ANA Annual Meeting 2014

How Target Used Data Breach to Shake Up Its Brand

Jeff Jones Shares Lessons Learned in Wake of Crisis

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Target's data breach, which took place almost a year ago, is still racking up impressions -- 150 billion to date. And CMO Jeff Jones didn't shy away from adding a few more to that tally with a frank presentation at the ANA Masters of Marketing meeting.

Jeff Jones
Jeff Jones

"Don't let a crisis force you to take stock of your brand assets," Mr. Jones said. "Don't get caught navel gazing like we did. … If you just respond, you will be too late."

Mr. Jones said the data breach provided an opportunity for Target to assess its brand and take action -- "moments lead to momentum." It became evident that as the industry and the world had changed, Target hadn't.

To start, the company had been focused on the white, suburban mom for too long. In reality, its customers are "more hispanic, more urban, more millennial and more connected than ever before," Mr. Jones said.

Likewise, ecommerce boomed and shoppers adopted smartphones in droves, yet the retailer continued to focus on its stores and circulars.

"Target became way too insular," Mr. Jones said. "For too long we hunkered down in Minnesota and … bred our own talent and benchmarked against ourselves."

Mr. Jones highlighted the ways the company is changing in the wake of the breach -- recruiting talent from the outside, revamping the mobile shopping experience and embracing a new level of transparency. It's also rolled out things like in-store pickup and subscriptions, in addition to testing same-day delivery services.

Those shifts are having a marked impact on the business. Thanks to the revamp of its online and mobile experience, sales through those channels are up 40%. And pick-up in stores now accounts for 15% of online orders.

In an interview following his presentation, Mr. Jones also noted that a legacy of the breach has been a rapid overhaul of the company's corporate headquarters. The executive team was dispersed throughout its Minneapolis headquarters, making spontaneous interactions difficult. The designated executive floor "had become a place where it wasn't about openness and transparency," Mr. Jones said.

The company announced plans to revamp its 26th floor in June, so that senior leaders could "operate better as a team, make faster decisions, provide clarity and drive alignment," Target's CFO John Mulligan said in a memo to employees. "We promised to remove roadblocks, streamline decision making and generally make Target less bureaucratic. ...We've made real progress."

Worth noting, the "executive committee" has also been renamed the "leadership team," "because all across Target, we need more 'leadership' and less 'committee,'" Mr. Mulligan said in the same memo.

The changes to the 26th floor were completed earlier this month. The new space is more open, with executives physically closer together and glass-walled conference rooms. The new space also features a social-media command center and an area with product kiosks showcasing a couple hundred new products and calling out details like price, designer and the inspiration behind the product.

As the holiday season and the one-year anniversary of the breach approaches, Mr. Jones said "we are by no means ready to declare victory," but the business is headed in the right direction.

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