. "That's a very expensive proposition," Egler says.

But Eddie Bauer's data mining has made tracking and maintaining the customer base easier and more efficient. "The essence of data mining," Egler says, "is to find pieces of information that aren't just common sense and use them to retain customers more effectively."

Using predictive modeling with SAS data mining software, a company with 5 million customers might predict which are most likely to buy something – anything – and target a mailing for them. Using SAS and its robust modeling capabilities, Eddie Bauer may identify 100,000 customers who will now spend $2 more. That's $200,000 in new revenue. If the company has 30 mailings a year, it makes an extra $6 million with virtually no new cost to the company. And since Eddie Bauer is successful at migrating customers among channels, customer spending has increased by 30 to 50 percent annually, Egler says.

"SAS software is an exceptionally easy product to cost-justify within the company," Egler says. "It only takes one or two home runs to demonstrate that the software provides a lot of value."

Building relationships
Building a business relationship with SAS is a chief reward among the benefits of using SAS software, Egler says. "The support team at SAS has been very helpful and is willing to work with us as soon as we need information," he says. "They are always there for us."

And he credits SAS for Eddie Bauer's newfound effectiveness in marketing to customers. "SAS gives us insight into customer behavior in a way that we couldn't get with other tools," Egler says. "SAS software is a strategic business solution for our company."

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