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Alliance Data helps make global retail brands “smarter” from Columbus, Ohio

From education to healthcare, logistics to retail, companies in Columbus, Ohio, are showing up smart.

Columbus CEO magazine’s January 2017 issue features an article that highlights Columbus as one of the nation’s smartest cities. In 2015, Columbus outranked 400 cities from across the globe to be named 2015 Intelligent Community of the Year by Intelligent Community Forum, a think tank for 21st-century economic and social development. Most recently, Columbus also won the U.S. Department of Transportation’s Smart City Challenge.

What makes Columbus so smart? The article points to the region’s strong economic growth and development, and how that attracts new industries, innovation and jobs. Columbus is a retail city—it’s ranked third for fashion design presence in the U.S. And when it comes to smart retail, brands around the world rely on Columbus-based Alliance Data to help them target the right customers at the right time. 

Columbus CEO sat down with Mike Schmidt, vice president, marketing insights at Alliance Data, to dive into how the company helps brands know more about their customers. Schmidt discusses how Alliance Data’s combination of innovative technology, scientific analysis and consumer research cuts through the facts and figures to reveal what customers want, when they want it, and how they prefer to shop for it. See what Mike had to say below and check out the full article in Columbus CEO!

 

Smart Retail: Brand Building

From early days as the nation's ideal test market to recent accolades for its third-ranked fashion design presence, Columbus is accustomed to modeling success in the retail sector. Now increasingly, brands in business around the world are relying on data scientists in Columbus to smarten up their communications with consumers.

Columbus-based Alliance Data has become a global leader in helping retail brands know exactly what their customers want, when they want it, how they prefer to shop for it and what they are likely to want next. The key to its smart work is lots of data-coupling information gathered through today's technology with scientific analysis of old-fashioned consumer research.

"We like to think we're smart, too," says Mike Schmidt, Alliance vice president, marketing insights. "We do some really great work. What we are really all about, is 'know more, sell more.' From that perspective, we always talk about it two ways," he explains.

"One is how do we help our brand partners know more about their customers so they can sell more but also sell more effectively, sell more relevantly," Schmidt says.

"The second piece is to make sure that you feel like you're getting offers and merchandise and communications that really speak to you. Nothing worse, in my mind as a consumer, (than) when I get an email with an offer the day after I was in the store. Or you get a special offer for infant clothing when you only have a 10-year-old in the house," he adds.

Alliance works with more than 150 retail brands to try to make sure such gaffes don't happen.

One of the smart approaches Alliance uses is predictive modeling, and the company relies on more than two dozen PhD data scientists to apply their best analytical and creative skills to help brand partners know their customers intimately, Schmidt says. Another 80 "strong analytical minds" look at trends to understand consumers more deeply, "so we have that bench strength that we can bring people in even without the retail experience and just teach them about that space."

One type of model Alliance develops is a "shopping cycle model" to answer questions about customers such as, "Are they a once-a-year wardrober? Do they like to come in every two weeks as the floor set gets refreshed and take a look at what's new? Are they a clearance buyer? Are they an early fashion trendsetter?" Schmidt says. The more retailers understand customers' shopping habits, the more they can communicate with them effectively and get the right offers to them at the right time.

Alliance also helps its retail partners-brands like Victoria's Secret and Pottery Barn-understand what types of merchandise their customers prefer so the retailers can direct consumers to more of what they like.

"It's, 'Oh, she likes those shoes in that color? Here are the three other things that you really should be thinking about offering her.' And then, where it's not always apparent as to why the connection exists, we do a lot of direct customer surveying, too. So we'll do focus groups and online surveys because that way you can augment the what-is-happening with the true voice of customers as to why it's happening," Schmidt explains.

"That way you don't go down path of tripping yourself into thinking that everything's a mathematical formula, but you really bring that strong human element back in and ultimately, if you think about decisions you make, it's what you hear from people and not just the numbers that really convince you. So it's bringing those pieces together, making it relevant for each brand partner individually, uniquely, (that) really gets them excited and then ultimately really gets their own customers excited. So we're able to take whatever loyalty you have within a brand and really just magnify that. That's powerful," he adds.

Speed and place are also important aspects of knowing customers, Schmidt says. Alliance helps retail partners set up a geo-fence that can access customers' smart phone GPS and trigger messages when the boundary is crossed.

"Our sister company within Alliance Data is Conversant, and Conversant has done a really, really good job of being able to identify that it is in fact Mary's smart phone as opposed to maybe Mary's tablet (used by other family members) to make sure that we're also delivering the message to right person, and in the digital world, that can get blurry. So being able to do that well also becomes really, really important," Schmidt says.

For their part, consumers are incentivized to allow access to their data because they want relevant, timely communications from retailers, Schmidt says. "Our goal is always (to) be so transparent that you can just see through it; you don't even see us behind the scenes. It just feels natural and this is what you would have come to expect as a modern consumer anyway."

To keep its data scientists engaged and energized, Alliance encourages them to spend 10 percent of their time working on outside modeling competitions or writing professional papers to publish for their peers. Data scientists also meet directly with brand partners to learn their challenges and brainstorm solutions. "This is not an arm's length where you're just getting a work order and you're sitting in a cubicle and crunching numbers. You're sitting down with the marketing folks or analytical folks at our partners," which Schmidt says keeps the work fresh and interesting.

Schmidt has watched Alliance's expertise evolve since joining the company in 1994, and he is still obviously excited about the work.

For 2017, Alliance is exploring "machine learning, where you're starting to almost get into the beginnings of artificial intelligence-type analytics, and we're continuing to bring in and find new information and new data sources about our consumers to help continue to drive that differentiation," he says.

Schmidt adds, "It's something that we're committed to. We've built out a strong analytics team and we're in the process right now of finalizing what is that next generation of what that looks like so we can continue to not only ourselves be relevant but continue to contribute to what makes Columbus a smart city."

 

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