Online florist uses analytics to cultivate customer relationships, grow profits

Why should a prominent florist establishment be so interested in business analytics?

Ask the folk at 1-800-Flowers.com Inc. and they would give you many good reasons.

Better customer relations, lower costs and increased profits – are just a few of them.

Headquartered in Long Island, N.Y., 1-800-Flowers is an online and phone merchant that sells fresh flowers, plants, gift baskets, gourmet foods and more to customers the world over.

As the company’s operations and clientele grew, staying current with customer tastes and buyer profiles became a challenge.

“How does an old guy keep up?” asked Jim McCann, founder and CEO of 1-800-FLOWERS.COM, INC., who has seen his business expand exponentially since he opened his first retail store in 1976.

To assist with this task of “keeping up”, in 2003, the company deployed a customer relationship management (CRM) application from Cary, N.C.-based SAS Inc.

Among other things, the new application helped 1-800-FLOWERS to quickly record and analyze buyer profiles – a critical capability given the nature of its business.

“The better we know who our customers are, the more relevant we can make communication [with them],” said Aaron Cano, the company’s vice-president of customer knowledge and marketing planning.

He said this inside knowledge of customer needs helps the company better target its products, determine what “specials” to offer, and do much more.

The SAS tool also minimizes the element of speculation – allowing 1-800-FLOWERS to plan its sales and marketing strategies based on an understanding of real customer needs.

“After all, we can sit here and make business decisions based on what products we think we should offer, but that’s not going to fly,” said Cano. “We need to understand customers – offering baskets to people who like baskets, and tulips to people who like tulips.”

The tool has also worked wonders for the company’s marketing initiatives.

E-mail campaigns are an effective way 1-800-FLOWERS reaches out to its customer base. A campaign may include as many as 15 – 20 different types of messages – each tailored to the needs of a specific customer group.

If people get generic messages that don’t apply to them, they’ll get annoyed, Cano noted.

Based on the data provided by SAS analytics, the firm can also intelligently determine which customers should receive e-mail updates and who should get a catalogue.

This ultimately leads to saved costs as it enables the firm to optimize spending across various channels. “From a financial perspective, we aren’t spending as much, but receiving a higher return,” Cano said.

All these capabilities are crucial to business success, he said, especially today with the fierce competition in the retail florist industry.

Cano said the company’s traditional business strengths – operational efficiency and 24/7 shipping – are no longer enough.  

In fact the focus at 1-800-FLOWERS has shifted from operational details to personalized customer service – based on key information obtained from the analytics tool.

And this shift has paid off – big time.

In the very first year that it deployed the tool, the company’s total revenues increased 7.5 per and online revenues, 13 per cent.

Cano says 1-800-FLOWERS has also seen loyalty increase over the years, and insights that analytics has provided his company will work to its advantage in rocky economic times.

In fact, the role that business intelligence can play in an economic crisis was the key motif at the SAS Premier Business Leadership Series 2008 held at Las Vegas recently.

Analytics can make a difference in today’s economy, where credit is an operational risk, said Jim Davis, chief marketing officer, SAS. “You can attempt to weather the storm, but this might be a Category 5 [and] weathering may not be enough.”

And experts agree that using analytics to drive intelligent decisions also involves human qualities – such as resourcefulness and creativity.

McCann, for instance, views analytics as an artful application of science.

This view is echoed by Tom Davenport, professor of IT and management at Babson College, and one of the speakers at the SAS Conference.

There is an art to making decisions, said Davenport, who is co-author of Competing on Analytics: The New Science of Winning.

He said science is dispassionate analysis – using computers, data and statistics – while art uses intuition, creativity and insight.  

SAS CEO Jim Goodnight said companies should look for ways to set themselves up for opportunities when the current financial storm clears, and they’ve got to demand results in months, not years.

It’s important now, more than ever, he said, to allow customers to use this slow growth period to optimize some of their processes around customer intelligence.

Underlying the latest economic meltdown, he said, was a bad data problem, and CEOs on Wall St. were not aware of what they were dealing with.

Goodnight said companies are interested in using the vast amounts of data they collect, and analytics is now being used where its never really been used before – from welfare fraud to determining which tax returns should be audited.

SAS offers an ASP model, particularly for smaller businesses, and expects to do $50-60 million in ASP work this year.

At the conference, SAS announced SAS for Mobile Interaction to help improve customer intimacy in the mobile device world, created in cooperation with mobile content enablers.

The idea is to bring predictive analytics to mobile marketers to improve results, particularly in tough economic times.

It connects customer and marketing intelligence with interactive multimedia messaging execution, allowing for customized promotions, customer feedback, dynamic preloads, intelligent offers and social networking.

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