Leveraging Loyalty Card Data to Improve Trade Promotion Effectiveness. Megan R. Margraff Chief Analytic Officer Spire, LLC

Transcription

1 Leveraging Loyalty Card Data to Improve Trade Promotion Effectiveness Megan R. Margraff Chief Analytic Officer Spire, LLC

2 Objectives Show how loyalty card data can be used to drive shopper-based trade insights and more effective trade plans

3 Agenda Background About the Data Source Putting the Shopper at the Center of Trade Planning Case Studies Live blinded examples of analysis, insights, and trade plan implications Discussion

4 About the Data Source

5 The Spire Shopper Panel Sourced from 30mm Loyalty Card Households 15 Banners Essence /Engagement Segmentation Store Level & Store Cluster Access Demographically Representative Largest blended retailer composite loyalty card data Mix of retail formats and strategies Actual purchase history Reporting at levels most others cannot Shopper segmentation to evaluate sales Benefits Total transaction perspective Compare fresh & center-store Detail on day/time of purchase & method of payment Uniquely connect behavior & attitudes Via surveys to HHs in our panel then link actual behavior Group shoppers by behavior, purchase history or differences

6 Spire offers a variety of shopper insight solutions Spire s Shopper Intelligence portfolio includes comprehensive analysis of the shopper behavior impact of a variety of levers: -Trade -Shopper Marketing -Consumer Promotion -CRM, etc. Shopper Activation Custom Analytics Shopper Intelligence Portfolio Execution Shopper Analytics and Consulting Services Behavior-Based Segmentation Aggregate Shopper Intelligence Platform Loyalty Card Data Access Retailer Banner Level Shopper Intelligence Platform

7 Putting the Shopper at the Center of Trade Planning

8 Units Traditional trade promotion analysis leverages two to three data sources Causal Data F&D 2/$3 FO $1.79 F&D 10/$10 Volumetric Data Baseline Sales Incremental Sales Financial Data Cost: $100K ROI: $0.75 Cost: $75K ROI: $1.05 Cost: $250K ROI: $0.88

9 Units but traditional trade promotion analysis leaves critical shopper-based questions unanswered Causal Data Volumetric Data F&D 2/$3 FO $1.79 F&D 10/$10 Baseline Sales Incremental Sales Who is buying on deal? % Buyers Heavy % Buyers Heavy % Buyers Heavy Medium Medium Medium Light Light Light New New New

10 Units Volumetric & Causal Data Traditional analysis leaves many shopper based questions unanswered F&D 2/$3 FO $1.79 F&D 10/$10 Baseline Sales Incremental Sales How do promotions affect purchase behavior during the deal? Average Purchase Size on Deal 1.5 units 1 unit 6 units

11 Units Volumetric & Causal Data Traditional analysis leaves many shopper based questions unanswered F&D 2/$3 FO $1.79 F&D 10/$10 Baseline Sales Incremental Sales How do promotions affect purchase behavior after the deal? Baseline goes up after deal Did we drive repeat among new buyers? Baseline stays flat after deal Did we subsidize buyers who would have bought anyway? Baseline goes down after deal Did we pantry load and extend purchase cycles?

12 Putting the shopper at the center of trade planning The Need Develop trade plans with a deep understanding of the shopper behavior does each type of event drives in the short and long term Which trade tactics subsidize base volume by driving short term lift but not long term growth? Which trade tactics drive long term benefits (ex: T&R, expandable consumption, loyalty)? Which trade tactics drive detrimental long term shopper behavior such as deal to deal buying? What is the impact of product interaction within the category in driving positive and negative shopper behaviors? Do different shopper segments respond to tactics in different ways? The Benefits Deliver a trade plan that maximizes positive shopper behaviors & limits negative behaviors Support each recommendation with simplified shopper-based rationale: Trade Plan Do s & Don ts Maximise the impact of Trade plans at the: Brand level, Portfolio level & Category level Category and shopper insights simplify retailer buy-in/execution

13 Case Study

14 Trade Intelligence Case Study For major center of store food manufacturer with over 1200 Trade Events Client Need Overall impact of current trade strategy on both short and long term volume Impact to shopper behavior of current trade promotions tactics Reduce overall trade budget with no impact to overall sales and shopper loyalty The Solution Analyzed thousands of trade events at category & PPG level across 12 retailers Built database of individual trade events Identify impact of each trade tactic (i.e. multiples pricing) both short & long term Deliver simplified Field Sales Action plan with prioritized recommendations

15 Recommended approach leverages a variety of data sources for a from the ground up view of trade events Many Events Thousands of Trade events Multiple Client and Competitive Promotable Product Groups Hundreds of Unique Tactical Combinations 12 Retail Banners Detailed Tactics Promoted Price, Multiple, Discount FSI/Shopper Marketing Timing & Frequency Other Promoted PPGs/Brands Season & Holiday 2 Years Varied Data Sources Actual, Card-Based Purchase Behavior & Pricing Detail Syndicated Merchandising Calendars MarketVision AdViews Trade Planners

16 Recommended three phase approach begins with a comprehensive database of trade events and tactics Phase 1 Trade Tactics PPG Line vs. Segment Promotion Feature/Display Support Promoted Price & Multiple Duration Timing (Season, Week of Month) Frequency / Gaps Promotion with other PPGs Promotion with Key Competitors Shopper Marketing Support FSI Overlay

17 Second phase is to analyze the purchase behavior impact of each trade event, comparing deal buyers to non-deal buyers Phase 1 Trade Tactics PPG Line vs. Segment Promotion Feature/Display Support Promoted Price & Multiple Duration Timing (Season, Week of Month) Frequency / Gaps Promotion with other PPGs Promotion with Key Competitors Shopper Marketing Support FSI Overlay The behavior impact of each event is analyzed using a test vs. control approach, comparing: Deal buyers vs. Non-deal buyers shopping weeks pre/post deal in same banner, same products Phase 2 Behavior Impact Who buys? How much do they buy? What else do they buy? Impact to purchase cycles? Impact to trial? Impact to switching? Is there a post-deal trough? Loyalty effect? Repeat buying effect? Category impact? Deal-to-deal buying?

