How Retailers are Using Marketing Intelligence to Overcome ......ACQUISITION INTRODUCTION THE FOUR SECTIONS OF THIS EBOOK ARE: 2 CROSS-SELLING & UP-SELLING 3 CUSTOMER RETENTION 4 CUSTOMER

HOW RETAILERS ARE USING MARKETING INTELLIGENCE TO OVERCOME THEIR BIGGEST MARKETING CHALLENGES SMARTFOCUS EBOOK 3 | PAGE 1

How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges

BEST PRACTICES IN MARKETING INTELLIGENCE


How this ebook worksThis easy-to-digest ebook consists of four sections, each focused on a different set of marketing challenges. It’s short, it’s to the point, and best of all, it gives you crisp examples of how real online, off-line, and cross-channel retailers are using Marketing Intelligence to overcome their biggest challenges, and how you can, too!

1ATTACKING

ACQUISITION

INTRODUCTION

THE FOUR SECTIONS OF THIS EBOOK ARE:

2CROSS-SELLING & UP-SELLING

3CUSTOMER RETENTION

4CUSTOMER WINBACK

SO WITH THAT OUT OF THE WAY, LET’S GO!


Even the best retail marketers struggle to capture one more customer, lose one less customer, or gain that one extra dollar of revenue. For most of us, the challenges are real and they’re in front of us every day. Our CMO wants more with less. Our customers get smarter (and more smartphone apps) every day. Our competitors seem to have more insights than us. And that’s just on Monday!

By Tuesday, we’re trying to understand why the last campaign underperformed, where we should spend money for the next promotion, and which categories should get the most visibility this weekend.

It’s a constant struggle to know what customers want and what you can do to influence them. Even more, it’s tough to prioritize your marketing efforts because you don’t have a clear view of what’s working, what’s not, and what’s really needed to reach your marketing goals.

What Are Your Biggest Marketing Challenges?

GETTING STARTED


GETTING STARTED

Maybe you should be focusing on one of these instead (or all of these):

• Driving cross-channel shopping

• Building loyalty

• Retaining customers in the face of increasing competition

• Increasing average transaction/basket size

• Leveraging all customer, transactional and digital data

• Acquiring new customers

• Understanding how different offers and channels drive conversion

• Reducing churn

The only way to really know where you should focus is to better understand your customers and how your marketing efforts impact their behaviors.

For that, you need Marketing Intelligence. Until then, read on to learn how others are using Marketing Intelligence to attack these different challenges in four different areas.

So what is your single biggest marketing challenge? Are you sure it should be that and not something else?


Every retailer can use more customers. Portions of your customer base are always leaving, and growth targets are always out in front of you.

But just saying, “We need new customers” isn’t really a strategy. You want the right type of customer, one that is likely to come back more than once, make profitable purchases, and become a loyal, long-term customer.

Drilling down, you’ll start to ask questions like:

• What is the most strategic approach to acquiring customers based on our overall corporate goals?

• How do I know what type of prospect is most likely to engage with my brand?

• How do I identify my best customers, and then how do I use that insight to better target new customers?

• Where do I use this information, and when?

• How do I measure success in customer acquisition?

Once again, you need Marketing Intelligence to answer these questions. Sure, you can just use your disconnected, siloed, weeks-old data to make an educated guess, but you know how that usually turns out, right?

Challenge: Customer Acquisition

GETTING STARTED


But let’s not just throw those questions out there without answers. Here’s how retailers with Marketing Intelligence are answering those questions:

The most successful acquisition strategies look beyond driving one-time transactions and more towards identifying prospects who are more likely to engage with a brand over time and drive profitable sales. An understanding of the profile and purchasing behavior of current loyal and high-value customers is key to finding more of the same. This insight will help guide the “who” (profile of new customers), the “where” (specific websites, social media, magazines, list purchase) and the “what” (which products are of greatest interest) needed to acquire your best new customers.

What is the most strategic approach to acquiring customers based on our overall corporate goals?

Look for prospects that fit a “most likely to engage” model to become profitable and loyal

How do I know what type of prospect is most likely to engage with my brand?

Analyze your best customers and create indicators of their “look-a-likes”

How do I identify my best customers, and then how do I use that insight to better target new customers?

