Customer Retention: Macy's Uses Predictive Analytics to Grow Customer Spend

The ability to better understand customer buying behavior, and then being able to actually use that knowledge to create optimized (i.e., personalized) marketing campaigns, is a key differentiator for retailers in today's hypercompetitive market, particularly when it comes to reaching and communicating with consumers online. 
With this in mind, Macy's has invested in a predictive analytics solution from SAP. The national department store chain, and specifically its e-commerce operation, Macys.com, deployed SAP's InfiniteInsight solution in the first quarter of 2014.

The solution has yielded immediate dividends for Macy's in terms of speed to market. Prior to working with SAP's solution, for example, Macy's had a number of variables to analyze when it came to understanding the likelihood that an individual customer would spend a specific amount of money in a certain product category. Its traditional approach to predictive analytics required the retailer to consult with any number of data scientists on staff, as well as create and use a predictive model for each product category.

With SAP InfiniteInsight, however, Macy's now has a solution for the automated creation of accurate and robust predictive models. The solution has served as a replacement for the classic model creation process, which is manual, repetitive and prone to human error. With the new solution firmly in place, Macy's is now able to build 20 predictive models in a few weeks, which amounts to a 15 times increase in productivity compared to the previous solution.

The ability for Macy's to create accurate and robust predictive models in a timely manner has helped the retailer achieve a near 12 percent increase in online sales, the result of more targeted emails to customers and prospects as well as personalized content delivered to website visitors.

"SAP InfiniteInsight is a product that excels in speed to results," said Kerem Tomak, group vice president, marketing analytics and CRM, Macys.com, in a press release from SAP. "It's scalable, concise and very efficient — it's the reliable choice for predictive modeling. It's my go-to product for everything that requires scale for my enterprise-level solution."