Case Study

Outrunning the Competition: Sports Retailer Sprints into Data-Driven Marketing with Sugar

Print case study

Intro

Largest sportswear and athletic equipment retailer serving the west coast of Latin America, Marathon Sports operates five business units and hundreds of retail stores – 160 stores in Ecuador alone. The company is a distributor for several leading U.S. brands including Nike, Adidas, Puma, New Balance, Asics, Reebok and UnderArmor. Sponsor of the Ecuadorean national soccer team, Marathon Sports turns its customers’ love for sport into fierce brand loyalty.

Challenge

Leapfrog competition by building deeper relationships with customers. Transform a database with more than 1 million customer ID numbers – and nothing more – into a rich resource to drive increased excitement, sales and loyalty.

Solution

Implement Sugar software as a central hub for customer data and to automate key business processes to drive customer loyalty programs, cross-sell and upsell, event marketing with SMS invitations, gamification based on consumer preferences, call center, social media and mobile promotions.

Results

  • Database of more than 1 million customer names expanded and enriched with contact information and preferences
  • 225% increase in customer purchases ($68 to $152) during monthly promotions
  • Increased customer retention from 47% to 57%
  • Sugar-driven social media campaign forced Marathon to extend store operating hours

Story

With decades of steady growth and expansion across latin america, marathon sports had a well-established business model for its sports equipment and apparel business.

The company carried top brands, opened stores in strategic locations, provided a great in-store experience, and merchandized its products the way manufacturers suggested. To build their brand, Marathon even sponsored and equipped professional soccer teams. But as competitors across Latin America began adding athletic gear and sportswear lines and expanding their footprint, Marathon’s Chief Customer Officer, Jaime Morillo, began looking for ways to improve loyalty and reinforce his company’s leadership position.

Marathon began using customer discount cards in 2005. Customers paid $14.90 for cards that could be used to get discounts on future purchases. But the function of the cards was purely transactional — Marathon knew nothing more about customers than their name or ID number. In 2011, a regulatory change meant Marathon could no longer charge customers for cards, so a strategic decision needed to be made: could the company afford to give up $14.90 in revenue per card, and offer loyalty cards for free, in exchange for customer data?

Driven by a desire to usher in a new era of customer-focused marketing and management, the company made a strategic decision to launch “Project CRM.” According to Jaime, Marathon’s Chief Customer Officer, “Until 2011, we had never tried to understand our customers because we had no competition. But with the change in regulations, we decided it would be a great time to get a better analysis of our customer base. That way we are creating brand-loyal customers.”

Key to success: modern, adaptable CRM

Jaime recognized that the move to data-driven marketing would require deployment of a modern CRM platform. One that could combine personal data, contact data, purchase preference information and buying behavior to drive smarter, more targeted marketing campaigns. With data gathered into one repository, Morillo could generate personalized offers, drive customer promotions, and trigger alerts and reports to keep marketing, sales, financial forecasting and customer service informed about customers and the business.

In the CRM selection process, Jaime considered Salesforce but decided that the company’s proprietary technologies and charges for API calls would make integration with existing systems too difficult and costly. What made Sugar stand out was how easy it was to integrate data from a broad range of internal systems, in-store kiosks and even external social media sources. Sugar leverages open industry-standard technologies like HTML5, REST, JavaScript, and PHP, and SugarCRM charges nothing for API calls, resulting in much lower costs for integration and operation. Marathon was also looking for the flexibility to deploy on premises first, and then move to a cloud-based deployment later – not an option with Salesforce.

Putting the data to work: "marathon day"

Marathon Sports began the process of gathering richer customer information by asking customers to provide name and email address information in exchange for its new, free loyalty cards. As the company’s email database grew, the company launched Marathon Magazine, a regular email publication with engaging content covering exercise and fitness, favorite sports, and popular soccer teams. Of course, the magazine also included information about Marathon Sport’s in-store promotions.

Every December, Marathon Sports stores hold “Marathon Day,” a sales and merchandizing event where shoppers can win prizes and discounts of up to 30 percent. The stores create a festival atmosphere of fun — games of chance with prize wheels, jackpot drawings and shopping excitement — and shoppers look forward to the landmark event.

