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Predictive analytics the first step to customer centricity for Bon-Ton

Hoping to gain a better understanding of its customers at a local level, the Bon-Ton Stores has deployed predictive analytics from SPSS.

Like many organizations, the Bon-Ton Stores Inc., a York, Pa.-based department store chain, is hoping to transition to a customer-centric organization, and it's the marketing department that's leading the charge.

"Marketing is the keeper of the customer, if you will," said Mike Hayes, senior vice president of marketing and administrative services. "We need to have the right kind of customer experience to make our customers come back in the store. We don't want to be about throwing out coupons and promotional events."

Bon-Ton has recently deployed predictive analytics software from Chicago-based SPSS Inc. to analyze and segment its customers. Bon-Ton operates 283 department stores, including eight furniture galleries, in 23 states.

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"We're basically building a whole marketing and analytics function as a core competency," Hayes said. "We want to unlock the data we capture every day, but we didn't have statistical tools to put that data into actionable insight."

Bon-Ton will begin its efforts measuring its media mix, determining where media spend is making the greatest difference -- be it radio, television or more direct efforts. The SPSS software is helping the company segment its customer base -- currently housed in the Customer Information System, a large enterprise data warehouse -- based on who responds to what.

The ultimate goal, according to Hayes, is to create an analytics production environment.

"Typically, with retailers, there is spot analysis done and that insight gets put on a shelf," he said. "We want to produce a production environment. We have a series of predictive data models we want to refresh continually, so we understand what happens with promotions and their value."

For example, Bon-Ton runs charitable events at its stores throughout the country and wants to use SPSS to understand which customers are supporting those events, Hayes said. Bon-Ton has an understanding of buying patterns at a macro level but can't drill down to specific behaviors -- whether customers in Des Moines, Iowa, are making different purchases than customers in Dayton, Ohio, for instance, and how to market to customers who consider themselves fashion-forward or conservative, and vice versa.

Bon-Ton's journey toward becoming a customer-centric organization began with laying out a strategic agenda to the CEO on how and why the company needs to understand its customer base at a local level. Once management was on board, Bon-Ton hired a director of research and analytics. The new director and Hayes spent about a month researching options, considering the Cary, N.C.-based SAS Institute before electing to deploy SPSS's Clementine application for data mining and analytics.

Predictive analytics can involve some sophisticated algorithms and data modeling, but the SPSS system has proven easy to use, Hayes said.

"You need to understand statistics," he said, "but it's a simple graphical environment."

Bon-Ton is still evaluating SPSS's Predictive Enterprise Services as a production environment where analysis is run automatically and links to other systems, but the ROI for the current installment should come pretty quickly.

"If you look at a company such as ours' media spend, even a small increase in sales or a decrease in cost is scalable very quickly," Hayes said. "With a couple hundred million dollar media spend, a 2% savings can make a huge difference."

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