An Interview With Macy's CMO Martine Reardon

The interview below is an excerpt from Robert Passikoff's upcoming book, "At the Speed of the Consumer: Branding in the Digital Age."

Robert Passikoff: Brands often get left behind in digital. They’re often an afterthought. You’ve done it really well. What’s your philosophy about brands and digital space?
Martine Reardon: I’d say that the philosophy starts with the customer and what’s important to them. At Macy’s, we do what I think is a superb job of understanding what the customer wants, needs, and how and when to communicate with her. The digital space has been evolving — and to some degree driven by that millennial target — but it’s not just millennials. There are very savvy boomers in the digital space who prefer to receive their content via digital. That’s where the philosophy came from, and we’re going to follow the consumer wherever she’s going.
We really think about what kinds of content and the best way to get that content to her. We had to make some tough decisions because when the digital space came along we couldn’t just start spending more money on advertising to bring that new medium into our core plan. We had to think about if you were going to tailor your spend from last year, some media had to shift into the digital space. I think that we were pretty progressive in that area because we did go from crawling to running very quickly. We shifted quite a lot because we actually saw it pay off.
We saw the consumer react and really love what we were doing in this space. We have over 13.1 million fans on Facebook now. When we started, we had zero. In four years, we've grown that space exponentially. It was a testament to the consumer reacting. When you dissect the fan base, we see that more than 50 percent is millennial in age. The other 50 percent is the true target consumer for Macy's. That’s how much it works.

RP: Given the speed and the success, do you see any particular problems that crop up in digital that you either never saw in the traditional world or that are more worrisome for brands?
MR: I don’t see it as problems, I see it as more challenges to think about. The great thing about the digital space is there are so many measurements that you can look at, more so than you can look at in the traditional space. Within the TV and radio world, there are Nielsen ratings, so you know how large the audiences are. In the digital space, you know almost one-to-one. You get to really know who that consumer is that’s browsing on that website or downloading that specific content.
I think that the challenge presented is you could get caught up in this data and analyze it almost to the point where you get paralyzed. We're leaders here at Macy’s at taking some risk, and not always having every single fact. But there's still a part of this business that's about the combination of art and science. I think the digital space does give you the pure science; it's up to marketers to apply some of that art.
If we take some chances and risk, maybe on things that aren't necessarily proven yet and don’t succeed, I call it a noble failure. It helps us to continue to think about what’s the next thing we want to do. We make sure that we apply a lot of those learnings into what not to do going forward and what to do more of going forward. So I don’t think that it’s risky. I think there’s so much there and you have to try to make sure that you stay on strategy as you’re thinking about these new things that you want to try.

RP: Macy's clearly has had a strategy in place and been consistent. Do you see that digital gives you the combination of outreach and engagement with your audiences?
MR: Yes. I believe that, again, because of the precise metrics available in the digital space, you can see the audiences that are responding. It starts with a strategy and the customer. What we then do is say, “How is the digital space going to amplify what we’re trying to do around the strategy and for that customer?” As we start to put the messaging out there, we're quickly able to see who is responding and who isn’t so that we can optimize that strategy. The great thing about the digital space is that it’s pretty nimble. So we can watch, sometimes in real time, who is responding to something and who isn’t. Then we can optimize the content that’s working and adjust content that’s not working.

RP: One has to deal with contextual relevance to the brand. I would think that contextual relevance is a lot easier for a retailer like Macy's than for brands in other categories.
MR: Not that it makes it easier for us, but I think that we're fortunate enough to have a plethora of products. We're a house of brands. There are very specific consumers that like specific brands. I think of our brand as a one-stop-shop for almost everything in your life, from your children to your home to getting married. There are a lot of other brands which are very specific and narrow in focus. There’s only really one lane they can participate in. We’ve got many. I think the challenge for us is to make sure that we’re putting the right content into the right channel that’s going to reach that consumer.

