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Gilt Groupe

Analytics: An Inside Perspective

Insights from a webinar in the Applying Business Analytics Webinar Series Originally broadcast in June 2011

Tamara Gruzbarg, Senior Director, Analytics and Research, Gilt Groupe Malene Haxholdt, Global Marketing Manager, Business Analytics, SAS

AnAlytics: An inside PersPective gilt grouPe

Start with a coveted set of products, hand-picked to entice luxury goods not normally found online, such as designer samples and overstocks, direct from 2,000 partner brands. Offer them in limited quantities, discounted up to 60 percent but only to an exclusive audience and only for a limited time. The recipe is almost guaranteed to fuel a shopping frenzy. Vogue calls it the online shopping phenomenon. Its noon, Eastern Time, at Let the games begin. Launched in November 2007, Gilt Groupe quickly established itself as one of the fastest growing and most innovative online retailers in the US. The company selects a broad range of womens fashion and accessories, mens apparel and lifestyle, home, children, travel and gourmet food items for flash sales that typically last just 36 hours and feature many of the worlds most sought-after designers. The company often buys direct from designers who would otherwise sell their excess apparel in New York showrooms. To encourage designers to sell or consign overstock to Gilt, the company opens sales only to those who have registered with the website. This keeps the products it sells off shopping search engines (important to designers), but also challenges Gilt to find and retain customers. By all accounts, Gilt is succeeding in that department. In just over three years, the roster of registered members has grown from 15,000 to more than 3.5 million, most of them invited by an existing member. Every day starts a new sale, usually at noon. Its first-come, first-served, so if you want the best pick of the offerings, youd better act fast, before its too late. The model works. On average, about 5,000 units sell within the first 30 minutes of the sale, 48 percent of all items sell in the first hour, and 65 percent of items sell in the first two hours. Sales attract more than 120,000 visitors in the first hour, and 1.4 million shoppers a month. The fastest purchase is almost instant, in about a quarter of a second. Our members consider Gilt to be entertainment and sport, not just a regular retail website, said Tamara Gruzbarg, Senior Director of Analytics and Research. Our audience is very engaged and looking forward to discovering what is new every day, and they make repeat purchases at a high rate. The company also keeps adding new ways to bring members back. Founded as an invitation-only site for womens designer merchandise, Gilt has added business lines for men, children, travel and vacation, home and outdoor living, local services and experiences in seven major metropolitan areas, gourmet food, and Gilt Noir, a private site that offers exclusive experiences and privileges for top members.

Gilt Groupe provides instant

insider access to todays top designer labels, at up to 60% off retail. Become a member and find something new every day for women, men, kids and home as well as exclusive local services and experiences, and one-of-akind travel packages. Sign in and see what inspires you today.
Gilt Groupe website

AnAlytics: An inside PersPective gilt grouPe

Getting Personal with 3.5 Million Shoppers

Who is the prime Gilt customer? Who is this earnest shopper who visits the site daily, eagerly anticipates new sales, and has the urge to find the perfect item within the first few minutes of the sale? Do these loyal customers fit a standard profile, or do they differ so markedly that the marketing and merchandising should be very tailored? With millions of website visits a month, 1.4 million members making purchases from eight distinct shopping tabs, and 11,000 customer care contacts a month, the Gilt Groupe certainly has a lot of data about its customers. First, theres the demographic data gathered in the process of registering a new member. Then theres browsing and shopping history gathered from the website, mobile apps and the transaction platform, plus marketing history (such as acquisition source, referral connections and campaign response). What brought customers to the site? What are their browsing and transaction patterns? What types of brands do members look at but not necessarily purchase? From the analytics perspective, the amount of information that is theoretically available to us is unprecedented, said Gruzbarg. But that doesnt mean it is readily available. When you have so much data available, you are bound to have certain questions and challenges with this. When I came to work here, it was a very young company. The first goal was to create something functional that would satisfy customer needs. The ability to report on all this information was secondary, so the data essentially had not been organized for analysis or reporting. There were also the usual challenges of integrating and aggregating data from various sources and formats, from different feeds that were constantly changing. In the past, marketing analysts relied on SQL queries that required a great deal of manual manipulation. It took a long time to produce reports, and the company couldnt very effectively segment customers. If you needed to ask a number of questions, you would have to make a separate query for each. Marketing, operations, finance, merchandising these functions were all looking at the business from their specific angle and asking questions that engaged different touch points of the customer experience, Gruzbarg recalled. So it was important to have a single view of the customer to make sure we are touching on all the critical aspects of the experience. There was no question in my mind that with SAS we could accomplish all of this and more. We were very fortunate in being able to put SAS on our system and make it usable very fast. Using SAS, we were able to access and combine information from any number of sources and start producing reports of various degrees of complexity that are relevant to different functions across the organization.

