Learn how 1-800-FLOWERS.COM (www.1800flowers.com) is achieving consolidated, accurate information for some 10 million customers. Facing disparate systems and lengthy test-and-learn cycles, the leading gift retailer turned to Oracle to create an enterprise-wide customer data model. The article outlines the retailer's steps toward success: In-depth analysis of business and campaign processes. How the company is putting consolidated customer views to work. Using customer analytics to drive future campaigns. Hard results, including 300% increase in net sales in one year.

As Published In November 2004

Customer Intelligence in Bloom
By Molly Rose Teuke

For 1-800-FLOWERS.COM, it's all about relationships.

The value of relationships in building market share is a given in business today, and it's apparent in more ways than one at 1-800-FLOWERS.COM. The Westbury, New York-based company has earned a prominent place in gift retailing, by helping customers connect with the important people in their lives—in other words, it succeeds by enhancing relationships, says CEO and founder Jim McCann. The company is now putting equal emphasis on its own relationship with customers, by getting to know them, addressing their specific buying patterns, and expanding buying opportunities. What began in 1976 as a single flower store is now five brands—including other well-respected names such as Plow & Hearth, HearthSong, and The Popcorn Factory—offering floral gifts, specialty foods, home and garden items, and toys.

By 2003, with a customer base of more than 10 million, the company faced several marketing challenges. First, pulling customer information from the legacy systems that came along with the brands it acquired was a cumbersome process. Second, the absence of a single, centralized data mart limited the potential for targeted marketing. Third, the turnaround on test-and-learn cycles was too long. Fourth, a shallow, decentralized base of customer knowledge limited the company's opportunities for cross-selling and upselling among brands. Finally, e-mail campaign volume was expanding faster than the company's ability to properly handle it, especially during the company's peaks, during holidays such as Valentine's Day and Mother's Day.

An End to Data Fragmentation

1-800-FLOWERS.COM, which has been running Oracle applications since 1996, turned again to Oracle for solutions to its growing pains. By combining the data silos that existed within each subsidiary into a single Oracle database, the company was able to create an enterprisewide customer data model with deep knowledge potential. "We now have an information delivery framework that consolidates data from disparate sources, runs analytics, and defines one instance of the customer," says CIO Enzo Micali. "We can understand each customer and their touchpoints across brands. We understand his or her preferences, what they like and dislike, and continually deepen the relationship between our customers and our brands."

That single view of the customer is key, especially in direct-to-consumer retail, notes Liz Roche, vice president of technology research services at META Group, a strategic consulting firm in Stamford, Connecticut. "The challenge for companies such as 1-800-FLOWERS.COM that want to establish more-intimate relationships with their customers and not just be a commodity delivery service," she says, "is to be able to create a repeatable means of matching potential customers to a customer profile, to understand what those customers will respond to."

The Numbers Are Growing

Since it began implementing the system less than two years ago, 1-800-FLOWERS.COM has achieved significant results. Revenue reached a record US$603 million in 2004. Net earnings more than tripled in one year, from US$8.3 million to US$30.4 million. The e-mail order rate increased 12 percent. Customer retention grew by more than 15 percent, and now more than half of the company's revenue derives from repeat business.

Web commerce is 1-800-FLOWERS .COM's strongest area of growth. In 2000 the Web accounted for just 10 percent of the company's business; today, it's more than half. "Another big challenge for a company such as 1-800-FLOWERS .COM is to have a marketing technology that has a really good data structure that is flexible and can handle multiple channels," says META Group's Roche. "The Web channel has become the de facto standard," she says, adding that savvy businesses discover that they must treat the e-channel as part of their entire channel structure.

Customers Can See the Difference

1-800-FLOWERS.COM has applied that rigor and earned a leading market share as a result. "One of the ways we've raised the bar is that we're truly a 360-degree retailer," says Micali. "Our intent is to have a unified customer experience regardless of channel. If you're on the Web site and you enter preferences and the following week you pick up the phone and call 1-800-FLOWERS, our Gift Advisor will know you and your preferences."