RP: In terms of mode of outreach, mobile, which didn’t exist for brands five years ago, has become the new way to shop. What have you been doing to leverage the brand and outreach?
MR: In 2011, Macy's was named mobile marketer of the year, and we thought that was brilliant. At the time, I think that there was a smartphone penetration of 25 percent. No way would anybody have predicted that in just two short years smartphone penetration would be more than 60 percent. I don’t know if you’ve seen the facts for holiday shopping this year, but more than 65 percent of consumers plan to go onto their mobile device and research online first before making their decision about where they want to go and what they want to buy.
The mobile device is this perfect little storm. People use it as a research device, but then also use it for commerce. We've had to make sure that we were continuing to stay above those trends. We have a brand new app that we're extremely proud to have relaunched.
Our first app launched in early 2012. We knew all the things we wanted to do differently, so we relaunched a new app at the end of 2012, and it’s been great. We find the minute we launch anything new on the app, we get more than 50 percent of consumers who download the new software because they want to engage the Macy’s brand. The app is incredibly useful. I think there’s a statistic that out of 100 apps that people may have on their phones, they use four. I think that the Macy’s app is in one of those four. People who have it on their phone use it.
Mobile is what the customer is demanding. It enables us to reach her on the go. Or, she could be staying at home. We have another great term that we love here called “the second screen experience.” You can be sitting on your sofa watching TV and have your mobile device, either your smartphone or tablet, in front of you simultaneously doing something else. The greatest part about what we do as marketers is use traditional media to drive to mobile media. Imagine sitting watching a TV spot that motivates you. Consumers say, “Let me go to Macys.com and look at some of those items I just saw.” Or, “As I saw that television spot, it inspired me to buy something.” We really try to use a mobile device for everything we do. A lot of our content is created for the mobile device and then the desktop.

RP: You mentioned the ability to gather data in real time. Standardizations have been extraordinarily elusive in the digital world in terms of return on investment. Is there anything that you specifically look at?
MR: We don’t spend money without considering ROI, and we’ve got a pretty good track record for ROI by media based on messaging of content. What ROI demand means for us is, “Come in because you’ve got two days to react to a sale event.” Brand advertising has a different ROI. We really look at everything. We look at digital, and within digital, there’s a media mix. There’s social, display, targeted display, search within search, product placement ads. With Twitter you can include video. All of it has metrics attached. We assign a number to ROI that we want to see by each medium and that’s how we create our overall plan.

RP: Do you see any macro trends that brands generally need to be aware of that digital is creating or is going to create?
MR: I would say the macro trend still is commerce on the smartphone. Today, when I think about mobile, I think about the smartphone and tablet. I do think that what we’ll see a lot more of going forward is conversion coming from the smartphone. Today everybody uses the smartphone to research, but they don’t necessarily make that purchase on the smartphone. They may be going to their tablet later that night. They may even come into the store. I think that the best thing we’ve got is the confluence of mobile and brick-and-mortar.
People always say to me, “Aren’t you afraid that you’re losing people to your online space and taking away from your store, and vice versa?” I say, “Absolutely not.” I'm completely channel agnostic, and the more that I can bring these two worlds together the better off we will be as a company. We know that when somebody is using a mobile device and also shopping in-store that they’re worth twice the amount to us than if they were only buying in a single channel. The more that we can serve up content on the mobile device to whet their appetite and get them to come into the store because they want to touch it, feel it or they want the experience of walking around in a store, that’s the best possible combination.

RP: Is there any advice that you would be willing to share with other marketers who are managing their brand in the digital space?
MR: Always be open to new ideas. Read as much as you can, and trust your people. You’re responsible for putting that team together, that’s the A team, and you need to support them. I do think that a big part of it is just being open to new things. I think what happens is when you're in a position for a long period of time, you tend to have a little bit of “last year-itus.” I encourage that to some degree, but I also discourage it because if you do that you’ll never experience all these new things. It’s really about balance. You have to go find what's new and always say to the team: "Here's your challenge: I have to bring new ideas, you have to bring new ideas. Everyone must come to the meeting with a new idea."

Robert Passikoff is the founder and president of Brand Keys, a brand and research consultancy.