Marketing, operations, finance,

merchandising these functions were all looking at the business from their specific angle and asking questions that engaged different touch points of the customer experience. So it was important to have a single view of the customer to make sure we are touching on all the critical aspects of the experience.
Tamara Gruzbarg Senior Director Analytics and Research Gilt Groupe

AnAlytics: An inside PersPective gilt grouPe

Analytics in Action at Gilt Groupe

An analytics solution composed of advanced data analysis, graphics and reporting enables business users to manipulate, manage, store, analyze, visualize and report on data all from a single environment. Analytics enables Gilt to better understand customers, so as to better engage them with marketing messages and merchandise most appealing to them. Gruzbarg described three success cases.

Deeper Customer Insights for Gilt and Its Brand Partners

As we grow from the very targeted fashion area of the site to encompass many more industries and verticals, we need to know how our customer base is changing, and how we can answer a variety of needs in a way that is most efficient and beneficial for our customer base, said Gruzbarg. Are all of our best customers dedicated fashion shoppers, or is there a surprisingly separate segment that is interested in using Gilt for a variety of their needs, shopping across businesses? How are they using Gilt? Clearly a portion of our members come in every day and return multiple times within a day, but not everybody has this luxury. So who are the people who are coming every week or maybe every other week or those who have joined but have not yet made a purchase? How do we ensure that when they do come in, we present them the outline that is most likely to interest and engage them with the Gilt experience? We were able to get a deep understanding of our customer base through the profiling, segmentation [and] predictive analysis that we conduct with SAS Analytics, said Gruzbarg, answering such questions not only for Gilt Groupe but for its brand partners as well. One of our value propositions is that, in addition to providing a marketing platform for their brands, we can provide a lot of information and insight about the people who are shopping their brands. What else are these customers interested in? Do these tend to be our more loyal customers, or less loyal? What other brands are they interested in? This kind of information is very interesting to retail brand partners, because we have the luxury of tracking our customers and understanding important aspects of their lifestyle and life cycle, due to the registration aspect of our site. Our brand partners dont usually have a lot of means of gathering such a detailed demographic portrait of their customers.

When it comes to insight generation, SAS is a known leader in the field. We were able to get a deep understanding of our customer base through the profiling, segmentation [and] predictive analysis that we conduct with SAS Analytics.
Tamara Gruzbarg Senior Director Analytics and Research Gilt Groupe

AnAlytics: An inside PersPective gilt grouPe

Personalized Email Marketing

At 11:45 a.m., members get an email reminding them that sales are about to start at noon and giving them a preview of whats going to be on sale that day. When we have more than 30 sales starting, obviously we are not going to fit all of them on one email, said Gruzbarg. We need to define a very small and tight subset of sales that are most likely to engage each customer and will make that customer open the email, click through it, go to the site and ultimately find something really relevant. With all of our data sources and marketing history, and SAS on top of it, we can dig deep into all of the behavioral patterns and understand the preferences of different customer segments. The behind-the-scenes algorithm that defines these custom emails is refreshed and applied every day no small feat, Gruzbarg said. I feel really proud we were able to implement it, because we are talking about more than 3 million records on a daily basis, six sales to showcase in an email (out of 30 sales) and multitudes of possible combinations. We made it possible.

More Effective Cross-Shopping Promotions

With all of these different businesses and verticals within Gilt, we want to make sure that we cross-promote in the most effective and efficient way, said Gruzbarg. For example, we sent an offer to our women members to entice them to check out our Home division. To ensure the efficient spend of marketing dollars, we didnt want to send this offer to everyone, just to the right audience that would find this communication relevant. In order to accomplish this, we built a predictive model to identify the key characteristics of women shoppers who are likely to shop Home as well. Through the modeling process, we discovered that these customers tend to be older, have higher income and education, have more expensive homes, are more likely to live in certain states, and were referred to Gilt rather than coming to Gilt on their own. In turn, they are also engaged customers. They send out more invitations than average to make sure their friends are also registering. They have explicitly expressed their interest by visiting the Home tab quite often, although they havent purchased anything yet. They have purchased specific brands in womens ready-to-wear that have proven to be good predictors of the likelihood for shopping on the Home tab as well. Once we identified the target audience, we sent an email with a specific offer in this case 10 percent off their order from Gilt Home and showed sales on the Home site for that day. We saw a great success with this campaign. We increased conversion on the Home tab by almost 100 percent and saw an immediate and very positive incremental return on investment as well.

