Start Today Co. Ltd.

By building a marketing database with the IBM Netezza data warehouse appliance, email open rates increased 500 percent and conversion rate (CVR) 1,000 percent

Published on 31 Aug 2012

"Thanks to the introduction of Netezza, we can now launch campaigns according to our customers’ needs. As a result our email open rate has improved on the order of three to five times and conversion rate on the order of five to ten times… High ROI is another benefit of introducing Netezza. " - Mr. Toshiaki Shimizu, Chief Marketing Officer Start Today

Customer:
Start Today Co. Ltd.

Industry:
Retail

Deployment country:
Japan

Solution:
Big Data, Big Data & Analytics, Big Data & Analytics: Customers, Data Warehouse, EMM - Cross-channel Marketing Optimization

IBM Business Partner:
N S Solutions Corporation

Overview

To better target communications to each customer, Start Today had to analyze a massive amount of data from its various web sites. The company looked for a high-performance solution that would minimize operational load and provide high performance without bottlenecks. Using the IBM Netezza data warehouse appliance and IBM Unica software, Start Today can now quickly customize campaigns based on individual customer needs. This has helped the company improve its email open rate by 3 - 5 times and its conversion rate by 5 – 10 times.

Business need:
Enhancement of customer relationship management strategy

Solution:
A purpose-built, high-performance data warehouse appliance that makes advanced analytics on very large data volumes simpler, faster and more accessible

Benefits:
Three to five times higher email open rates; five to ten times improved conversion rate; drastically reduces the data extraction workload

Case Study

Through fashion, “Make the world a better place and make people smile all over the place”

In 1998, Start Today Co., Ltd. was established with the corporate philosophy: “Make the world a better place and make people smile all over the place.” The company offers fashion-related services around its mainstay, ZOZOTOWN – one of the largest fashion shopping websites in Japan. The most distinguishing feature of the company is that it handles all operations internally, from site design to system building, physical distribution, and management and operations. With an average age of 27.7 (as of the end of March 2011), all of its 284 employees continually aim to deliver “coolness” under the company’s managerial creed: “Make people better.”

Start Today operates 8 services, including websites for shopping, search, and news delivery. The ZOZO brand name is a combination of the Japanese words “SOZO” (imagination) and “SOZO” (creation). In June 2011, the company’s total membership exceeded 3.3 million people and the access count from mobile phones and PCs was in the range of 500 million to one billion page views. Over 40 percent of its membership is active, and the average member spends approximately 43,000 yen on the site per year. The company recorded sales of 57 billion yen in 2010 and is expanding its business at an annual growth rate of over 150 percent.

The Customer Friendship Management department (CFM) of the company aims “to become our customers’ best friend”. Start Today used to send out bulk emails to its members, producing on-the-spot advertisements and sending them to addresses on a delivery list extracted from a database. “When we used to send out emails, we did simple segmentation, but we couldn’t personalize them,” says Mr. Toshiaki Shimizu, Chief Marketing Officer of Start Today.

In November 2010, to further expand its business and increase customer satisfaction, the company developed a customer relationship management (CRM) strategy and established a new CRM department. Mr. Shimizu explains, “We always felt that we were not communicating enough with our existing customers. Therefore, we decided to create an initiative to focus on CRM efforts. The company’s CRM concept is, “Do not overlook the day-to-day behavioral and emotional changes in each customer; imagine how the customer’s state of mind is influenced by such changes; and create the kind of attention and consideration tailored to each customer that only ZOZO can provide.”

In order to actualize this strategy, the company decided to build a data warehouse system consisting of a marketing database and analytical tools for one-to-one marketing. “We needed to analyze a massive amount of data from the sites we currently operate and provide communications optimized to individual customers,” says Mr. Shimizu.

For its data warehouse platform, the company adopted the IBM® Netezza® data warehouse appliance. The original objective of the CRM department was to “build effective long-term relationships with our customers.” However, since April 2011, the objective has changed to “become our customers’ best friend.” The department name has also been changed to the Customer Friendship Management (CFM) department.

