by Stephanie Overby

Power Tools Company Uses Marketing Analytics to Compete With Big Box Stores

News Analysis
Oct 29, 20143 mins

Big Data tools to combine internal and external information helps determine how to counteract the marketing muscle of Home Depot and Lowe's.

If you’re in the market for a chain saw or a leaf blower, you might consider a product from Stihl. But you won’t find the company’s products at Home Depot or Lowe’s. Stihl operates an independent dealer-only retail distribution program that its leaders say is instrumental in helping the company dominate the gasoline-powered outdoor tool category.

But that tactic means Stihl is one step removed from the marketplace. “It’s hard for us to get close to the customer,” says Ken Waldron, director of marketing. That made it difficult for Waldron, who came from the automotive industry, to prove the returns on his marketing investments.

“When you’re working for Chevrolet, you can see very quickly every Monday how many Cavaliers were sold, to whom and in what geography,” Waldron says. “It wasn’t until I came here that I realized that was a luxury.”

Stihl must collect data from many sources, some more complete than others. There is no big market researcher for gas-powered outdoor tools and independent dealers all track sales differently. Stihl belongs to the Outdoor Power Equipment Institute, whose members report on U.S. shipments to wholesalers and retailers. Other third-party research companies track retail sales. And Stihl itself collects product registration and warranty card data. “It takes a bit of doing to understand your performance,” Waldron says.

Last year, Stihl deployed Eye on Marketing ROI software from Black Ink to begin analyzing the more than 10 million customer records it has generated since 2000. The goal is to find historical sales trends and help its thousands of independent dealers as they compete with industry Goliaths for customer attention.

In a new program, Stihl has coaxed 5,000 of its retailers to participate in regional marketing campaigns, in part to show potential customers there’s an alternative to the big box stores. “We’re marshaling this army of retailers who see Home Depot and Lowe’s as the enemy,” Waldron says. “All of them want to better understand their return on marketing effort.” Stihl’s analytics will give them “more reason to believe in what we’re doing in the face of enormous category killers,” he says.

In-depth customer data analysis can raise marketing’s profile inside a company, says Laura Ramos, an analyst at Forrester Research. “Better use of data and reporting helps marketers make the transition from the role of brand center to the source of insight.”

Stihl identified two customer types: “Eddy Expert,” the baby boomer who is familiar with the brand but may soon be aging out of its products, and “William Wannabe,” the Generation X or millennial homeowner who represents the next wave of potential Stihl customers.

Stihl has historically focused on boomers. But analysis revealed that if the company had redirected some recent marketing programs to target 30-to-40-year-olds, it could have captured over $200 million in additional sales at retail by increasing the number of customers it has in that age group by just a couple percent, Waldron says.

Such analytics will drive changes in marketing strategies at distributor stores and loyalty programs in 2015. The “ability to profile who is buying, when they are buying and where they are buying, in a far more granular fashion, will allow us to better target our media and messaging investments,” Waldron says. “The notion of effective micro-marketing against specific audience segments is no longer fantasy, it is reality.”