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Technology Trends Customer Insight, a copy of the presentation delivered by Giles Pavey, Head of Retail Solutions, dunnhumby from the CIM East of England Summer Marketing Conference held on 9 June 2011 at ARU, Chelmsford
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© dunnhumby 2009 | confidential
Customer Marketing
How dunnhumby are helping customers, retailers and manufacturers win
Presentation to the Chartered Institute of Marketing, 9th
June 2011Giles Pavey, Head of Innovation, dunnhumby
2
Winning with customers
© dunnhumby 2009 | confidential
customers
Only two sources of competitive advantage:
- the ability to learn more about our
customersfaster than the
competition and
© dunnhumby 2009 | confidential© dunnhumby 2009 | confidential
competition and
- the ability to turn that learning into
actionfaster than the
competitionJack Welch
Jack Welch Former CEO General Electric
© dunnhumby 2009 | confidential
© dunnhumby 2009 | confidential
© dunnhumby 2009 | confidential
© dunnhumby 2009 | confidential
© dunnhumby 2009 | confidential
9
the customer model
© dunnhumby 2009 | confidential
£300m+ revenue from 150+ clients
1010
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© dunnhumby 2009 | confidential
62 MM 75 MM 238 MM 300 MM adults 310 MM 350 MM Customers 500 MM accounts
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© dunnhumby 2009 | confidential
Facebook announcement; Nielsen Netrating of Google Audience estimated for adults only
62 MM 75 MM 238 MM 300 MM adults 310 MM 350 MM Customers 500 MM accounts
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© dunnhumby 2009 | confidential
62 MM 75 MM 238 MM 300 MM adults 310 MM 350 MM Customers 500 MM accounts
How do you drink from the fire hydrant?
© dunnhumby 2009 | confidential© dunnhumby 2009 | confidential
Things should be made as simple as possible, but not
© dunnhumby 2009 | confidential© dunnhumby 2009 | confidential
but not simpler
Jack Welch
Albert Einstein
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How do we do it?
© dunnhumby 2009 | confidential
dunnhumby’s blueprint for business success through customer centricity
Data
Insig
ht
Acti
on
Transaction
history
Demo-
graphics
Research
results
Customer
segmentation
Propensity
models
Customer
KPI's
Acquisition
DM
Product
development
Pricing
Strategy
ATL
Advertising
Retention
Ch
an
ges in
Cu
sto
mer
beh
avio
ur
Call centre
dataProspecting
models
lin
k
lin
k
© dunnhumby 2009 | confidential© dunnhumby 2009 | confidential
Data
Insig
ht
Acti
on
Retail
strategy
Retention
programmes
Ch
an
ges in
Cu
sto
mer
beh
avio
ur
data
DM
responses
models
Customer
journey
Capture changes in customer behaviour via
data and begin the journey again
18
dunnhumby’s “win win win” approach
Retailer Value Creation
Grow Like for Like sales and Net Margin via better decisions throughout the business
Insights to Suppliers Media to suppliers
© dunnhumby 2009 | confidential
Commercialise the unique customer data
asset with suppliers
Sell targeted communications and in
store media to suppliers
More Relevant Customer Experience
Improved channel, promotions, products, prices and communications
19
Customer Data
Customer Insight
Customer Management
Long Term Customer
Loyaltyenables...to
drive...
to
grow...
Customer segmentation Communication strategy
– Retention
Increased Customer
Clubcard has enabled Tesco to know their customers
© dunnhumby 2009 | confidential
– Lifestage
– Value & Loyalty
– Lifestyles
– Retention
– Growth
– Win-back / prospecting
Business strategy
– Price
– Promotions
– Ranging
– Availability
Customer Lifetime Value
– Sales growth
2020
this is a friend we know…
– she is a busy young lady
– she looks after her health and loves fresh produce
– she drives to the supermarket on a Saturday morning
– she has a cat
– she doesn’t pay attention to
© dunnhumby 2010 | confidential
we know 350m people around the Globe as well as we know Miss Jones
– she doesn’t pay attention to the price of products
– she does look out for promotions
Miss Jones
2121
lifestyles are built from “DNA profiles”
Miss Jones’s DNA Profile: a “time-poor, food-rich” customer – 25,000 products are used to
create a customer’s DNA
– we have a DNA profile for every
single customer
Over-
indexin
g
© dunnhumby 2010 | confidential
Under-
indexin
g
Dimensions
Really relevant to customers
● What are the key attributes of the products you choose?
● What are your favourite purchase channels?
● When do you buy?
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© dunnhumby 2009 | confidential
● Promotional Behaviour
● Clubcard Offers
● Clubs
23
Range decisions based on sales AND shopper
metrics
The right product in the right store for the right customers…
• Retain lines popular with loyal
customers even if not top sellers –retain their whole basket
• Range rationalisation based on
Optimised merchandising in cleaning products
© dunnhumby 2009 | confidential
Increased facings of lower price
products at stores dominated by price
sensitive shoppers.