IBM Netezza data warehouse appliance adopted for its speed, scalability, and simplicity
The development project to build a data warehouse commenced in December 2010. Mr. Toru Okazaki, director of the CFM department in Start Today’s marketing division, reflects on that period stating, “We were able to do data extraction using SQL statements in an amazingly short time, just about two weeks after introducing the IBM Netezza data warehouse appliance.”

Starting at the end of January 2011, the company built the following three functions: “business intelligence” (BI), which enables routine and non-routine analysis as well as key performance indicator (KPI) dashboards, and “marketing automation” and “recommendations” for realizing one-to-one marketing. It conducted comprehensive testing in March 2011 and the data warehouse system commenced operation on April 1, 2011 .

Start Today’s BI, marketing automation (IBM Unica®), and recommendation functions all leverage the new data warehouse platform. “All of the necessary pieces of information are put together in the IBM Netezza data warehouse appliance,” explains Mr. Shimizu.

Mr. Okazaki continues: “The data transferred to Netezza from the main database does not generate much load. However, hundreds of gigabytes of data may be gathered every month. While we don’t have any problems at the moment, we need to plan ahead several years into the future.”

Mr. Shimizu summarizes the reasons why the IBM Netezza data warehouse appliance was chosen as follows: “Speed, scalability, and simplicity are especially important to realize CFM. We decided to adopt Netezza because Netezza satisfied all of these requirements. Another reason was that we had the opportunity to hear about its effectiveness from a major corporation that had already implemented Netezza.”

Mr. Okazaki concludes: “One of our goals is to realize the world’s best CRM. To achieve this, ‘speed’ was our first priority. So we looked for the fastest data warehouse to minimize operational load and realize fast operation without bottlenecks. We determined Netezza was perfect for the job. Netezza has the best balance and is technologically mature; it is the data warehouse that made it possible for us to realize our objectives.”

Realizing one-to-one marketing with personalized email
The company’s first one-to-one marketing effort using their IBM Netezza data warehouse appliance was the delivery of personalized email. “Currently, we create about 70 to 80 different personalized emails based on the data stored in our Netezza data warehouse to deliver messages to our members. We plan to increase the number of personalized emails in the future,” says Mr. Okazaki.

For example, the company sends personalized “Thank you for registering” emails to new members a few days after registration. It also sends personalized “Thank you for purchasing” emails based on customer analysis; for example, emails are sent x days after purchase for first-time customers and y days after purchase for repeat customers.

Additionally, the company sends “retention” emails to members whose number of visits to the site has decreased since their purchase. Further, the company sends birthday emails and emails that explain how to wrap gifts to members who have purchased gift kits.

Mr. Okazaki describes personalized email as follows: “We try to communicate more intensely with first-time customers so that they become repeat customers.”

“By sending opportune emails to customers, such as explaining how to take care of leather goods to those who have purchased leather goods, our customers regard our emails as a service instead of as commercial messages,” says Mr. Shimizu. “We believe the difference in perception between advertisement and service is huge.”

Improving conversion rate by strengthening cross-media marketing
By building the data warehouse system, Start Today is attempting to strengthen its cross-media marketing efforts, which consist of mass marketing, social media marketing, and direct marketing. Mr. Shimizu explains, “Ultimately, the important thing is figuring out how to incorporate our CFM strategy into cross-media marketing.”

A personalized email scheme is one of the efforts toward strengthening direct marketing. “Personalized email is based on the methods of lifecycle-based marketing and event-based marketing. These techniques allow us to communicate with our customers at the most opportune times, which is to say, at the times customers are most willing to listen to us.”

Event-based marketing is already widely used in Europe and the United States. This method helps businesses extract changes in events (such as customers’ behaviors and purchasing patterns), speculate on their backgrounds and needs, and provide communications, which address such needs in real time.

Mr. Shimizu continues: “Previously, whenever we released a new product or service, we ran a one-way mass media campaign to maximize exposure. However, thanks to the introduction of Netezza, we can now launch campaigns according to our customers’ needs. As a result, our email open rate has improved on the order of three to five times and conversion rate on the order of five to ten times.”