Look at RFM variables, then append age, gender, family type and buying channel propensity then further dive into what products they are buying.

How do I measure success in customer acquisition?

Track click and conversion rates for different channels and strategies by segments. Leverage attribution metrics to measure which channels and tactics were most successful.

GETTING STARTED


A high-end sports retailer had both online and brick-and-mortar stores, but lacked data-driven insights. Their in-store sales associates felt they knew their best customers, seeing that loyal customers shopped in-store once or twice per year and purchased everything for the season during those visits.

With that anecdotal insight, marketing determined that the best way to drive incremental traffic was by acquiring new customers who mirrored this demographic and purchasing behavior, but they first needed to identify these “best” customers. Their hands were tied, however, since purchase data was siloed by channel, they had no demographic data, and they couldn’t determine which marketing partners produced the best results.

HERE’S HOW MARKETING INTELLIGENCE HELPED:

1. Aggregated online and in-store data, and added demographic data to create a detailed view of their top, bottom, and average customers.

2. Identified the top 30% of their customers based on RFM and determined that the majority were men aged 35-55.

3. Analyzing those customers by categories purchased revealed an overwhelming affinity for outerwear and jackets.

Marketing created campaigns that targeted this demographic profile with promotions for men’s outerwear across multiple channels, but used Marketing Intelligence to constantly track attribution and reallocate budget to the channels that were offering the most impact.

CASE 1: Disconnected On-and Off-line Insights. An Attacking Acquisition

CASE STUDIES

RESULTS:

200% MORE NEW CUSTOMERS VS.

PAST CAMPAIGNS.

40% NEW CUSTOMER RETENTION AFTER

1 YEAR.


A “fast fashion” retailer noticed a drop in sales and believed it was the result of a change in their merchandising mix. Their newer clothing was trendier, apparently attracting a different customer who might respond better to different marketing tactics.

They wanted to confirm their assumptions but they couldn’t easily view customer purchase histories. However, if they were right, they needed to quickly understand their new customers and actively attract more.


1. Marketing split customers into those who purchased since the merchandising change and those who hadn’t.

2. For each group, they compared the number of new vs. existing customers, purchase frequency, and transaction and total spend.

3. They compared the categories favored by the different segments and found that new merchandise was heavily purchased by new customers.

4. Comparing demographic data showed that newer customers were younger, with more in their 20s and less in their 50s.

Marketing discovered that new customers were not only spending 16% more per transaction, but were 37% more likely to respond to display ads over direct marketing. By quickly revising their marketing tactics, the company reversed their sales decline in less than 45 days.

CASE 2: Changing Mix Attracts New Customer Types

RESULTS:

16% INCREASE IN TARGETED

SEGMENT SPEND.

REVERSED DECLINING SALES IN UNDER

45 DAYS.

CASE STUDIES


CHALLENGE: Cross-selling and Up-selling

So maybe attracting new customers is easy for you. But, you’re always looking for ways to influence customers to spend more, right?

Maybe you’ve introduced a new category that you want customers to notice (and buy). Or, maybe you want to push customers to higher-margin items, or to raise average transaction values.

Whatever your motivations, you’re probably already asking yourself these types of questions:

• Are customers who’ve purchased across multiple merchandise categories more engaged and more valuable?

• Am I effectively using up-sell and cross-sell promotions as relevant content in marketing programs?

• Are we taking advantage of past purchase knowledge to drive add-on sales with our customers?

• Can I use up-selling to counteract the margin hit resulting from discount promotions?

You’re probably also asking yourself, “But wouldn’t Marketing Intelligence answer these questions?” Yep, your parents would be proud!

CHALLENGE


Beyond just those juicy questions, you’ll start to get curious about ways that Marketing Intelligence will be able to give you insight and ideas about improving your cross-sell and up-sell initiatives. Here’s how:

Knowledge of what merchandise your customers have already purchased provides an opportunity to build product- and price-driven marketing campaigns targeted at those customers who are more likely to open, click and convert.

And, it’s not just the ability to answer your most pressing questions; Marketing Intelligence gives you ideas, the ability to quickly drill down on those ideas, and the tools to turn those ideas into action.

