Loyalty one webinar   Delivering on the Promise of Shopper-Centricity 2013-07_23
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Loyalty one webinar Delivering on the Promise of Shopper-Centricity 2013-07_23

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Customer Centricity Fuels Sustainable Growth ...

Customer Centricity Fuels Sustainable Growth
by Graeme McVie, LoyaltyOne US Vice President
Two main trends in the retail environment are driving the need for a customer-centric approach: heightening customer expectations, and evolving & expanding competition.

When properly implemented on an enterprise-wide level, customer-centricity can capture a larger share of customer spend, loyalty – and profits. See how.

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Loyalty one webinar   Delivering on the Promise of Shopper-Centricity 2013-07_23 Loyalty one webinar Delivering on the Promise of Shopper-Centricity 2013-07_23 Presentation Transcript

  • Delivering on the Promise of Shopper-Centricity July 23, 2013 Graeme McVie VP & GM, Business Development & Client Service gmcvie@loyalty.com; 301 652 0694 The Path to True Sustainable Competitive Advantage
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 2Page 2 We’ll address the question: Do retailers really need to become more shopper-centric? Showcase best practice approach to shopper-centricity Layout roadmap to become more shopper-centric while achieving shorter-term objectives 1 2 3
  • Do retailers really need to become more shopper-centric?
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 4Page 4 POLL QUESTION What’s your opinion? 1. Retailers use shopper data when making decisions: a) All of the time b) Most of the time c) Some of the time d) Rarely e) Never
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 5Page 5 POLL RESPONSES 0% 10% 20% 30% 40% 50% a)All of the time b)Most of the time c)Some of the time d)Rarely e)Never Retailers use shopper data when making decisions (% of Responses):
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 6Page 6 Commodity Price Changes Over Last Decade +271% +189% +279% +327% WHEAT CORN SUGAR CRUDE OIL
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 7Page 7 U.S. Consumer Spending (Year Over Year % Change) 2000 – 2010 ~-1% ~+3%
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 8Page 8 Five 24% Six 28% Seven 19% Eight 5% One 1% Two 2% Three 7% Four 14% Consumers are shopping multiple channels …. 3% 8% 8% 14% 21% 24% 31% 35% 35% 36% I purchase my groceries online and have them delivered I research products on blogs I use social media sources to research products I look for updates from retailers/manufacturers via email I visit online deal sites I research products on websites I download coupons from couponing sites I download coupons from retailer websites I download coupons from manufacturer websites I download recipes off websites … and are doing more research on the internet # of Channels Shopped % of Consumers
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 9Page 9 Traditional retailers are stepping up their game Safeway: Lifestyle stores, Just4U Kroger: Targeted marketing, Vendor Collaboration Walgreens: Loyalty program launch New types of competitors are gathering pace Amazon: Selling groceries, opening DCs close to urban areas, offering same day delivery Alice: Enabling manufacturers to sell directly to consumers Drugstore.com: Online pure play with niche offering Target: Red Card, targeted marketing, new localized formats/assortments Alternative formats are proliferating Aldi: Ultra low cost, lots of private label Whole Foods: Organic, fresh, healthy Club stores: Low prices, larger pack sizes Dollar stores: Lots of stores, simple prices, small foot print
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 10Page 10 Focus Still Mainly on Quarterly Financial Objectives Shopper Insights not Sufficiently Specific or Timely •In the past, shopper insights grouped shoppers into large generic segments reducing relevance and value •Static shopper insights did not allow for changes in behavior over time Shopper Insights not Easily Connected to Actions •Disconnect between shopper insights and concrete actions •Decision-makers have to use judgment to translate insights into actions Negative Feedback Loop •Retailers need to hit their quarterly financial objectives •Using the same tried- and-trusted approaches minimizes short-term risks •Limited appetite exists to fix the car while driving it
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 11Page 11 POLL QUESTION What’s your opinion? 2. Which of the following decision areas do you believe makes best use of shopper data on a regular basis when making decisions: a) Corporate strategy b) Merchandising c) Marketing d) Store Operations e) Real estate planning f) Supply chain/logistics
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 12Page 12 POLL RESPONSES 0% 10% 20% 30% 40% 50% 60% a)Corporate strategy b)Merchandising c)Marketing d)Store Operations e)Real estate planning f)Supply chain/logistics Which of the following decision areas do you believe makes best use of shopper data on a regular basis when making decisions (% of Responses):
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 13Page 13 Merchandising Marketing Store Operations Traditional Focus Performance Objectives Category-centric Campaign-centric Store-centric Category sales & profit Campaign response Store sales & direct store costs
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 14Page 14 Store Week 1
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 15Page 15 Week 2 Store
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 16Page 16 Store Week 3 Organic Milk
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 17Page 17