To build anticipation among shoppers, the company doesn’t announce Marathon Day until the night before the event. “We keep it a secret to heighten what people are saying about when it might be,” Jaime says. Prior to Sugar, television advertising was used to announce Marathon Day. But it was costly, and untargeted. With Sugar, Marathon executes much more cost effective email marketing campaigns, and customers with profiles in Sugar get notified early, via IM or SMS. Everyone else has to wait for the night-before television advertising.

Proven Success: “Because we now had an efficient direct marketing strategy through Sugar, 14 percent of our customers learned of the Marathon Day date through email marketing and social media posts,” Jaime says. “That’s the same percentage we reached through television, but it costs a lot more to get that 14 percent through TV.” On its first Marathon Day with Sugar, sales increased 60 percent, with a record 35,000 transactions on that day.

Grace under pressure: Sugar performance

Marathon Day engenders the madness you might expect: stores are open from 10 a.m. to midnight, lines at the register are long and often the last sale isn’t recorded until 2 a.m. – some stores have to lock their entrances periodically because of overcrowding. Customers who spend $100 or buy specific merchandise get to spin a prize wheel or play a jackpot game on a tablet computer to win prizes related to their favorite soccer teams. When customers engage in the game, Sugar augments their customer database with the shopper’s favorite team. In-store prizes are selected through the system based on the customer profile, and inventory in stock at each store.

Watching Sugar perform at peak demand, keeping up with prize inventories and customer rewards, confirmed Jaime’s CRM choice. “We wouldn’t want to have a customer win a prize and not have something – a keychain or USB – with their team’s logo available. And even worse, if we had to give them something from another team,” Jaime says. “With Sugar, we kept on top of that inventory all day, and even if we ran out of the team logo, we could give them something neutral, not something from a team they may not like.”

Despite the huge demands of 35,000 transactions, Sugar hummed along without a hitch: collecting data on all transactions, keeping real-time track of prize inventory, and even notifying customers by text that if they spend a few more dollars that day, they would be eligible to spin the prize wheel. Jaime and his colleagues were amazed to see data coming in, almost in real time.

Even better: data-driven decisions

The next day was even better when Sugar provided sales reports:

“We were immediately able to see all this information – the spending, the average sale — and this is something we never had so quickly. We could see what strategies were working and which needed to be adjusted, and we were learning more about our customers.” With rich information from Marathon Day, the company deepened its strategic commitment to a customer-focused transformation by reorganizing some of its departments internally, moving customer service, ecommerce and graphic design under sales and marketing.

It also changed the company approach to financial forecasting. “When we used to talk about why we didn’t do well on back-to-school sales, everybody would start giving anecdotal answers. We were working only on hunches and perceptions. Now, we look at hard data, and often the data shows us information that surprises us and challenges our thinking,” says Jaime.

Taking it to the next level: marketing to the family, not just the individual

Marathon now uses Sugar to maintain demographic information about its customers, along with records of transactions, frequency of purchase, method of payment, including the credit card brand, and favorite local and international soccer teams. Sugar records even include a customer’s sizes for clothing and shoes. The detail has enabled an entirely new marketing strategy.

“With Sugar, we can see that more than 60 percent of our customers are buying for the family. We see a male buying for females and children, and we can see those patterns – which guides our marketing strategy to focus on the family, not just the individual,” Jaime says.

Expanding marketing reach: marketing automation integration

As companies mature in their CRM experience, they often add other applications that integrate easily and grow Sugar’s functionality. With an eye toward building more sophisticated email campaigns and capitalizing on social media, Marathon selected Act-On for marketing automation, a decision that helped the company leverage information from its social media pages, especially during the World Cup.

Marathon initially viewed its social media pages as a way to engage with customers: promotions, new product information, discount coupons surrounding soccer. But, as is common with sports-oriented pages, the content degenerated into debate among fans about their teams. As a result, Marathon wasn’t getting a dividend from its pages.

When the company added Act-On, it met those challenges by taking the audience away from the sports debate. It created specific campaigns, offered e-coupons, added squeeze pages effortlessly and posted signup forms for specials or events. It changed the page content from pointless debate to value. “We’re pulling all that into Sugar and getting conversions into ecommerce sales and seeing the same people who showed up in our stores,” says Jaime. “Before Sugar, it was impossible for us to know that a customer who got our email actually went to our store and purchased.”