What’s a more effective way of introducing new products to my customers?

Look at past product purchases and target customers who have bought similar, adjacent, or complementary products.

How do I figure out what other products my customers may be interested in?

Leverage affinities by looking at the market baskets and nearby purchases made by other customers buying the target category.

How do I know the best time (calendar, buying cycle) to market up-sells in a particular category?

Look for the times when sales increase, peak and decline, and identify the unique cycles for those specific product categories.

CHALLENGE


A national running store chain partnered with a vendor on an omni-channel marketing strategy to help increase the success of a new running shoe. They already had personas for their different customers, but had no way to segment individual customers.

They needed a way to market this shoe across both digital and direct channels, plus evaluate the ROI of the program, since the costs were to be shared between the vendor and the retailer.


1. Using purchase histories, they identified the personas, determined a value for each segment, and created a demographic profile of each bucket.

2. The team set up an attribution model and a “timeline segment” to monitor the activity of the different personas over time.

3. Daily reports tracked the success of the various campaigns and how the trendsetter, brand loyalist, and new runner personas responded.

The retailer created precise, targetable segments, then created hyper-targeted display campaigns to reach conversion rates 53% higher than typical, giving them an overall program ROI of nearly 400%.

CASE 3: New Product Line Success. Capturing Cross-sells, Uncovering Up-sell Opportunities

RESULTS:

53% INCREASE IN CONVERSION RATES.

NEARLY 400% OVERALL PROGRAM

ROI.

CASE STUDIES


CASE STUDIES

An online health food retailer used a “free shipping” offer as an incentive to new customers, but as shipping costs rose, the offer ate more and more of their profits. To regain profits, the retailer wanted to promote higher-margin items but, lacking insight on new customers, couldn’t determine which products or categories to offer.

To start, they needed to quickly figure out a segmentation criteria for new customers, then quickly bucket them into segments. Next, they needed to identify which products should be promoted to these different segments, plus when and where to promote.


1. Identified “free shipping” customers who purchased across different online “shops.”

2. Drilled down to create profiles for customers based on RFM metrics and category affinities.

3. Connected the products purchased most often with other high-affinity products that were likely to be purchased.

Marketing was able to quickly identify product-profile affinities which they plugged into their e-commerce system and offered during browsing and checkout. This simple insight increased promo-related margins by 7.3% and helped them refine their acquisition messaging to increase conversions by 18%.

CASE 4: Offsetting the Cost of “Free Shipping”

RESULTS:

7.3% INCREASE IN PROMO-RELATED MARGINS.

18% INCREASE IN PROMOTION

CONVERSIONS.


CHALLENGE: Customer Retention

Regardless of how well you attract and monetize existing customers, you never want to lose a good customer. Clichés are clichés for a reason, which is why one of the most popular retail marketing ones says something about it being more expensive to find a new customer than to keep an old one.

Customer retention is a key priority for retailers, especially in today’s world of constant advertising, customer-focused apps, myriad channels of engagement, and the fact that your competitor is always just a smartphone tap away.

Any good marketer thinks about retention constantly, and asks questions like:

• How do I deal with increasingly aggressive competition and decreased customer loyalty?

• How do I provide value-added opportunities for existing customers to engage with me instead of looking to the competition?

• Will targeting current customers with relevant messaging and products and great service drive increased loyalty?

Maybe Marketing Intelligence can help? Nope, ain’t no maybe about it!

CHALLENGE


CHALLENGE

You’re dealing every day with the changing nature of retailing and the information imbalance caused by mobile apps, social media, and larger competitors with bigger budgets. But Marketing Intelligence can help you compete and keep customers with answers like these:

To retain your customers, you must first know your customers. I think Confucius may have said that.

Retaining new customers and strengthening the loyalty of already engaged customers requires the ability to identify customers with potential. Developing “best customer” profiles based on purchase behaviors and demographic data will give you the insights to engage with them in a more targeted manner. Further applying this profile to new customers can also help identify those with potential and help you market to them in a relevant way.

Bottom line: to be effective, messaging must be as targeted and personalized as possible.

How do I determine the best way to communicate with different groups of customers?

Develop key customer segments such as loyalists, potentials, active and inactive based on RFM, behavior, and other attributes.

