GameStop is having a good month with the launch of new Xbox and PlayStation consoles.
But before those launches, GameStop had to find a business model that worked when new consoles weren't hitting the market. The fix: GameStop began taking game trade-ins and pushed into a loyalty program via a information technology investment in 2010 and 2011.
I caught up with Ashley Sheetz, chief marketing officer of GameStop, recently at the CBS Broadcast Center in New York. Here's a look at the lessons learned.
The game console buying cycle. Sheetz said that Nintendo's Wii expanded the market for gaming consoles, which haven't really been upgraded for seven years. The initial phase of the buying cycle revolves around early adopters, but Sheetz said that it's likely that more consumer segments will be brought in. "People, who might have been spending discretionary income on things like smart phones, TVs, tablets, over the past couple of years, are now focusing in again on the gaming market," said Sheetz. "We also feel very confident though that, going into 2014 and 2015, we will continue to see the rise of these consoles with more and more people adopting it."
Customer engagement. GameStop has a successful loyalty program called PowerUp Rewards. The program gives GameStop an avenue to reach out to 25 million members in the U.S. The key is to not hit customers up with offers that aren't on target. "PowerUp Rewards has allowed us to have one on one communications with our customers. We now know who are customers are. They give us their e-mail addresses, they give us their phone numbers, and we’re able to have personal relevant communications with those customers, and we’re able to tell them about the products and services that GameStop provides that will be most relevant to them," said Sheetz. "as we look at the technology that’s available to us, as marketers, it’s only going to grow and get more exciting. So it’s a great time to be in marketing."
Magic metrics for GameStop's trade-in program. GameStop's trade-in program where customers can turn in consumer electronics as well as tablets and smartphones has created an ongoing relationship with customers and played into sales of new games and consoles. Here's what Sheetz outlined on her metrics for the trade-in program:
Pre-owned is also a huge value proposition for our customers. So not only are they able to purchase new products from us, they have the choice: 'Do I want to buy this new game for $60?” Or, 'Do I want to buy a pre-owned version of the game for a significant discount?' So when we think about that, we spend a lot of time with research around the trade and the pre-owned proposition. The biggest thing that we look for is awareness because a lot of retailers out there only sell new products. So the first key metric is awareness, the second is familiarity, and the third is trial, so we’re always looking at those metrics.
Multichannel marketing. Sheetz said that it's counterproductive to think of channels as a silo. GameStop views its Web site, mobile products and store experience as one continuum. All of those channels play into one sale, which is often sealed in store with good customer service. She said:
When we think about being a multichannel retailer, there are a lot of channels that are very important to us. Our website is very important and our mobile Web site is a component of that. Social is huge for us. It’s a very important channel for us to engage with our customers. We have owned properties on Facebook, and Twitter, and now Tumblr is a new addition to that, as well as YouTube.
Social has been an important aspect for us not just in informing our customers about what’s next, but also in providing really strong customer service. It really is about how all of the channels work together in the consumer journey, and how they integrate. A customer doesn’t think about GameStop.com separately from GameStop on their mobile device, separately from GameStop. You know on Facebook it’s just GameStop; that experience is seamless across all of our channels.
Tumblr vs. Facebook. Sheetz also noted that GameStop has been following its customer base to Tumblr. She said:
One of the reasons why we’re going to Tumblr is because we are seeing some of the younger generation leaving Facebook, not all together. Facebook is still huge for us, we have over 5 million followers on Facebook, but we’re starting to see Tumblr come out and be a big player with big numbers. For us it’s really important for us to be where our customers are, and we saw so many of our customers on Tumblr that it was a natural fit for us to go there.
Tumblr is a little bit more of a content based communications, so we’re able to share with them more of the content around games. A lot of what we’re starting to use Tumblr for is actually building awareness and showcasing some of the really cool products that are in our PowerUp Rewards catalog.
Marketing technology. Sheetz noted that analytics and marketing are connected at the hip, but can also impact the broader business. Aside from the communications, GameStop needs an ongoing analytics effort and recommendation engine to drive future purposes. "Another thing that PowerUp has done for us from an analytics perspective, outside of marketing, is it’s even helped us make decisions around real estate," said Sheetz. "So now we know where our customers live and we can identify whether there is an area of unserved customers where we should be opening a store. We can also identify overlap so we can afford to close one of those two stores."
Demographics. Sheetz said the goal for GameStop is to reach demographics and where they stand in the gaming cycle. Sheetz said:
We have demographics of all ages that shop with GameStop. We really focus in on making sure that we’re talking to you based on the lifecycle that you’re in, in that moment. So if you’re a dad with a young child, we’re going to talk to you about the products and services that make sense for that child. If you’re an adult core gamer interested in M rated games, we’re going to talk to you about the products and services that you’re interested in.
We have been able to expand our toys offering through the ability to access inventory through warehouses. We are a small footprint retailer, we intentionally have not allowed those stores to get bigger, and bigger, and bigger, and bloated because we’re really good at managing our cost and our overhead. So what we’ve been able to do instead, which has made a lot of sense for our bottom line, is rather than making the stores bigger, you’re getting access to the thousands, and thousands, and thousands, and thousands of SKUs that we have available on our website, but you’re able to do that in a way by just coming into the store, and ordering it, and then having it shipped to your house.