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 18Page 18 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Category1 Category2 Category3 Category4 Category5 Category6 Category7 Category8 Category9 Category10 Category11 Category12 Category13 Category14 Category15 Category16 Category17 Category18 Category19 Category20 Category21 Category22 Category23 Category24 Category25 Category26 Category27 Category28 Category29 Category30 Category31 Category32 Category33 Category34 Category35 Category36 Category37 Category38 Category39 Category40 Category41 Category42 Category43 Category44 Category45 Category46 Category47 Category48 Category49 Category50 % share of shopper’s spend by category (top shoppers, 50 largest categories) Avg: 50%-70% Current Spend Opportunity Spend
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 19Page 19 1 9 “There’s going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people.” Safeway ex-CEO Steve Burd, earlier this year, according to the AP.
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 20Page 20 The companies that best satisfy the needs of shoppers will win To do this, retailers need to be able to achieve two objectives: understand the needs of individual shoppers execute actions that best satisfy shopper needs in a relevant & timely fashion
  • Best practice approach to shopper-centricity
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 22Page 22 POLL QUESTION What’s your opinion? 3. What reason do you believe holds back retailers the most from becoming more shopper centric: a) Lack of shopper data b) Shopper data exists but it is difficult to access c) It’s difficult to analyze/interpret the shopper data d) Retailers don’t believe in shopper data e) It’s too challenging to incorporate shopper data into day-to-day operations f) Shopper-centricity is not aligned with individual employee’s objectives/incentives
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 23Page 23 POLL RESPONSES 0% 10% 20% 30% 40% 50% a)Lack of shopper data b)Shopper data exists but it is difficult to access c)It’s difficult to analyze/interpret the shopper data d)Retailers don’t believe in shopper data e)It’s too challenging to incorporate shopper data into day-to-day operations f)Shopper-centricity is not aligned with individual employee’s objectives/incentives What reason do you believe holds back retailers the most from becoming more shopper centric (% of Responses):
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 24Page 24 Who is the shopper and what are their needs? Needs •Life-stage (e.g. Young families) •Lifestyle (e.g. Healthy, Convenience, etc.) •Geo-demographics What influences the shopper’s behavior? Response •Offers (products/ brands & prices) •Content (creative, copy) •Channels (Digital, DM, mobile, social) What is the shopper’s current & potential value? Value •Current Value & Behavior •Potential Value by Shopper •Value overall, by category/brand
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 25Page 25 Jane’s Shopping Pattern Shopper Analyses Engine Health Score Convenience Score 8.6 2.1 Julie’s Shopping Pattern 7.1 7.8 Steve’s Shopping Pattern 1.8 7.2
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 26Page 26 Enterprise Shopper Strategy  Analyze Shoppers  Identify Growth Opportunities by Shopper, Category, Store  Develop Shopper Strategy & Drive Functional Plans Vendor Collaboration & Alignment •Category Strategy •Price, Promotion, Assortment •Innovation • Loyalty • 1-to-1/CRM • Targeted Mass •Store Features/ Programs •Macro-Space/Clustering •Real-estate Planning Merchandising Marketing Operations Integrated Shopper Plans Case Study Next Pages
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 27Page 27 Produce and HBC categories represent large current spend $’s and attractive incremental $’s; Seafood appears to offer attractive growth potential Number of Shoppers
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 28Page 28 Households with Teens present the greatest growth opportunities for seafood
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 29Page 29 Deploy demo/info stations, co-locate seafood meal solutions, use bundle pricing & provide recipe suggestions in target stores; send marketing to target shoppers
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 30Page 30 Enterprise Customer Strategy  Analyze Customers  Identify Growth Opportunities by Customer, Category, Store  Develop Customer Strategy & Drive Functional Plans Vendor Collaboration & Alignment •Category Strategy •Price, Promotion, Assortment •Innovation • Loyalty • 1-to-1 • Targeted Mass •Store Features/ Programs •Macro-Space/Clustering •Real-estate Planning Merchandising Marketing Operations Integrated Customer Plans Case Study Next Pages
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 31Page 31 Singles/ Couples Who Buys? Where to Grow? Who Buys? Where to Grow? Hhld w/ Baby Hhld w/ Child Hhld w/ Teen Empty Nesters Seniors Health Conscious Cooking Aptitude Time Starved Value Sensitive Lifestage Segments Lifestyle Segments To grow sales in this category send targeted marketing offers to high opportunity shoppers in Singles/Couples & Seniors segments who are value sensitive
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 32Page 32 Empty- nesters Seniors Hhld w Teen Hhld w Child Hhld w Baby Singles/ Couples Single Serve Whole Bean Ground Instant Adapt the product assortment and Planograms/facings in stores that over/under- index in the relevant sub-categories