Should I invest equally across the marketing to all my customers?

Identify customers based on their current and potential value, then invest in customers with the best potential for long-term profitability and goal attainment.

How can I identify customers most likely to be retained or to defect?

Develop best-customer profiles with demographic attributes along with transactions, then identify look-a-likes within your segments.


CASE STUDIES

A brick-and-mortar sporting goods retailer began selling a new line of environmentally-friendly ski products, which attracted a highly profitable segment and sparked the emergence of several competitors. They wanted to protect their market share against the competitors’ discount-based offers, which they were certain would eat into their sales.

With their existing tools, they couldn’t identify “green” product buyers and, lacking demographic data, they knew that targeted marketing campaigns would be difficult.


1. Developed various customer profiles based on products purchased and overall customer spend value.

2. Added third-party demographic data and created deeper profiles for each segment.

3. For green customers, looked at how they behaved over time and prepared to track how they responded to new marketing efforts.

4. Created an attribution model that would allow them to measure the effectiveness of their marketing by channel and campaign.

With marketing and customer data finally connected, they found that green customers were spending $44 per year more than average and had affinities that differed from typical customers. This allowed them to create highly-relevant promotions that increased conversion rates by 31%, raised average transactions by 12%, and minimized losses to competitors.

CASE 5: Remarkable Retention. Battling Aggressive Competitor Discounts.

RESULTS:

31% INCREASE IN PROMOTION

CONVERSION RATES.

12% INCREASE IN SEGMENT’S AVERAGE

TRANSACTION.


An online casual work apparel retailer was struggling to retain customers when they noticed an increase in the average time between purchases. They set out to increase purchase frequencies, which would also mean fewer opportunities to visit competitors.

They estimated that their average customer returned every four months, but were unsure if this varied for first time buyers versus repeat buyers, if it varied across different types of customers, or if it was even a valid estimate.


1. Uncovered purchase histories, then built personas based on categories purchased.

2. For each persona, built a timeline segment to understand time between purchases for first-time, second time, and repeat customers, and to see if frequency was different across categories.

3. Finally, monitored each segment to see how behaviors changed after the new marketing campaigns were launched.

Marketing Intelligence gave this team the ability to go beyond their hunches and finally understand their customers at a detailed and actionable level. That knowledge enabled more targeted messages to more specific segments, increasing email campaign click-through rates by 27% over average and resulting in a higher-than-expected 430% ROI for this specific program.

CASE 6: Reducing Time Between Purchases

RESULTS:

27% INCREASE IN CAMPAIGN CLICK- THROUGH RATE.

430% ROI FOR FIRST INTELLIGENCE-DRIVEN

CAMPAIGN.

CASE STUDIES


CHALLENGE: Customer Winback

Even the best retailers with the best marketing teams still lose customers. It might be that customers change over time, or that product lines drift, or competitors pop up to fill a void or create a new sub-segment. However it happens, there’s value in trying to win them back.

WHY SHOULD YOU ADD CUSTOMER REACTIVATION TO YOUR MARKETING PLAN?

Here are just a few reasons:

• Lost customers may be fueling a competitor’s growth.

• Many lost customers were once valuable, loyal customers who may just need a reminder about what you offer.

• If you can easily and cheaply get some of them back, it’s additional profit that might have a big ROI.

Best of all, you already know something about them since they were a customer at one point. That’s a great place to begin. Could Marketing Intelligence help? You betcha!

CHALLENGE


CHALLENGE

You’re dealing every day with the changing nature of retailing and the information imbalance caused by mobile apps, social media, and larger competitors with bigger budgets. But Marketing Intelligence can help you compete and keep customers with answers like these:

Identifying previously-valuable customers who have not shopped recently (and “recent” is unique to you), then determine potential opportunities to win them back by looking at their past marketing behaviors and purchasing activities.

You already have this data, so all you need to do is act on it.

How do I reactivate lapsed customers? Develop a marketing stream that includes a compelling reason to return by leveraging past purchase knowledge with a related offer.

Which customers are likely to be won back, and who shouldn’t I bother with?

Focus efforts on customers who were more recently engaged and have been valuable customers in the past. Leverage RFM metrics to prioritize the different segments.

