CHICO’S MINES ITS CUSTOMER DATABASE
Byline: Denise Power
NEW YORK — Many retailers have notions about their customers, their shopping habits and their fashion preferences. Chico’s FAS, however, has some real information. It knows its best customers spend an average of $200 on each trip, and they shop a Chico’s store about six times a year.
Those nuggets of information were recently extracted from a new customer database being developed by the Fort Myers, Fla., women’s apparel retailer. Armed with valid data, rather than acting on intuition, Chico’s can tailor its strategy accordingly, to encourage the loyalty of its most profitable shoppers and learn how to create similar behavior among less loyal customers.
“We knew our customers were loyal,” said Jim Frain, director of marketing. “Our ground troops in the stores saw that we had loyal customers who visited many times per year.”
However, until recently, the company could not gauge the volume those repeat shoppers represented.
“We couldn’t track average visits per year or dollars spent on a per-customer basis,” said Frain. “We didn’t know to what extent the loyal customer was [contributing] to our business. We knew from a gut perspective.”
But Chico’s lacked the data to validate it.
When it revamped its Passport Club loyalty program and invested in customer tracking software in February, Chico’s was able to start monitoring purchasing behavior on an individual basis.
Now that it’s using customer-tracking software, from STS Systems, based in Montreal, the retailer is able to capture and analyze transaction history on each of the 500,000 customers enrolled in its Passport program, which represents about half its shopper base. Chico’s operates 196 stores, including nine franchised locations.
The database will grow more valuable over time because Chico’s will have accumulated enough data to analyze trends. Initial reports drawn from the customer database indicate that about 20 percent of shoppers enrolled in Chico’s Passport Club program could be characterized as “premium” shoppers spending $200 per trip, or about double what other customers spend per trip, on average.
These numbers, and other transaction data gathered at the point of sale, are valuable benchmarks that form a picture of Chico’s shopper base, from a macro view and a customer-by-customer basis.
To capture a larger portion of transaction data for analysis, Frain said, Chico’s is pushing to build enrollment in the Passport Club program. Although anyone can enroll in the program, only those who’ve spent $500 are eligible for its benefits, including a 5 percent discount on all purchases.
Frain said the retailer signs up about 20,000 new participants each month, and about 5,000 to 7,000 shoppers reach the $500 threshold that converts them to full-fledged members each month.
As a marketer, said Frain, he would enjoy having “every transaction” recorded in the database. However, that’s not realistic. A more viable goal is capturing 90 percent of transactions, he noted.
Chico’s, which sells private label apparel, could use its customer database to guide product development. “Step two is to look at the best segments of our files, the preferred of the preferred, and see what they are buying. That would influence our product development team,” said Frain.
He noted that two of the chain’s stronger collections, Travelers and Sausalito, could post even better results if data on top customers’ preferences were used to beef up the product development for those labels.
For the nine months ended Oct. 30, Chico’s net income surged 65 percent to $12.2 million on sales of $113.2 million, a 41.5 percent increase over the same period last year.