Making the most of customer data requires a holistic approach, says Aaron Cano, vice president of customer knowledge at 1-800-FLOWERS.COM. "There's a front end of campaign management that looks at analysis, that starts to help the business folks really understand who they want to talk to in a campaign," he says. "Then there's list selection—setting up segments and codes—and there's the back end in terms of what's working and what's not.

"A lot of tools are very good at the middle part—list selection—but to me, that's not a marketing function, so it's not that value-added for me. We felt that Oracle provided a longer-term partnership solution, versus going out and buying a software application."

It's All About Relationships

In implementing Oracle Marketing, 1-800-FLOWERS.COM's IT department cooperated with its marketing team, with Oracle working as a third player in the partnership. "We spent a lot of time up front with Oracle, reviewing our business model and campaign processes before we did anything," says Cano. "We set out detailed flows in terms of how we run a campaign, how we look at analysis, and what we physically do every day from a database marketing perspective and an IT perspective. We spent two months mapping out all of those details and had status meetings twice a week to review where we were and where we were going.

"Spending that time really helped us understand what we wanted to do, and I think it helped Oracle understand what we wanted as a retailer in a multichannel environment. It was that partnership that led to a real business solution," adds Cano.

The result of this close partnership is a seamless, intuitive, closed-loop marketing process that includes customer segmentation, target list creation, multichannel direct mail and e-mail marketing strategies, and response and order tracking. The marketing team can now use Oracle Application Server Discoverer to drill down into specific marketing campaign results across brands and report on them. That means it's now easier to point and click through information without spending time on programming ways to access that information.

The Results Are In

"Less processing leads to shorter test-and-learn cycles," says Cano. "Now the business analysts can go in there, look at their campaigns, and drill down to see what's working and what's not working, and they don't have to come knocking on my door to do those things.

Snapshot 1-800-FLOWERS.COM www.1800flowers.com With one of the most recognized brands in gift retailing, 1-800-FLOWERS.COM provides a broad range of gift products, including flowers, plants, gourmet foods, candies, gift baskets, and other gifts, to customers around the world. Year founded: 1976 Annual revenue: US$604 million in FY 2004 Number of employees: 2,000—and more during peak holiday seasons Software: Oracle Database, Oracle Application Server Discoverer, Oracle E-Business Suite Financials and Marketing applications, Oracle eMail Center, Sun Solaris Hardware: HP, Sun Services: Oracle Consulting

"We wanted a simple-to-use solution that would allow us to quickly apply the results of our marketing campaigns. There's a reduction in time for the test-and-learn cycles, where if I do a campaign on Monday, I want the answers on Tuesday, so that when I do another campaign the following week, I can change it, based on the results in the prior week," Cano adds.

"The fundamental difference in implementing Oracle Marketing products is that our marketing team is now focused on the analysis and not on the preparation and gathering of data," says Micali. "We've built an engine where data goes in, gets reconciled, filtered, and churned—enabling the business to spend more time on analytical activities and less time on data gathering and preparation.

"Marketing has a direct impact on revenue. We may know that sales are increasing, but why? The ability to pinpoint the reasons and understand them is very powerful. Through the implementation of the Oracle Marketing product in our data warehousing activities, we get much better clarity around the number of new customers we've acquired and the frequency of their purchases. We have a better picture of what's going in all of our channels," says Micali.

A Mutual Partnership

Cano has also been working with Oracle on enhancements to Oracle Marketing, part of Oracle E-Business Suite 11i.10—which, at press time, was scheduled for delivery this fall. "That was the kicker, if you will, in selecting Oracle," he says. "It was really that understanding of a partnership that was part of the commitment to us and to the tool we purchased, and it was also that I can spend some time with the product development folks at Oracle to help transform the tool into something we believe is going to be better in the future. With other vendors it was, 'Here is the solution; here's the software. Install it, and have a nice day.'"

"1-800-FLOWERS.COM is all about relationships, and we have a good relationship with Oracle," concludes Micali. "When we look to hire people, our biggest concern is chemistry and fit. Culturally, there's a fit with Oracle. There's chemistry there, and there's a level of trust. If I need something, I'm fairly confident that if I pick up the phone and call someone from Oracle, I'll get what I need."