Macy's Inc. (M) exec Julie Bernard addresses privacy concerns in data-driven marketing campaigns

Retailer: We're using data responsibly

CINCINNATI -- Privacy issues took center stage at the D2 Digital Dialogue conference in Cincinnati Wednesday, as Macy’s Inc. marketing executive Julie Bernard predicted that consumers will reward retailers that handle customer data responsibly.

“I could just track the (identity) of every phone that comes into Macy’s,” said Bernard, senior vice president in charge of customer strategy, loyalty and credit marketing. “Just because you can doesn’t mean you should.”

Bernard was a keynote speaker at the two-day conference on digital advertising strategies. The event includes presentations from executives of Procter & Gamble Co., Macy’s, Dunnhumby USA and Facebook.

Bernard’s presentation was about how Macy’s is using data analytics to deliver relevant marketing messages to consumers. But the discussion strayed into privacy matters in response to audience questions.

“We’re all still figuring out what that exact balance looks like,” Bernard said. “There’s a funny consumer thing (developing). They’re worried about our use of data but they’re (angry) if I don’t deliver relevance. So, if I send them a direct-mail catalog where the front page is a flying mattress in a cloud, they’re annoyed with me and they call and complain and we hear about it. Somehow, I’m supposed to deliver relevance and magically understand what they want without looking at the data that we have on them.”

Macy’s is expanding its use of online behavioral data and consumer-shopping histories to deliver targeted offers to consumers at times when they’re likely to be respond to such sales pitches.

But it’s also holding monthly “privacy council” meetings where company executives and attorneys explore best practices for protecting consumer privacy. For more than a year now, Bernard said Macy’s has asked marketing partners to operate under a “privacy compliant” partnership structure in which companies like Yahoo, Comcast, Twitter, AOL and AT&T match their subscriber data to Macy’s customer information in a “safe haven” environment that prevents each company from knowing too much about the others’ customer.

“Consumers will begin to understand and appreciate that we’re using data in a responsible way,” she said.

Media coverage of government eavesdropping programs and customer-tracking technologies used by private sector enterprises have focused a spotlight on privacy matters. That’s a potential threat to Cincinnati’s growing reputation as a data-driven marketing hub. Companies like Dunhumby USA, Kroger Co. and Procter & Gamble have joined Macy’s in pioneering new ways to use data to better understand their customers.

“We’re always concerned about how to deliver benefit and value to customers in ways that they’re comfortable with,” said Dunnhumby Executive Vice President Matt Nitzberg in an interview with WCPO. “What we have found over time is … customers will increasingly respond if they find you’re using data and information to deliver value to them.”

Nitzberg added that Dunnhumby is “not in possession of any personally identifiable information that we shouldn’t have based on what the customer has opted into, the policies of an of our retailers or brand partners and any local regulations.”

Nitzberg said he frequently opts in to retail marketing programs that provide sales offers he can use. When those retailers clog his inbox with annoying or useless offers, he opts out. He thinks many U.S. consumers are adopting a similar approach.

“Five years ago, customers might have been asking, ‘How do they know this about me?’" Nitzberg said. “Today, the bar has been raised by many customers to the point where they say, ‘I shop in that store so often. How can they be sending me stuff I don’t care about? Don’t they know me better?”

The key, said Nitzberg, is for marketers to recognize that consumers are in charge. “They control whether or not you reach them,”he told the D2 audience. “You may be completely shut off if you don’t earn the right to market to the customer that matters the most to you.”

Bernard told conference attendees that Macy’s is trying to accomplish that goal by crafting unique marketing messages that can be targeted to individual consumers.

She described an experimental campaign, developed with the Lancome beauty brand earlier this year. Shoppers were invited to choose a gift with a Lancome purchase, then they were targeted with a “personalized communication strategy” that included direct mail, email and online discount offers over several weeks. Bernard said the campaign delivered a “significant sales lift” and Macy’s is looking for ways to ramp up the strategy.

"It's not a small incremental lift," Bernard said. "It would scale to truly being able to see hundreds of millions in incremental revenue on a fully-scaled operationalized basis over time."

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