Pep Boys’ CMO on how ‘ridiculous amounts of data’ changed their strategy

In some ways, Pep Boys is the quintessential heritage retailer. Founded in 1921, the automotive chain is a Philadelphia institution. The company’s famous spokesmen — Manny, Moe and Jack, modeled after the company’s three founders — are as definitively “Philly”as eating cheesesteaks and hating on the Giants.

At a time when all national retailers must go digital or die, how can such a brick-and-mortar brand make the transition to online? As Pep Boys CMO Ron Stoupa put it, “I will never be able to change your oil via the iPhone, no matter how good the app.”

Yet, Pep Boys has in fact transformed from beloved regional chain into a national auto parts and service powerhouse that welcomes most of its tire and service customers only after they’ve searched online.

How’d they do it? By leveraging data.

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An ideal customer experience depends on data

Time was, when your car broke down, you went to your car guy. Or, you asked your neighbor for advice. Now, Stoupa said, “fewer people are now defining themselves by their cars. The cars are becoming more of a tool.” In other words, most of us don’t have a “car guy” anymore.

Understanding this, Pep Boys turned to its abundant store of data. The goal: to translate decades’ worth of customer behavior into an actionable marketing plan. By modeling the 36 million consumers in its database, Pep Boys learned that 70 percent of customers conduct research online before buying a set of tires or getting their oil changed.

“A lot of people are going online [before coming] into our stores,” said Stoupa, “so digital marketing is key. It’s the information… That’s where it all begins.”

Through careful modeling and segmenting, Pep Boys developed a way to own the entire consumer experience. “They can search for a deal on your mobile phone,” he said. “We have a deal, they save it. Then they can make an appointment on their phone, and redeem a coupon when they get to the store.”

According to Stoupa, mapping the customer’s digital journey to in-store behavior is the “fastest-growing aspect of our business.”

As customer intelligence grows, strategies must be fluid

Broadly speaking, Pep Boys’ customers are divided into DIY and DIFM. The former, Do-It-Yourself, is the classic retail buyer who buys a new muffler and installs it himself in his driveway. The newer breed of Do-It-For-Me customers, said Stoupa, “walks into Pep Boys and hands their keys over.”

Traditionally, Pep Boys placed more value on their DIY retail customers. Not one to rely on tradition, Stoupa wanted numbers to back up his marketing.

Taking Pep Boys’ “ridiculous sums of data” in hand, Stoupa conducted high-level analyses. The closer he looked at the numbers, the more robust the behavior models became. Sure enough, new insights inspired new strategies.

“Until the segmentation, we didn’t understand how concentrated the [DIFM] customers were on the service side,” he told us. In fact, this small minority of customers was driving one-quarter of business. “That’s when we said, ‘Wow, look at the opportunity in service.’”

This led to a new focal point within their marketing strategy: away from best-price retail messaging, to a service-centric value proposition.

“We still have great value,” said Stoupa, “but we’re not leading with price. We’re leading with service. We’re leading with information. We’re leading with data.”

The challenge of using data to enhance brand engagement

When Stoupa started at Pep Boys five years ago, the company’s data was held across several disconnected systems. “We had very old systems, like many retailers have, with data stored in many places,” Stoupa told us.

Today, big data may be easier to collect, but it’s no less complicated to parse. “Instead of seven disparate systems, I now have store data. I have web data. I have search data. I have social data. I have all of these hard and soft data pieces out there.”

Managing the data flow is one challenge. Leveraging those numbers to effectively inform marketing decisions is yet another. The key is remaining focused. At Pep Boys, Stoupa uses known customer behavior to increase retention and drive value-adds.

“We’re utilizing the data we collected from all of these points — from what you actually bought, to what you’re actually searching online, to how you came into us, to what coupons you’re redeeming — to paint a picture.”

Though the days of catalogs are long gone, customers still find great value in the modern version of direct-mail: the email newsletter. Stoupa relies on his war chest of data to take full advantage of this touchpoint by delivering content relevant to specific consumers based on their past behavior. For example, if someone just bought tires, their rewards newsletter might contain an article on how best to care for your tires.

By delivering content that’s on-message, as determined by the data, “We’re able to build what the consumers want: trust, value and convenience.”

Brick-and-mortar and digital are no longer rivals

Stoupa acknowledges that many of his customers still call to make appointments, and many still walk in without smartphones clutched in their hands. But “the big growth” lies in converting digital touches into real-world sales. To do that, he keeps a close eye on the numbers and models.

“We are a transforming, customer-first business,” he said. “You have to understand who your customers are, you have to give them the products and services they want, otherwise someone else will. And data is the core to delivering that.”

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