Cabela's Technology Boosts the Bank
Technology can weave together operations, promotions and services in a recession to make more aggressive pursuit of the consumer pay off, something that Cabela's is taking a step further in its role as a banker.
Given the rotten state of the financial industry, retailers have been warned -- by Deloitte economist Carl Steidtmann for one -- that they might have to assume functions traditionally provided by banks. Cabela's is among those that have taken this position already. The sporting goods retailer, which calls itself the World's Foremost Outfitter, today operates the World's Foremost Bank. The bank provides Cabela's customers with a Visa card hooked into a loyalty card program that Dennis Highby, Cabela's president and CEO, identified as "a significant strategic advantage over our competitors" in Cabela's fourth quarter conference call.
A big part of that advantage comes from how the bank operation is tied into the retail business, a function that Cabela's has been enhancing. Recently, it worked with Teradata to improve its ability to analyze customer behavior across its operations. Among the capabilities that the upgraded system provides is generation of credit card statements with product and service promotions targeted to individual customers or segments.
The system upgrade improved Cabela's ability to aggregate and analyze information on individual customers, spending, economics, regions, store locations, promotional events and business impacts. With it, Cabela's can look at customer profitability, assess the relationship of sales to merchandise, assortment, promotions and each sub operation Cabela's runs under its corporate umbrella, including those under its banking services. The information then can be used to generate promotions that mean something to the Cabela's customers they reach.
Bill Franks, who oversees the Retail Advanced Business Analytics Practice for Teradata's Americas region, said one of the biggest frustrations he has faced as "someone who pushes analytics for a living" is seeing companies pass up on the chance to improve data performance when things are going well and bonuses are being paid regularly. He noted, though, that even companies resistant to change are receptive to new ideas today. Current economic circumstances can motivate the establishment of new capabilities as well as procedures that ensure companies continue refining and enhancing those capabilities.
Highby noted that the World's Foremost Bank added new cardholders through 2008, with the average number of active accounts gaining 15.5% to 1.14 million. He pledged to continue adding new card accounts and loyalty program members, who, of course, will be targeted and assessed and, if Cabela's can maintain its focus on driving additional benefits from its technology, ever more effectively addressed. That's the idea, after all.