The IBM Netezza data warehouse appliance’s analytic capabilities allow the company to tailor campaigns backed by solid numbers. This results in an increase in the rate of activity among both new and existing members. As for existing members, increases in the number of purchases and the average amount per purchase are also expected. Mr. Shimizu concludes, “The most important thing is to provide services from our customers’ points of view and to satisfy our customers.”

Reducing data extraction workloads
Mr. Shimizu describes the systematic benefits of introducing the IBM Netezza data warehouse appliance as follows: “Before, there was a heavy workload just to extract the necessary data. However, with our IBM Netezza data warehouse appliance, we can quickly analyze the data, which makes it easier to implement the plan-do-check-act (PD CA) cycle.”

Mr. Okazaki adds, “To allow end users to conduct data analysis before, we had to send a request to a system administrator for data extraction. But in the future, with our IBM Netezza data warehouse appliance, we will enable all end users to extract data themselves, greatly reducing the workload of the system administrators.”

Mr. Shimizu continues, “We must also assess future system investments and running costs. High ROI is another benefit of introducing Netezza.”

N S Solutions Corporation (NSSOL) performed system integration (SI) for Netezza. “It is meaningless to own the fastest data warehouse if we cannot make good use of it. NSSOL made on-target proposals as to what we should do to maximize the speed of our IBM Netezza data warehouse appliance” says Mr. Shimizu.

Mr. Okazaki adds: “NSSOL’s management was extremely capable. They were not bound by the traditional way of doing things, and they tried to achieve our target speed with a new approach. We truly appreciate that we were able to commence operation successfully on April 1.”

Aiming to improve the customer experience
“Now more than ever, we would like to continue insisting on originality and pursue the improvement of the customer experience as well as create globally unique Japanese marketing,” says Mr. Shimizu. “What is important in this project is that it is consistent with our corporate philosophy and managerial creed. We also need to be flexible and be able to change plans according to future organizational strategies and market trends. By introducing the IBM Netezza data warehouse appliance, we were able to establish a system infrastructure which allows us to quickly adjust to future strategies and changes in the market.”

About IBM Netezza data warehouse appliances
The IBM Netezza data warehouse appliance revolutionized data warehousing and advanced analytics by integrating database, server and storage into a single, easy to manage appliance that requires minimal set-up and ongoing administration while producing faster and more consistent analytic performance. The IBM Netezza data warehouse appliance family simplifies business analytics dramatically by consolidating all analytic activity in the appliance, right where the data resides, for blisteringly fast performance. Visit ibm.com/software/data/netezza to see how our family of data warehouse appliances eliminates complexity at every step and lets you drive true business value for your organization. For the latest data warehouse and advanced analytics blogs, videos and more, please visit: thinking.netezza.com.

About IBM Data Warehousing and Analytics Solutions
IBM provides the broadest and most comprehensive portfolio of data warehousing, information management and business analytic software, hardware and solutions to help customers maximize the value of their information assets and discover new insights to make better and faster decisions and optimize their business outcomes.

For more information
To learn more about the IBM Data Warehousing and Analytics Solutions, please contact your IBM sales representative or IBM Business Partner or visit: ibm.com/software/data/netezza

Components

IBM products and services that were used in this case study.

Software:
IBM Netezza 1000, IBM Campaign

Legal Information

© Copyright IBM Corporation 2012 IBM Corporation Software Group Route 100 Somers, N Y 10589 Produced in the United States of America August 201 2 IBM, the IBM logo, ibm.com, Netezza and Unica are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at "Copyright and trademark information” at ibm.com/legal/copytrade.shtml. The content in this document (including currency OR pricing references which exclude applicable taxes) is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The performance data and client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. TH E IN FORMATION IN TH IS DOCUMEN T IS PROVIDED “AS IS” W ITH OU T AN Y WARRAN TY, EXPRESS OR IMPLIED, IN CLU D IN G WITH OUT AN Y WARRAN TIES OF MERCH AN TABILITY, FITN ESS FOR A PARTICULAR PURPOSE AN D AN Y WARRANTY OR CONDITION OF N ON -IN FRIN GEMEN T. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. Actual available storage capacity may be reported for both uncompressed and compressed data and will vary and may be less than stated.

Showcase your unique capabilities