Measuring Retail Collaboration


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Measuring Retail Collaboration

  1. 1. As seen in © ChurchillBest Practices inSHOPPER MARKETING MEASUREMENTPart 5: Measuring Retail CollaborationUnderwritten by:By Liz Crawford, Senior Industry Analyst Executive SummaryThe following is the fifth installment in a six-part series n There essentially are three key steps in assessing theexamining best practices for the measurement of shopper impact of collaborative shopper marketing efforts:marketing. This article looks at effective ways to measure 1. Aligning objectivesretail collaboration. The final article next month will examine 2. Assigning success metrics 3. Assessing and reporting resultsdirections for the future. To read the first four articles in the n Both brand and retailers must overcome intra-series, visit company hurdles, as well as partnership chal-P erhaps the most fundamen- But success is achieved only if all lenges, to achieve truly effective collaboration. tal difference between the stakeholders win. In some cases at n Mutual success can be calculated in part by sales historic measurement of tra- least, that means brand-specific ob- lift, but it can’t end there. Broader mutual benefitsditional in-store marketing and the jectives must sometimes be sacri- must be assessed, such as category effects, store-measurement of shopper marketing ficed for the overall good. level sales, in-aisle shopper impact, and pre/postis this: Shopper marketing gauges In 2010, the Retail Commission on shopper perceptions for both retailer and brand.impact beyond the brand. Since Shopper Marketing proposed the n Not all measures will reflect benefits for bothmany programs must meet objec- following definition as part of its re- partners all the time. Identifying mutual goalstives set by both the manufacturer port to the industry: upfront can help cement the commitment to theand the partnering retailer, their “Shopper Marketing is the use program and the partnership.goals and metrics are often set at of insights-driven marketing and n While hard sales and shopper data are critical tothe category, portfolio or even store- merchandising initiatives to satisfy gauging program achievement, both sides re-wide level. the needs of targeted shoppers, ceive the softer benefits of collaboration as part Although the net is cast wider, enhance the shopping experience, of the “return on relationship.” This can includethe measurement techniques them- and improve business results and a “seat at the table” for manufacturers and im-selves aren’t much different from brand equity for retailers and man- proved differentiation for retailers.those used in traditional practices. ufacturers.” © Copyright 2012. Path to Purchase Institute, Inc., Skokie, Illinois U.S.A.  All rights reserved under both international and Pan-American copyright conventions. No reproduction of any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law. 1
  2. 2. SPECIAL REPORT Common Brand and Retailer Measures Measurement buckets: Brand objectives, expressed as: Retailer objectives, expressed as: Lift, units/occasion, category share, Lift, category sales, comp-store sales, cross- Transaction data brand loyalty, national campaign ROI, category sales, basket size, profitability per retail program ROI square foot Trip frequency, trip types, number of aisles Shopper List making, dwell time, consideration, shopped, shopper card penetration and behavior shopper engagement, advocacy participation, digital shopper engagement, shopper loyalty, household penetration Retailer brand equity measures (ongoing Brand equity measures: awareness, measurements): shopper satisfaction, percep- Attitudes and beliefs “brand for me,” “would recommend to tion of shopping experience (“clean store,” a friend” “friendly staff,” “quality products,” etc.) Sales: scan data Sales: Scan data, shopper card data Data accessible to re- Insights: media consumption, in-home Insights: trips, in-store traffic, in-store video spective stakeholders ethnography and consumption data, or tracking data, website traffic, shopper qualitative insights, cross-channel data, profile-level, basket data national panel data Brand-based programs that meet the re- Non-shopper, business- A “seat at the table,” increased feature tailer’s specific business needs (such as trip to-business relationship and display support, favored vendor frequency, category sales); improved differ- benefits status, category captain designation entiation But the report later notes, “One word miss- 1. Aligning Objectives programs solely to block a competitor froming from this definition is, ironically, the one The Brand Perspective gaining an advantage. For instance, somethat the Commission identified as most es- One of the brand-side challenges to even multi-brand programs allow only one brandsential to effective shopper marketing: ‘col- rudimentary collaboration stems from the per category to participate. And such cat-laboration.’” While there are exceptions, brand-retailer dynamic itself: the brand is no egory exclusivity requires brands to employmost effective shopper marketing programs longer a “client.” Over many years, brands competitive, “bare-knuckle” tactics.require