Nordstrom VP of Marketing, Digital, and Enterprise Data Jason Gowans explains how to move past marketing buzzwords and rethink your approach to achieving a better measurement strategy and greater growth.
I’ll be the first to admit I’m skeptical about anything that sounds like marketing jargon. I’m a numbers guy. If you can’t measure it, you can’t do it. So, some years back, when people started talking about organizing their brand around the customer, I thought, “Yeah, but what does that actually look like?”
Fast forward to today: We’ve turned that jargon into a reality. Because at Nordstrom, we put the customer at the center of everything we do, and it’s reflected in how we operate.
To explain how we did it, let’s travel back to 2016. In fashion, it was a great year for pantsuits and off-the-shoulder everything. For us, it was the year we began to re-evaluate how we measured success, with the goal of driving stronger outcomes for our business. Through data, we were able to identify the opportunity to evolve how we defined success.
Our data showed us that our marketing expense was outpacing our sales, and our rate of customer acquisition was declining at the same time, ultimately, driving the wrong outcomes for our business.
To combat this, we first had to look internally and put the customer at the center of our decision-making. Here’s how we organized our brand around the customer to measure what really matters.
Ditch the silos to uncover growth
Is your organization set up to give you a holistic view of the customer journey, or are your teams siloed by channel? If your answer is the latter, I can guarantee you’re getting a fractured understanding of your customer, and you’re not set up to measure for growth.
We had siloes of channels and siloes of merchant activity. As a result, we were miscalculating our value back to the business.
At Nordstrom, our marketing and analytics teams were organized by search, display, social, and email. Plus, we looked at each merchant within our brand portfolios separately: Nordstrom Rack versus Nordstrom.com versus brick-and-mortar stores. We had siloes of channels and siloes of merchant activity. As a result, we were miscalculating our value back to the business.
What did we do? We restructured our internal teams so that we were organized around our customer profiles. At the highest level, our business goals are to attract new customers and nurture existing customers, regardless of channel or merchant. Rather than individual channel teams, now we have two marketing teams — a customer acquisition team and a customer retention team.
Acquisition is about profitably investing for the future. For us, that means having a curated point of view on what’s next and how we can reach a new generation of customers. Retention is all about growing the lifetime value of current customers by increasing trips and spend. For example, we wanted to ensure our Nordstrom Rack customers had visibility to the sales promotions of our full-price channels. So during our anniversary sale, we encouraged our off-price Rack shoppers to consider our full-price product offerings.
Let measurement signals lead the way
The state of marketing today is too complex to rely on one, single measurement solution. That’s why the path to a better measurement strategy involves multiple solutions and customer signals. This gives you a holistic view of the customer and helps you better understand the effect of incremental marketing.
We fell into a trap many brands do by measuring marketing effectiveness solely through last-click return on ad spend. That skews investment to existing high-spend customers and sometimes even our own employees.
I’ll give you one example: In the past, when a customer made an order via last-click measurement, we would give all the credit to one particular affiliate publisher. But when we built our own multi-touch attribution (MTA) solution, we learned that some of that credit went to other affiliates, some of it went to other marketing channels, and some of that credit was attributed to our estimated baseline propensity of the customer to shop with us anyway, independent of marketing. Essentially, there was only a tiny slice of credit that was actually deemed incremental.
This was a huge a-ha moment for us. These days, we use four key signals to measure marketing effectiveness: a media mix model, MTA, last-click, and experimentation.
But these signals don’t provide the prescriptive answer of how exactly to move forward. This is where the expertise of your team comes in. They can use their judgement to determine what actions to take to drive growth based on the business outcomes you’ve all agreed to pursue. Judgment becomes even more important when we consider the shifting landscape around things such as cookies and their impact on our ability to collect a complete picture of marketing activity.
With potentially tens of millions of customers and prospective customers, it’s important to know what really drives customer lifetime value beyond the obvious trips and spend. Perhaps it’s introducing the customer to a new category or new brand or encouraging the customer to try a Buy Online-Pickup in Store feature, engage with a stylist, enroll in a loyalty club (like our Nordy Club), or even download your app. Being able to assess the value of each of these potential actions will help drive not just your marketing campaigns but also how much you’re willing to pay for any one of those actions.
By reorganizing around the customer, we have moved from a mindset of last-click return on ad spend to one of incremental marketing. As a result, we’ve bent the curve on our marketing model. Expenses are now in line with sales, efficiency has increased, and our rate of acquisition has gone up.