Silver Star Brands Vice President of Marketing and Business Development Kathy Hecht chooses her words carefully. “Average” (as in average order size) is a bad word. “Hypothesis” is used frequently. “Take a deeper look” and “Let’s rethink that” are extremely valuable phrases. But Hecht emphasizes that she would much rather do marketing than talk about it. Since joining the multi-brand, multichannel direct-to-consumer company last year, Hecht has played a central role in leading its journey toward becoming a more digital company. She took a brief timeout to talk about her and her team’s focus on actionable customer segmentation, a key driver of the company’s digital transformation.
What’s your marketing passion?
At the core, it’s about creating actionable customer segments.
When did this passion take root?
I was working at American Greetings Corporation about a dozen years ago and my boss, the CEO, sent me a video link of Malcolm Gladwell talking about spaghetti sauce. The point of his discussion was that not everybody likes the same thing. Too often we look for the right answer, singular, when we should be looking for the right answers, plural. Asking the question, “What’s the one spaghetti sauce that most people like?” produces a sauce that appeals to the “average” taste. The spaghetti sauce-maker discovered that creating two or three sauces was a far better solution. Nobody is truly happy with “average.”
How did you apply that insight to marketing greeting cards?
It inspired me to let go of the notion that there is a single “right” card in any given category [birthdays, anniversaries, etc.]. We started looking for the right cards. We did a lot of data work to understand customer buying patterns, we data-enabled our site to take action on that segmentation and we began testing our segmentation hypothesis. Once we had validated our hypothesis on multiple small tests, we expanded it to the entire site. So, for example, when you visited our homepage, you either saw a Passover e-card, an “Easter Spring” e-card or an “Easter Bunny” e-card, depending on what customer segment we assigned you to. As a result, we saw an 82% increase in e-card sends. On the first day of the program, my boss called me and said, “OK, you brown-noser, what are you doing?” When he logged on to the site and saw a Passover e-card banner, he wondered what I was doing since Passover had not traditionally been the biggest category. He figured I did something special specifically for him. I went to his office, logged on with my information and the Easter Spring offer popped up. In effect, he was right. We had done something special for him—and for every other customer—by putting the right card in front of the right segment. The aha was about putting the right stuff in front of the different groups of people. I began to see what happened when we paid attention to actionable segments of people.
How are you instilling a commitment to managing actionable customer segments at Silver Star today?
It involves a lot of work that revolves around one question: What can we learn about our customers to give them a more relevant and personalized experience while driving actionable results for us? Ultimately, we’re talking about describing the customer story. We have a skincare product line called Bi-Matrix. It’s a wrinkle-reduction cream that works in 60 seconds, and it’s amazing. But there’s more than one way to talk through that. One way is clinical: More than X percent of women see a decrease in fine lines. The other way is to think about the woman who is getting ready to go to a high school reunion and wants to look her best, or a woman going on a job interview. That’s a more emotional story that involves creating a greater sense of confidence. We tried the clinical version in our marketing messages and the results were not as great as we hoped. Now, we’re developing an emotional narrative that is more in tune with our actual customer stories.
What other practices do you use to develop actionable customer segmentation?
Everyone on my team is learning that “average” is a bad word. For example, I don’t want to see what the average order size is. Instead, we need to look at the distribution range. I’ll say, “OK, if the average order size is $75, tell me how many people are sitting there at $30 and below, how many are at $31 to $50?” If the average order size has changed, is it because the whole curve has shifted to the right? Or, is it because we have a new group of people who are buying a lot more from us? When we find a group of customers acting differently than everybody else, we want to learn who they are and why they’re doing what they’re doing.
What’s an example of a deeper look into the data and customer activity?
We have a Buyer’s Club through which we offer certain customers a discount and free shipping. When the program’s profitability began to dip, we looked closely at everybody who used the offer one or two times, those who used it three to 12 times, and so on. We discovered that a small group of Buyer’s Club customers were using the offer hundreds and hundreds of times because they were reselling our products. They were basically drop-shipping through us. By taking a deeper look, we figured out what was happening. Once we understood, it gave us the opportunity to approach these customers as business partners. We’re now talking about how we can work together to reach more customers in a better way.
Another example is what we’ve done around determining who gets how many catalogs. Rather than looking at the average number of catalogs, we created segments of customers and quickly focused on customers who were getting 12-plus catalogs and year and were only marginally qualified for any individual catalog. By looking linearly across time, rather than at the campaign level, we were able to remove almost 1 million catalogs from the circulation plan with minimal impact to revenue.
Once you have a customer story and identify relevant behaviors and preferences, what’s next?
When you talk about creating actionable segments, these groups have to be the right size. One-to-one really doesn’t work because you can’t get down to a segment of one that’s scalable. We use the word “hypothesis” a lot because a lie told a thousand times becomes the truth. If the hypothesis is that this group of customers is going to act differently than that group of customers, we will set up a series of tests that will validate or invalidate our hypothesis. We’re going to find out what the data tells us, and if that’s encouraging, we’ll put it in play. For us, “put it in play” is running a program or initiative for about six to nine months, a year at the longest. At that point we’re going to come back and revisit it because customers change, we change, and a lot of other things change.
How do you spread the word about actionable segmentation, in the marketing organization and beyond?
Not by talking about it. I tried that at a prior employer—my stint on the vendor side—and it didn’t work. All people did was talk about marketing, which I got tired of because I wanted us to do marketing. I think a better way to share the importance of actionable customer segmentation is by talking about actual results. I do that internally and also externally. When I speak at conferences I’ll talk about what we did, and I don’t care if my competitor is sitting right in front of me. If I’m telling you what we’ve already done and it helps you along your path, great—because we’ve already moved on to what comes next. Besides, another company cannot re-create exactly what we do.
