Worth a reported $13.5 billion in 2016, Australian businesses are spending big on marketing. Boards and business owners alike desire quantifiable returns on their investment and are looking to industry veterans to lead the charge. Large businesses such as Myer are paving the way with their recent creation of a Chief Merchandising and Customer Officer role (CMO), addressing what Australian businesses rank as their third most pressing issue: building deep customer relationships. This challenge can only be addressed as part of a greater strategy, requiring use of a number of different types of marketing metrics.
Often considered the fluffy part of a business, marketing is fast earning a reputation as a potential foundation for growth. When plans are developed and implemented thoughtfully, marketing can be a cornerstone of a business’s growth strategy. Marketing metrics have underpinned Myer’s current transformation strategy which will also be used as the means to assess the strategy’s success. Measuring the performance of this strategy is however fraught with challenges, as each metric has it’s own strengths and weaknesses. It is no wonder then that the fifth most pressing challenge Australian businesses reportedly face is quantifying marketing’s return on investment. Despite this challenge, the use of marketing metrics can direct marketing actions, keep employees accountable as well as facilitate managers’ diagnosis of business performance from the top down. These metrics also deliver relevant results for reporting to various stakeholders, addressing the very real challenge in a practical and measurable way.
At a cost of $600 million, Myer’s strategy aims to deliver ‘stronger in-store customer experiences’ and improved ‘brand perceptions’. This investment (marketing activity metric) underpins the behavioural metrics used to establish the strategy’s benchmark: earlier this month, the retail giant announced impressive improvements to both year-on-year and year-to-date sales as well as gains against their competition. Myer’s loyalty program helps track their customers’ purchase frequency and their share of the category hovers around 5%, however market penetration is harder to quantify and thus less relevant as a measure of customer engagement.
Myer’s new CMO, Daniel Bracken, defines his role as a reflection of the strategy, focusing on memory metrics such as attitude, customer satisfaction and service quality – all of which play a pivotal role in building deep customer relationships. Other metrics such as physical availability continue to be refined, with improvements to both product placement and experiences and ecommerce capabilities making up $350 million of the strategy. This significant investment in the digital customer has prompted the creation of another key role: Chief Digital and Data Officer. Mark Crispey, ex-Coles Online, has taken the department store to eBay, broadening Myer’s physical availability in a new online market both domestically and internationally. Complementing this with behavioural metrics, Crispey believes the key to increasing Myer’s share of the category is ‘taking the product to where the customer is, rather than waiting for the customer to come to them’.
Myer’s CEO Richard Umbers is focused on customer profile metrics, declaring ‘it’s about winning her heart, mind and wallet’.
‘We have to have relevant brands categories, a varied range to suit the local marketplace, and in-store experiences driven by emotion.’
Beyond the standard gender, age and income, Myer has gone one step further, understanding their most valuable customers purchase both in store and online. This naturally led to their development of operational offerings to support this cross-channel customer (eg. click-and-collect).
As the focus of this department store shifts to the customer experience and managing the relationship with the brand, Myer executives will be increasingly reliant on marketing metrics to quantify the success of the strategy. And with a clever strategic integration of these marketing metrics, Myer’s hopes of a unique experience has the capacity to deliver a positive return on their hefty investment.
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Marketing Magazine. 2016. Marketing spend set to grow in 2015 but budget constraints Australia’s top issue | Marketing Magazine. [ONLINE] Available at: https://www.marketingmag.com.au/news-c/marketing-spend-set-grow-2015-budget-constraints-australias-top-issue/. [Accessed 21 May 2016].
Myer CMO promoted to chief customer role as retailer reports stronger results – CMO Australia. 2016. Myer CMO promoted to chief customer role as retailer reports stronger results – CMO Australia. [ONLINE] Available at: http://www.cmo.com.au/article/599709/myer-cmo-promoted-chief-customer-role-retailer-reports-stronger-results/. [Accessed 21 May 2016].
Myer targets customers through digital and data in $600m transformation agenda – CMO Australia. 2016. Myer targets customers through digital and data in $600m transformation agenda – CMO Australia. [ONLINE] Available at: http://www.cmo.com.au/article/583549/myer-gets-know-target-customers-600m-transformation-agenda/. [Accessed 21 May 2016].
Stock Market News, Finance and Investments | Money Morning Australia. 2016. Why are Myer Shares Falling?. [ONLINE] Available at: http://www.moneymorning.com.au/20160407/why-are-myer-shares-falling.html. [Accessed 21 May 2016].