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 33Page 33 $0 $3,000 $6,000 $9,000 $12,000 0% 10% 20% 30% 40% 50% $0 $3,000 $6,000 $9,000 $12,000 0% 10% 20% 30% 40% 50% Infrequent Shoppers Secondary Shoppers Priority Shoppers At 40%: overall Sales $s begin to decrease Sales $’s Sales $’s at Different Discount Depths Overall and by Segment All Shoppers At 30%: priority shopper Sales $s start decreasing; infrequent shopper Sales $s increase Discount Change the promotion offer from Buy 1 Get 1 Free (i.e. 50% discount) to Buy 2 Get 1 Free (i.e. a 33% discount); re-invest saved promo dollars in better promos
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 34Page 34 Impact to Category sales of shopper- centric decisions Existing category shoppers buying additional products in the category Existing category shoppers increasing consumption of existing products in the category Existing retailer shoppers but new to the category Test versus Control Impact (Pre/Post) Overall cumulative impact of shopper-centric decisions (measured pre to post, test versus control) was a growth rate of over 10% in category sales 5% 10%
  • Roadmap to becoming more shopper-centric
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 36Page 36 POLL QUESTION What’s your opinion? 4. Where do you think we’ll see most shopper-centric activity in the next 12-24 months: a) Personalized pricing b) In-store promotions c) Assortment d) Customer marketing – direct mail (i.e. paper) e) Customer marketing – digital (i.e. email, website) f) Customer marketing – mobile (i.e. apps, geo-targeting) g) Store layouts h) Store programs/events/features i) Customer service
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 37Page 37 POLL RESPONSES 0% 10% 20% 30% 40% 50% 60% a)Personalized pricing b)In-store promotions c)Assortment d)Customer marketing – direct mail (i.e. paper) e)Customer marketing – digital (i.e. email, website) f)Customer marketing – mobile (i.e. apps, geo- targeting) g)Store layouts h)Store programs/events/features i)Customer service Where do you think we’ll see most shopper-centric activity in the next 12-24 months (% of Responses):
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 38Page 38 1. Showcase value through rapid, quick wins that deliver results in short-term 2. Expand the value in a pragmatic manner 3. Reap the full potential benefits of shopper-centricity
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 39Page 39 •Create shopper insights: ‒ Identify greatest strategic value opportunities •Drive strategic decisions: ‒ Allocate resources to largest strategic opportunities •Democratize shopper insights: ‒ Incorporate shopper dimension into multiple reports across the company •Drive overall strategy process: ‒ Design enterprise loyalty strategy
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 40Page 40 Merchandising •Promotions: ‒ Deploy shopper/need- specific promotions •Pricing: ‒ Identify Key Value Items for valuable/loyal customers; manage prices within narrow competitive range •Promotions: ‒ Consistently execute shopper- driven promotions ‒ Proactively seek out shopper-centric promotions from manufacturers •Pricing: ‒ Understand impact of pricing on shoppers/segments •Assortment: ‒ Understand de-list impacts by shopper •Pricing: ‒ Drive all shelf prices by leveraging shopper-insights; personalize pricing by individual •Assortment: ‒ Drive Store Brand strategy/innovation •Collaboration: ‒ Align manufacturer brand/trade investments & innovation with your shopper needs
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 41Page 41 Marketing •Customer Marketing: ‒ Leverage shopper insights to improve effectiveness of upcoming customer marketing campaigns •CRM: ‒ Build shopper engagement intelligence platform •Customer Marketing: ‒ Consistently execute targeted marketing campaigns that are shopper-centric rather than campaign-centric •Branding: ‒ Design overall and banner branding through shopper insights •Marketing Mix: ‒ Shift marketing budgets from mass market, untargeted activities to tailored and personalized marketing
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 42Page 42 Operations •Demo/Info Stations: ‒ Setup in-store demo/info stations in specific stores that are aligned with large growth opportunities •Events/Programs: ‒ Establish shopper- driven events/ programs in-store •Staff Alignment: ‒ Hire, train and allocate staff in order to satisfy large shopper needs •Customer Experience Design: ‒ Improve the shopping experience by designing stores around shopper needs
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 43Page 43 1.Get the lay of the land  Analyze your shopper data 2.Plan your journey  Take a phased approach 3.Choose the path of least resistance  Start where it’s easiest
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 44Page 44 Delivering on the Promise of Shopper-Centricity Driving sustainable competitive advantage by better satisfying the needs of the shopper Introducing the Shopper to merchandising Is it possible to make merchandising more shopper friendly rather than category friendly Driving marketing from the shopper up Using the shopper and their needs to deliver relevant and profitable marketing performance Enhancing the shopping experience Making store planning decisions that work for shoppers, store operations and the bottom line Extending alignment along the value chain Permeating shopper-centricity to trading partners to align objectives and resources Realizing true shopper loyalty Unleashing the power of your loyalty efforts to innovate, differentiate and delight 1 2 3 4 5 6 Webinar sign-up will be available through www.Loyalty.com
  • All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 45Page 45 The White Paper that accompanies the webinar is available at www.Loyalty.com
  • Delivering on the Promise of Shopper-Centricity July 23, 2013 Graeme McVie VP & GM, Business Development & Client Service gmcvie@loyalty.com; 301 652 0694 The Path to True Sustainable Competitive Advantage