brand-retailer collaboration. This is have grown accustomed to buying media or When these kinds of dynamics are in play,a business necessity for achieving optimal research, which puts them in the driver’s seat. it is difficult – or even irrelevant – to mea-results. But partnering with retailers is very differ- sure the return on investment. This is not a This article examines ways in which brands ent, because brands don’t completely control test-and-learn enlightenment model, but aand retailers can effectively measure the re- spending. Retailers have different objectives, warfare model, where defending turf and/orsults of joint programs while also examining and can drive a hard – even intimidating – gaining ground are the key objectives.a few of the obstacles they might encounter bargain. One anonymous brand marketer Next, brands have intra-company dynam-along the way. suggested that it’s like trying to befriend a ics that can hinder aligning objectives with There are essentially three steps that must bully: he keeps taking your lunch money, but retailers. Notably, sales and marketing teamsbe taken to effectively measure the impact of you go on trying to please him. can appear to operate at cross-purposes, es-joint shopper marketing programs: 1. Align- Brands sometimes feel compelled to par- pecially when they are in silo-ed departmentsing objectives; 2. Assigning success metrics; ticipate in trade programs in order to stay with different compensation incentives. For3. Assessing and reporting results. on a retailer’s good side, or to maintain mer- many manufacturers, these legacy organi- That may sound simple, but it isn’t always chandising support, or even to simply stay on zations are well-entrenched cultural forceseasy. the shelf. Occasionally, brands participate in within the company, and that makes getting 2
  3. 3. SPECIAL REPORTeveryone on the same page with the cus- data and back channels to understand their mentality is, ‘If you aren’t growing top-line,tomer a challenge. real priorities. One down-to-earth retail ex- you are dead.’” Key performance indicators In many classes of trade there are key mar- ecutive admitted, “Sometimes even the buyer (KPIs) will often include year-over-year cat-keting weeks for different categories. Getting won’t give you a straight answer!” When in egory growth, comp-store sales growth, anda brand promoted at retail during that week doubt, brands must keep marketing goals increases in basket sizes and trips. Brands canis critical to achieving annual sales goals, so broad, which in turn leads to fuzzy objectives. use this as a starting place for aligning successwinning that week equates to success – and Ultimately, retailers interviewed for this ar- metrics with their compensation – for many salespeo- ticle contend that the ideal brand proposal Brands, too, are interested in top-line salesple. Thus, temporary price reductions (TPRs) sets meaningful differentiation for the re- for their business. So mutual success can beremain entrenched. tailer as a core objective. The best programs calculated in part by sales lift – but can’t end Shopper marketers in that same company, are those that include a total store solution, there. Broader mutual benefits must be as-on the other hand, may see things differently. provide a critical point of difference vs. a com- sessed, such as increased units per purchaseCo-marketing dollars used to fund TPRs can petitor, or deliver a real shopper solution. The occasion, incremental cross-basket purchas-miss strategic objectives. If trade money is corresponding success metrics would include, es, growth in category-purchase frequency,being spent to help the retailer “throw in a respectively, comparable-store sales lift, at- new user penetration, and shopper delight,gallon of milk” with a threshold-dollar pur- titudinal shifts among shoppers, and cross- among, brand equity goals and shopper be- basket analytics. Of course, not all measures will reflecthavior goals may be lost completely. There- One retailer remarked, “We also keep our benefits for both partners. Retailers oftenfore, some programs are designed primarily eyes on the size of the prize.” So, objectives don’t care about a brand’s share of category;with sales goals, not brandgoals, in mind.The Retailer PerspectiveMost retailers think that fewbrands are savvy about re- Mutual goals and mutualtailer values. According tothe retailers interviewed for respect: “If we do nothing elsethis series, fewer than 30% but that on a regular basis, it’s aof brands address retailerpriorities in their shopper win-win.”marketing proposals. Whenprogram objectives are only Catherine Lindner, vice president,brand-centric, retailers may retail marketing, Walgreensview the metrics as self-serv-ing or irrelevant. To illustrate this, considera typical brand proposal. Brands begin their also must show substantial retailer payoff, conversely, brand teams are usually retailer-presentations with shopper insights – a good beyond brand lift. agnostic about sales (although their custom-start, but one that rarely ladders up to the Additionally, brands aren’t alone in dealing er-team counterparts would feel quite differ-retailer’s objectives, which are based on busi- with