We held out several control cells

to make sure that: (A) our target works; we really are able to identify people who are much more likely to shop Home; and (B) the economics of our offer work from the marketing perspective, in that we achieved an immediate positive return on investment. The metrics were very favorable.
Tamara Gruzbarg Senior Director Analytics and Research Gilt Groupe

AnAlytics: An inside PersPective gilt grouPe

Keys to Success with Customer Analytics

For organizations seeking to drive business decisions with advanced analytics, Gruzbarg shared five key pieces of advice: Link the data to the business results you want to achieve. It is important to know how this information would be used to move the business forward, said Gruzbarg. Out of all the myriad metrics and statistics available, what are the key metrics that really explain the business? What are the insights that would tell the story through the numbers, and tell you what to do next? Understand the advantages and limitations of the data sources available to you. Some data elements will have more predictive power than others, under different circumstances, Gruzbarg noted. For example, transactional data has very high predictive power, but by definition, we only have this information for people that actually placed an order. We still want to detect the preferences of members who have not yet placed an order and we want to determine how they are likely to respond to something new, such as our new gourmet food sales. So what can be used as a substitute for the missing information? Consider what degree of accuracy or rather, inaccuracy is acceptable. Data in the model doesnt necessarily have to be perfect, as long as it has predictive power. Test and measure. You will always be asked the question about incremental gains, how a particular initiative moved the needle, said Gruzbarg. So it is important to have appropriate test designs for all of your analytics initiatives for accurate and insightful measurement of results. How did it drive additional demand, incremental dollars or improve something without any additional efforts on the marketing side? To answer these questions, having an appropriate test design up front, to be able to measure and report the results, is the key. Put analytic insights into the hands of decision makers. With SAS, executives, marketing and merchandising staff members can see a dashboard, updated weekly, with 55 to 60 different metrics a 90 percent increase over the metrics available previously. The dashboard takes about a half day to run, and the reports are automatically dropped into Excel spreadsheets. Because of the weekly updates, forecasts and planning are done on a weekly basis something that wasnt possible before. Start early to grab the quick wins. It is never too early to start with analytics, even if you dont have full-blown capabilities right away, said Gruzbarg. Simple segmentation based on one or two key variables, implemented at the right time, could go a long way in helping to move the business forward. Those initial insights can then be incorporated into future comprehensive strategies.

AnAlytics: An inside PersPective gilt grouPe

Gilt Groupe scored some strong wins by better understanding its customers and what they want, which in turn enables them to better segment customers and drive them to the sales most relevant to them. Among recent successes: A 10 to 20 percent lift for customers browsing in new merchandise categories who had not purchased in those categories. A 100 percent lift (for the first three deciles) for women who shopped at the mens site but had not yet purchased. A 20 percent increase in new member conversion rates. Analytics enables Gilt Groupe to create a signature shopping experience with distinctive appeal for each of its millions of members, even though they have different tastes, needs and values. Just ask the 1.4 million loyal shoppers who will click to buy from Gilt this month. Is it noon yet?

About the Presenter

Tamara Gruzbarg,
Senior Director for Analytics and Research at Gilt Groupe Tamara Gruzbarg is responsible for the development of the analytic direction, road map and insights distribution supporting the entire organization in the delivery of highly relevant personalized offerings to Gilt Groupes customers. Before joining Gilt, Gruzbarg was the Vice President of Analytics at JP Morgan Chase and then the head of Digital Analytics at Experian Marketing Services. In all of her professional roles, Gruzbarg has been an avid SAS user, finding its multitude of capabilities indispensable in solving a multitude of analytical problems she has been presented with throughout her career. Gruzbarg holds an MA in statistics, as well as an MBA from Columbia University, has had speaking engagements at marketing analytics conferences (SUGI, DMA), conducted client webinars, and has been interviewed by industry publications on the topics of email and online marketing.

AnAlytics: An inside PersPective gilt grouPe

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