Hardware Retailing The Industry's Source for Insights and Information
The Home Depot collects data from digital resources, such as its website, promotional emails and social media, and uses that information to drive traffic to stores and better target its advertising and marketing efforts.
A Home Depot executive discussed those methods Jan. 16 at the National Retail Federation’s annual convention in New York.
David Abbott, vice president of integrated media and online marketing for the big box, spoke during a seminar titled “Data: The New Currency for Retail Marketers.” He also answered questions about how retailers are changing the way they spend their advertising and marketing funds and use data to find creative new ways to reach customers. You can watch the full presentation on YouTube.
Data’s Influence Across Channels and Platforms
In order to continue growing sales at brick-and-mortar locations, Home Depot uses a variety of platforms to drive store traffic. The big-box chain still makes 94 to 95 percent of its sales in the physical stores, but the various platforms it uses keep those sales growing, Abbott says.
“As much as our e-commerce business is growing, it’s there to help customers interact with the stores,” Abbott says. “We work hard to stitch together the interactions of the various devices as they relate to the store.”
In addition, personalization can help boost sales to DIYers and, even more importantly, the pros, Abbott says. Pros are in a store multiple times a week, so creating personal relationships is key, he says.
“In the store operation, we have individuals who manage our pro accounts,” Abbott says. “If we have a contractor that spends $1 million a year, they have someone they can call. What we want to do is provide our associates enough information about the pro customer to be able to give a well-rounded look at what that customer’s needs are. That’s one of the things we’ll be focusing on in 2017—figuring out what information we can provide to the stores to provide more relevant information to the customers.”
However, personalization can also be tied back to when and where a customer is located.
“If it’s snowing, you may be less inclined to buy a barbecue grill versus a snow blower,” Abbott says. “Personalization in that case is less about who that individual is but where they are and when they are.”
Targeting Pro Customers
To motivate customers to shop at Home Depot, the company has heavily focused its advertising on merchandise. The company will continue to do that, but is exploring targeting capabilities to reach specific audiences, Abbott says.
“We want to go after some of the targeting capabilities that exist right now,” Abbott says. “Our email and our (customer relationship management) team is pretty robust in terms of how they’re approaching segmentation, but now the tools on other digital media are catching up. We’re leveraging that more and more through data-management platforms. Over time, even though we’re not going to walk away from the productivity and the media dollar we spend, we do want to look at how many customers we acquire.”
The company is using data to analyze the existing customers the company attracts.
“[Pros and contractors equal] about 10 percent of our customers in terms of number, but they make up about 40 percent of our sales,” Abbott says. “So if we know we can acquire or retain a pro and spend an extra dollar for a longer term, more and more success metrics will be moving in that direction over time.”
Data’s Relationship to Marketing Spend
Because it has more ways to track metrics through digital means, such as social media analytics, Abbott’s team is looking for the best way to analyze information.
However, the company cannot always track its marketing return on investment. For example, consumers may make purchases after browsing blogs or Pinterest boards that offer home improvement project inspiration. Home Depot wants to invest in that kind of content, but can’t easily measure results from those sites, Abbott says.
“Inspiration is kind of a tricky thing for us,” he says. “For better or worse, the marketing budget at The Home Depot that funds email circulation or a TV spot … also funds content. So if we’ve used return ad spend, which is a short-term metric, inspiration takes a little more time and the causation is harder to see. We believe we need to create more inspirational content, but it’s hard to see if we need to do more or less.”