internal issues that can create stumbling ently). But identifying mutual goals can helpness issues that often are quite different from blocks for collaboration. Retailers have legacy cement the commitment to the program andthe brand’s. For example, in the grocery class organizations with silos, too. For one, buying the partnership.of trade, trip missions are blurring across centers sometimes aren’t incented to cooper- When it comes to identifying mutual goals,channels; drugstore chains sell ice cream and ate with each other, so developing holistic mapping retailer shopper segments to brandconvenience stores sell cat food. This puts shopper solutions across departments (like buyers is a frequently cited technique. How-intense pressure on the competition for trips. skin and hair, say) can be very difficult. Cross- ever, recognizing overlapping brand equitiesSo retailers would like brands to help them departmental solutions may be hard to estab- is at least as important. Common equity willprompt a trip mission that could only be ful- lish because one of the buyers doesn’t “get help with program development, but will alsofilled in their store. Providing insights and credit” for the sales. help determine metrics of success. Both retail-designing programs to solve this need would er and product perceptions can be included inlead to a brand win. 2. Assigning Success Metrics pre-post shopper surveys, for example. On the flip side, retailers aren’t al- First and foremost, retailers want to drive Once objectives are aligned, identifyingways transparent about their strategies, top-line growth for their stores. According the corresponding metrics is fairly straight-so brands can be left relying on secondary to one executive, “For many retailers, the forward, because the measurement options 3
  4. 4. SPECIAL REPORT How Walgreens and Hershey Spent Their Summer VacationThe following case study resulted from pilot programs “When you don’t do that, our idea of success is differentconducted by members of the Retail Commission on from our vendor partner’s idea of success.”Shopper Marketing as a way to validate its model for Rather than employing the standard seasonal themeeffective collaboration. It was presented during the 2010 of preparing for the return to school, the partners devel-Shopper Marketing Expo. (For more information, visit oped creative that leveraged Hershey insights into mindset of “Mom,” who views the final few weeks of summer as the last chance to have fun with the family,Hershey and Walgreens teamed up in summer 2010 to de- according to Phil Stanley, then Hershey’s vice presidentvelop a back-to-school campaign that would drive store of customer marketing.trips and increase basket size while boosting candy sales. A “Don’t Stop Summer Fun” theme fit well into Wal- Walgreens chose as its target “Efficient Eileen,” the greens’ overall brand position of “inspiring a well life,”chain’s most important execution of whichcustomer segment in largely “resides in theterms of pharmacy sales, healthcare space,” Lind-but a shopper who typi- ner explained. “But [thecally does not buy candy Wal g re e n s s h o p p e r]during her trip. Hershey, doesn’t just think aboutmeanwhile, chose to tar- the health aspects. Sheget “Em,” its core con- thinks about the fun andsumer segment. the happiness. And she The partners then set knows that when she’sabout finding the points happier, she’s healthier,of intersection between and vice versa. [So] it was“Eil e e n” a n d “Em .” a position that we knewWhile a key component resonated with our con-of collaborative shopper sumers.”marketing is to “make The program ran in asure you create alignment” between the retailer and handful of markets (selected for their prospects for suc-manufacturer’s key targets, “don’t get too caught up on cess) and employed displays, circular features, local radiobeing perfect,” advised Catherine Lindner, Walgreens spots, coupons and online components. “All of thesevice president, retail marketing. “ I think we got the best were existing tools that we already had in our portfo-result ... without a lot of crazy math” and additional lio,” said Stanley. “We just brought them together andspending on the effort, she said. aligned on the objectives.” “Ultimately, we didn’t spend They also devoted time to determining mutually ben- more as an organization,” added Lindner.eficial objectives and the methods through which results Although specific results were not disclosed, both Stan-would be measured. The metrics included sales/unit ve- ley and Lindner deemed the program a financial success.locity, dollar share vs. other retailers and incremental lift But both executives were effusive about the effect theon the sales side, and awareness, unplanned purchase process had on the nature of their business relationship.impact, purchase barriers and likelihood to recommend “We know a lot about confection consumers. But Wal-on the attitude/behavior side. greens knows more about its shoppers than we could ever “We don’t sit down [with manufacturers] and align on hope to know,” said Stanley. “The goal was to see if we couldmetrics early enough – or often enough,” Lindner said. really drive performance. And I think we’ve proven it here.”