During the World Cup, Marathon ran a Facebook promotion offering a coupon for a World Cup T-shirt redeemable in its retail stores. The result: Marathon converted one-third of its new social media friends into sales, and captured even more loyal fans in their customer database from a previously-hard-to-reach demographic.

Deeper understanding: marketing that’s welcomed by customers

Now that Marathon has deep data on 70 percent of its customers, the company is learning new ways to understand and communicate with them. Sugar harvests and correlates data from sales transactions, contests, customer calls and customer service requests, and produces smooth, focused reports that guide marketing and merchandising. For example, Marathon has a website customers can use to design their own T-shirts for their favorite soccer team.

When a customer designs a T-shirt, the website collects basic demographic information about that customer and also logs the customer’s favorite teams. That information feeds into Sugar, which keys an Act-On push campaign around that sports team or event. “We can see what the customer wants and respond to those needs in a friendly, helpful way now,” says Jaime. “Certainly, it has helped drive sales, but more importantly, it makes us a company attuned to our customers.”

Sugar helps when margins fall

Being attuned to customers and their buying patterns certainly helped when the Ecuadoran government instituted additional surcharges on imports. With the barrel price of oil dropping – a major revenue source for Ecuador – the government increased tariffs on imports to compensate for the loss of oil revenue. The additional tax on imports pushed the retail price of athletic shoes – a franchise product for Marathon — from $38 to $88. As if that weren’t difficult enough, Jaime saw his Marathon customers shopping outside the country – in Colombia, for example – for the same shoes at a cheaper price.

“We were – and still are — taking a hard hit – that was inevitable – but we had to try to recover sales from 2014. To sell the inventory we have – to compete with retailers here and in surrounding countries – we are doing sales and discounts, and Sugar helps us communicate those discounts,” Jaime says. “With Sugar and marketing techniques through ActOn – offering additional promotions through email and customer calls to about 1,000 customers – we managed to reach our goals.”

The promotions included Sugar-generated email couponing for purchases – consumers who spent $200 in one month, got a $50 credit for the next month – all tracked through Sugar. Six hundred customers came back to take advantage of the credit, Jaime says.

“We got some really nice results out of that. We ended up with a 24 percent open rate on emails and we were able to get sales up each month and improve our customer information database because of Sugar,” he says.

Expanding the customer focus: improved marketing and management throughout South America

With retail and logistics locations spanning the entire West Coast of Latin America, Marathon plans to implement Sugar next in Peru. “We have great support for Sugar from our CEO, and we see Sugar as the backbone of our operational strategy, from Panama to Chile,” says Jaime. “We have produced solid returns from our implementation in Ecuador – we know so much more about our customers now – that I know we will be equally successful as we move outward.”

His advice to others considering Sugar or wanting to reposition marketing efforts toward customers:

“Eventually, you are going to have competition that is customer-focused, and you will no longer have a competitive advantage. Sugar will absolutely transform your business and help you be effective in being customer-focused and staying ahead of the competition.”

Solution partner: PlusProjects

Marathon’s customized Sugar deployment was developed and implemented, and is managed by PlusProjects. Ecuador-based Plus Projects is a technology company that has been customizing business solutions for 15 years, implementing CRM projects, BPM, CMS and mobile experiences, and managing social channels for clients.

"With Sugar, we can see what our customers are buying; that more than 60 percent of our customers are buying for the family. We see a male buying for females and children, and we can see those patterns – which guides our marketing strategy to focus on the family, not just the individual." - Jaime Morillo, Chief Customer Officer, Marathon Sports

"The most important thing is that we are able to start being analytical and stop being intuitive… often the data shows us information that surprises us and challenges our thinking." - Jaime Morillo, Chief Customer Officer, Marathon Sports

Partner

Quito, Ecuador

sugarcrm@plus-projects.com

Website

Industry

Distribution

Headquarters

Quito, Ecuador

Integrations

  • Joomla: Web pages & gamification
  • RetailPro: Point of sale software
  • SAP HANA: Business intelligence
  • Act-On: Marketing automation & social media analytics

Customizations

  • SMS Gateway: Text messages are written in Sugar and targets are drawn from the customer list drawn from Sugar.