Sales increase +16%
Units increase +48%
• Range rationalisation based on product substitutions – remove unnecessary lines, retain unique
lines
• Product mix tailored to the profile of customers that shop the store
24
Winning house brand new product development
540 new lines, designed to win against limited range discount formats
dunnhumby helps by using customer data to analyse
• The most important products for price sensitive / less affluent customers, by category
© dunnhumby 2009 | confidential
category
• Into which stores to focus distribution of these products
Results
Between 3% (beauty) and 11% (Household) penetration of weekly users
Typical customer buys 2.1 “discounter” items per week
The Clubcard Statement is at the heart ofTesco’s contact strategy
● c. 15 million customers mailed every quarter
● Delivers in excess of £160m ‘Reward’ to customers
● 7 million variations of product coupon offers
● Significant impact on revenue 6 x per year
● A valuable tool for suppliers – helps off set costs
25
© dunnhumby 2009 | confidential
● A valuable tool for suppliers – helps off set costs
● dunnhumby provide targeting and coupon sourcing
We run similar customer communications in most of our markets with our retail partners
Voucher redemption: 95%+; product offers : 20%+
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Every till transaction is an opportunity
Deliver relevant offers based on customer’s purchase behaviours over
time and today
dunnhumby source offers both solus
and as part of integrated campaigns
with other media
© dunnhumby 2009 | confidential
with other media
Typical redemption: 17.5%
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In store & on the road
Trolley TalkersPump
Talkers Lorry
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In Store TV
Floor Stickers
Coupons @ TillSampling
In store & car park
6 sheets
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At homeLoyalty
Themed Mailings Magazine
© dunnhumby 2009 | confidential
Clubs
Coupons @ Till
Web &
Internet
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Putting the customer first in the digital world
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we can populate “my favourites”
from your store shopping
increasing “click through” and
reducing “abandoned” visits
31
credit card tells us more about
© dunnhumby 2010 | confidential
strong synergy between
credit card and shopping
drive behaviours in and out of store
credit card tells us more about
how you live your life
gives added benefits
What you buy and when you buy tells us a lot about you
Film buff
Blockbuster lover
Hi-tech
Early adopter
First to buy
Blu-ray £14.99
These purchases indicate radically different customers, even though they are buying the same product
© dunnhumby 2010 | confidential
Launch Month 3 Month 12
£11.99 £10.99 £4.99
Film buff
Blockbuster lover
First to buy
Low-tech
Blockbuster buyer
Prepared to wait
Gift purchase
Discount shopper
Mainstream movies
We can replicate this across all categories
F&F Couture sequin jacket £90
F&F Faux leather biker jacket £20
Fashionista
Couture
Small size
High price
New release
High price
High performance
Camera buff
Early adopter
Brand buyer
Canon EOS 7D 15-85 IS £1,899
Nikon D5000 SLR £499
© dunnhumby 2010 | confidential
F&F Boyfriend Jacket £18
New release
Low price
Youth culture
Latest craze/trendy
Low price
Promo purchase
Large size
Brand buyer
Promo purchase
5-star review
Upgrade camera
Entry level
Easy to use
Low spec
Long warranty
Sony Cyber-shot W270 £159
Combining this data can help us be predictive of future behaviour in non-food
Previous purchases in same category
Previous purchases of the same product
What you browse & search
What products you click on High
Predictive PowerStated preferences
Browse & search history
© dunnhumby 2010 | confidential
Nothing
Grocery purchases
Other purchases in non-food
Predictive Power
Low
Previous purchases in adjacent category
Lifestage and Price Sensitivity
Stated preferences
Predicting what you’ll buy, not when you’ll buy
Understanding how different customers search can tell us where we are winning
Canon EOS
7D
www.which.co.uk
Digital
Camera Digital SLR
First-time buyer
Upgrade customer
Camera buff
Digital Photography
© dunnhumby 2010 | confidential
www.which.co.uk
Amazon.comTesco.com
Jessops.com
PURCHASETesco store
Sony.comCanon.com
JohnLewis.com
PURCHASEJohnLewis.com
Review.com
PURCHASEAmazon.com
We can help customers find what they want
This customer has searched ‘kettles’ on Direct
We use what we know…
● Price Sensitive shopper
● Promotions purchaser
● Previously bought Tesco brand small electricals
● Previously bought a silver toaster
© dunnhumby 2010 | confidential
● Previously bought a silver toaster
… to deliver RELEVANT RESULTS…
#1 #2 #3 #4 #5
Right offer… …right channel …right customer…
Website
Ensuring we have the right dialogue with each customer will be key
Product Promotions &
Coupons
Category Offers
© dunnhumby 2010 | confidential
Clubcard
Mobile
Who gets whatdriven by insight
Catalogue
Who and whenBanner Ads
Messages & Editorial
Supplier Media & Advertorial
38
Coming soon to the UK
Helping me live my lifeOnline Communities
© dunnhumby 2009 | confidential
Smart Trolley
E-Cash / Payment vehicles
Offers direct
to phone
Helping me live my life
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© dunnhumby 2010 | confidential