  5. 5. SPECIAL REPORTgenerally become readily apparent (see chart, count for the “fully loaded cost of measuring Finally, the process of collaboration offerspage 2). results.” its own reward. “It’s that mutual respect that The challenge that arises here is logistical: This makes upfront commitment all the oftentimes gets left in the lobby. If you walkThe brand typically has some of the necessary more critical. But it also means that only pro- in with the idea of mutual goals and mutualdata, and the retailer has the rest. While both grams big enough and profitable enough to respect, it really goes a long way,” said Cath-sides have access to scan data, retailers are make the analysis worthwhile will be read. erine Lindner, vice president-retail marketingobviously more interested in their own shop- Realistically speaking, that won’t be more for Walgreens, while speaking in fall 2010 atpers than in a national panel of category buy- than two or three programs per year. a Retail Commission workshop. “If we doers. Yet brands don’t normally have retailer- Brands should be prepared to shoulder nothing else but that on a regular basis, it’s aspecific shopper data. The retailer, therefore, most of the burden of analysis (and related win-win.” owns the information that is most meaningful expense) as a “cost” of establishing a deeperto him. And it is this data that will prove the partnership. However, there are potentialbenefits of the brand’s program to the store, benefits for retailers who share the burden:including shopper card data, store-level sales gaining insight into how their shoppers re-data, on-shelf audit information, in-aisle vid-eo monitoring analysis and ongoing shopper spond to different stimuli, category by cat- egory. Retailers also will be able to gauge About the Authorattitudinal studies. which brands are driving more effective and efficient programs, thereby increasing the3. Assessing and Reporting sophistication of their alliances.ResultsThe participating brand will be at the ready to The Return on Relationshipreport results to prove program effectiveness While hard sales and shopper behavior databecause it is in their immediate best interest are critical to evaluating program success,to do so. But will the retailer? As noted earlier, each partner gains softer benefits from thethe retailers own the data that will help the collaboration as well. This is the “return onbrand prove its case. the relationship.” Many retailers seem reluctant to share On the brand side, the benefits can includeresults, probably at least in part because it a general increase in feature and display sup- Liz Crawford has more than 20 yearswould require them to shoulder some of port and even a coveted “seat at the table,” of brand management and consultingthe expense and effort involved in analyzing the latter of which means that the brand is experience with a concentration inthem. In fact, one executive pointed out that consulted on category-level decisions. A solid strategic innovation. Over the lastretailers themselves rarely anticipate or ac- brand partner can also enjoy official category few years, Crawford has focused captain status. on developing integrated shopper By the same token, the retailer’s business marketing strategies for Fortune 500 Series Schedule will improve by working with brands that truly clients. Currently, Crawford is an understand their needs and can help drive analyst and contributing writer for the Part 1: Rationalizing the their objectives effectively. As an example, Path to Purchase Institute. McGraw- Investment Diet Pepsi’s “Skinny Can” launch at Target Hill released her book, “The Shopper (discussed in article three of this series) en- Economy,” in March. Part 2: Measurement of hanced the equity of both partners among Shopper Behavior the retailer’s shoppers. Ultimately, such mu- tual equity enhancement is what makes shop- JWT/OgilvyAction Inc., conducting Part 3: Measurement of Brand per marketing more worthwhile than tradi- business under the OgilvyAction and Impact tional collaborative activity. JWT Action brands, is a fully integrated, The potential for mutual benefits goes be- end-to-end shopper marketing and ex- Part 4: Effective Integration yond program impact to encompass busi- periential marketing agency with main Practices ness-to-business effects such as cost reduc- offices in New York, Chicago and Akron, tion, profit growth, and long-term customer Ohio. It is part of the WPP Group. Part 5: Retail Collaboration loyalty and satisfaction. These benefits are measurable over time. Because shopper mar- Part 6: Directions for the keting is a relatively new discipline, however, Future there are few companies that can identify them as yet. 5