How can I get ahead of the problem and reduce my churn rate?

Determine red flags to indicate slowing shopping behaviors and reduced brand interest, then proactively communicate with those customers.


Focusing on distinctive international apparel collections for children, this retailer knew that every customer would eventually “age out.” This increased the importance of reengaging “lost” customers and proactively identifying and getting ahead of “at-risk” customers to ensure that they kept shopping.


1. Integrated marketing, CRM, POS and other data for a single, drillable view of past and current customers.

2. Created timeline segments to track customer activity based on time from last purchase, which uncovered attrition rates and customers close to being lost.

3. Created an attribution model to justify the costs of the program to their executives.

Marketing was finally able to see customers who had previously left and what they purchased before they left. They created targeted campaigns based on these purchases and brought back hundreds of these “lost” customers with their very first campaign. Even more, they progressively addressed attrition by targeting “at risk” customers and, in just three months, reduced overall attrition by 11%.

CASE 7: Winning at Winback. Targeting “At Risk” Customers

RESULTS:

11% REDUCTION IN ATTRITION IN ONE QUARTER.

FIRST CAMPAIGN REACTIVATED

“100S” OF CUSTOMERS.

CASE STUDIES


A brick-and-mortar consumer electronics retailer noticed a reduction in year-over-year same store sales, as well as a drop in average transaction value. Since their competitors weren’t experiencing a similar drop, they knew that they were losing customers, and higher-value customers at that.

In trying to develop a winback strategy, they needed to identify those lost customers and focus their efforts on winning back, at first, the higher value sub-segment of those lost customers.


1. Identified customers who had recently become inactive and what they purchased when active.

2. Sub-segmented those customers by potential value by looking at past spend values and frequency levels.

3. Created timeline segments to track the activity of all customers going forward and proactively combat customer loss before it happened.

In identifying inactive customers based on value, the team was shocked to see the revenue impact of attrition: tens of millions of dollars! Marketing Intelligence opened up opportunities to engage inactive customers, gave them the tools to act on their findings, and helped them slow and then reverse their attrition in under 30 days. Even more, with so many inactive customers now prime for segmentation and targeting, they were able to win back nearly 2,000 customers with their first email campaign.

CASE 8: Combatting a Drop in Same Store Sales

RESULTS:

REACTIVATED 2,000 CUSTOMERS WITH

ONE EMAIL.

LESS THAN 30 DAYS TO STEM ATTRITION TREND.


The best place to start is by increasing your Marketing Intelligence, and that means getting a solution that will bring together, in one view, all of your customer, marketing, transaction, and other data. No, wait. Let’s take that back. The best place to start is www.SmartFocus.com. What are you waiting for?

FURTHER READING

WHAT ARE YOUR BIGGEST MARKETING CHALLENGES? WHAT ARE YOU DOING TO TACKLE THEM?

SmartFocus

18 West 18th Street, 11th Floor New York, NY 10011, USA

Tel: +1 (212) 257-6018 Fax: +1 (646) 783-7982

www.smartfocus.com

The Internet of Everything is the macro-trend of connectedness that’s changing the way customers shop. With more than half of online visits and a third of eCommerce transactions now coming from mobile devices, mobile and proximity marketing are more important than ever.

At SmartFocus, we have capabilities to provide context-aware marketing for a mobile world. Our technology will help you truly know your customer and engage them with the right message, at the perfect moment, wherever they are – in store and online across all of their preferred channels.

SmartFocus is the leader and innovator in contextualized and personalized messages. Our platform includes beacon technology that knows when your customer visits a physical store; real-time predictive recommendations generated at the precise moment they open your email or visit your site; and powerful insights that use smart analysis of Big Data to effortlessly generate a truly personal experience.

For more information, please visit us at: www.smartfocus.com

THIS EBOOK IS BROUGHT TO YOU BY SMARTFOCUS

Documents

How Retailers are Using Marketing Intelligence to Overcome ......ACQUISITION INTRODUCTION THE FOUR SECTIONS OF THIS EBOOK ARE: 2 CROSS-SELLING & UP-SELLING 3 CUSTOMER RETENTION 4 CUSTOMER