As SAP extends outward from its roots in ERP to other functions and services, its customers will continue to ask how it plans to bring these new offerings to life. They’ll want to know why they should care and how they will give their business a competitive advantage.
SAP’s newest acquisition—Qualtrics—is no different. In some ways, the challenge is harder because SAP is asking customers to step out of their comfort zone within operational data (O-data) to try to better understand the experience data (X-data) from their customers and employees that comes from engaging with their brands.
ASUG News sat down with Mark Kermisch, CIO at Red Wing Shoes, during SAPPHIRE NOW and ASUG Annual Conference to discuss how Qualtrics has helped Red Wing better understand its customer, its market, and where it can go with future technology.
Reverse Engineering: From the Outside In
Red Wing shoes has been in business for more than 100 years. As customer expectations have changed through the years, so have the ways the shoe manufacturer and retailer have worked to meet them.
“Nobody makes software to manufacture shoes or to tan leather,” Kermisch said. “So, we’ve had to build many of our applications on our own.” This home-grown technology approach is one that Red Wing has used successfully to take its iconic brand into the future. When it comes to SAP, however, Red Wing is a fairly new customer that’s taking a different approach.
“Our SAP journey has been different than most SAP customers,” Kermisch added. “We started with applications like Qualtrics and SAP Concur, rather than the traditional ERP route such as SAP ECC or SAP S/4HANA. So, we’re kind of going about it backwards, but I think it happened that way based off of what we needed. We needed to identify how to get value first. For us, Qualtrics drives direct value.”
Not Just X + O, But X to Get O
Kermisch was very forthcoming about how he sees X-data and O-data working together to help drill down to things like item-level profitability and what a new product or geographic market might mean to the company long term. He also shared an example of how X-data is used to generate this extremely valuable O-data to understand buyer behavior.
“Six or seven months ago, we launched a web application called the Boot Finder. If you walked into a store today, you would see one wall of steel-toed boots and another wall of soft-toe boots, and they all look the same. But that's not how today’s consumer shops,” he noted.
Red Wing knows that in today’s marketplace, the consumers are in the driver seat. They walk into the store looking for a product that will help them get their job done, whether that’s working on their hands and knees slinging a hammer all day or climbing ladders. “So, we created an application that starts with a survey that asks that question, ‘What do you do?’ Based on the answer, the Boot Finder takes 1,000 SKUs of shoes down to two or three recommendations. The customer can print that out and walk into a store or go on our website and buy that product. That data tells us who they are, what they're doing, and what products they ultimately buy at the point of sale. That data is invaluable to a product and a retail company like us.”
Defining New Customer Needs
Qualtrics also helped Red Wing gather some hard numbers on its consumers prior to holding focus groups to dive deeper on the findings. This includes preferences among the shifting customer base. (For example, women are becoming a larger segment of its market and lean toward boot features like comfort and style instead of stitching or grade of leather that interest male customers.) It also looks at relevance of its own brand messaging. (Likewise, do customers in Berlin really care about the heritage of the small town of Red Wing as the birthplace of the brand?).
Experiential data also allows Red Wing to conduct surveys among some of its biggest customer advocates to understand what new waves of innovation would matter to them most. “If you read the press, you would think every fashion-driven brand is putting technology in every piece of fashion we’re going to wear,” Kermisch said. “It can be scary for a 100-year-old company to start putting a technology chip in its shoes.” So, information that will help it determine what features might be sought-after if it was going to employ technology and create the “smart boot” is definitely valuable for the manufacturer.
Boots on the Ground
“There are a lot of jobs where you can’t wear a watch, or a beeper, or a phone because it’s a safety issue. But you can’t do your job with your shoes off,” Kermisch explained. “So, safety buyers like the idea of the boot because they know it will be on. If I can add some technology and information that they can derive off of, that adds value.”
Potential safety benefits include awareness of slips, trips, and falls—if a worker is horizontal instead of upright, for instance—or if the gait of a worker is indicating dehydration or exhaustion, which may trigger an alert to a manager to give that worker a 10-minute break off the line. There may also be an opportunity to use this technology to work toward the holy grail of shoe design: a way to easily cool the foot.
A Retail Company or Data Company?
Kermisch is clearly excited about where the future of retail companies like Red Wing Shoes is headed. “It forces us to ask, ‘What is our business?’ Today we would say, ‘We manufacture boots, and we are a retailer.’ Tomorrow I might say, ‘Well, no, actually we're a platform company and our currency is data. That's what we sell.’”
Eventually that could lead to a model where the boots may be given away and the business is based on subscriptions that are bought for access to the data the boots provide. Such thinking, if it went mainstream, would have major implications for the entire retail and consumer products industries.
It means that finding more ways to leverage both the X-data and O-data that could be coming in will be critical for businesses like Red Wing Shoes to remain relevant. Fellow SAP customers should be inspired by these learnings about how they can introduce X-data to optimize what they have discovered from their O-data. Companies like Red Wing Shoes are paving the way for other companies to follow the footprints their “smart boots” are leaving behind.
Register today for the Consumer Industries Forum in Phoenix, Arizona, October 2–3, 2019. Join other retail and consumer product professionals to learn about digital technology trends and the latest solutions from SAP.