18 The third phase is to apply rigorous analytic techniques to link the tactics used to the changes in behavior they drive for each promoted product group Phase 1 Trade Tactics Phase 3 How Tactics Drive Behaviors Phase 2 Behavior Impact PPG Line vs. Segment Promotion Feature/Display Support Promoted Price & Multiple Duration Timing (Season, Week of Month) Frequency / Gaps Promotion with other PPGs Promotion with Key Competitors Shopper Marketing Support FSI Overlay Who buys? How much do they buy? What else do they buy? Impact to purchase cycles? Impact to trial? Impact to switching? Is there a post-deal trough? Loyalty effect? Repeat buying effect? Category impact? Deal-to-deal buying?

19 This approach provides a consistent framework to address a wide range of business questions Sample Business Questions What is the impact of promoting multiple brands within the portfolio together? Which combinations drive trade-down vs. up-sell/variety-seeking? What s the right sequence of promotions across my brand portfolio? Does holiday promotion drive loyalty/share of requirements throughout the year? What are the right tactics for holiday vs. non-holiday deals? How do I optimally plan trade deals and shopper marketing activities for synergy? How do trade deals compare to shopper marketing events in terms of long term benefits? Which tactics used by my competitors are harming the category? Which tactics should I consider emulating with my brands? Sample Insights One-week deals drive incrementality, while two-week deals already begin to subsidize loyal buyers Promote Brand A with Competitor C, but never Brand B with Competitor C In terms of discount, go for 40% or more or aim for efficiency. Moderate discounts are a waste of resources, as response doesn t justify additional spend Using the right multiple drives strong expandable consumption for the brand and the category, but using SUP/too-low multiples drives subsidization Brand B isn t getting repeat from holiday triers but Competitor C is, thanks to stronger postholiday planning

20 Brand A Event Type: Don t Do TPRs or residual TPR after a quality event 826% Short-Term Lift % Increase in Avg. Weekly Brand A Volume, Deal Weeks vs. Non-Deal Weeks Long Term Lift per Buyer % Increase in Brand A Volume, Deal Week + 12 Weeks Post, Deal Buyers vs. Control 7.1% 404% 265% 171% 2.3% 1.4% F&D FO TPR RTPR -1.2% F&D FO TPR RTPR TPRs appear to drive moderate lift in the short term but in the long run, TPR buyers don t end up buying more Brand A volume than non-deal buyers The short-term lift on TPRs is mainly due to buyers time-shifting their purchases, which doesn t drive volume in the long run

21 Brand A Price Point: Aim for at least a 40% discount, or target efficiency Short-Term Lift 20-30% 30-40% 40-50% 50-60% Long Term Lift per Buyer 20-30% 30-40% 40-50% 50-60% 752% 7.0% 3.7% 388% 387% 408% 0.0% -1.6% 20-30% 30-40% 40-50% 50-60% Short-term lift is fairly flat until you hit a key 50% discount threshold (too costly) 20-30% 30-40% 40-50% 50-60% But long-term lift per buyer does start to increase at 40% discount Remember, the results shown above are all else being equal below 40% discount, use an efficient price point at the right MULTIPLE to drive stronger short and long term lift!

22 Brand A Event Duration: Run 1-week Events Short-Term Lift % Increase in Avg. Weekly Brand A Volume, Deal Weeks vs. Non- Deal Weeks Trial Impact % Increase in New Brand A Buyers per Week, Deal Weeks vs. Non-Deal Weeks Buy Rate Gains % Increase in Brand A Volume per Buyer, Deal Buyers vs. Control 826% 419% 44% 307% 248% 21% 1st Week 2nd Week 1st Week 2nd Week 1st Week 2nd Week The major benefits of promotion are achieved in the first week of the deal, with: nearly 3x the lift nearly 2x the trial gains over 2x the buy rate gains compared to the second week of a multi-week deal.

23 Brand A Event Duration: DON T DO Multi-Week Deals Expandable Consumption Long Term Lift per Buyer 1-Week Deal 2-Week Deal 1-Week Deal 2-Week Deal 13% 5.0% 5% -3.1% 1-Week Deal 2-Week Deal 1-Week Deal 2-Week Deal Two-week deals deliver much less expandable category consumption Two-week deals drive NO long term gains in Brand A volume per buyer By subsidizing buyers who would have purchased anyway in the second week, multiweek deals erase the long-term volume gains achieved in the first week of promotion

24 For each brand, a full trade plan is developed with the shopper rationale behind each recommendation Event Type Feature & Display Target minimum 75% Display ACV Brand A - Trade Plan Do s If you can t get the display, target another week instead of doing a feature only event Display is critical to driving short-term lift, reach and trial Display also drives greater loading on deal, which leads to short-term expandable category consumption and greater long term volume lift Price Point 3/$4 or 3/$5 Event Duration Multiple of 3 Discount >40% is best, but if you can t hit at least 40%, aim for efficiency 1-Week Events Multiples are critical to drive loading and expanded consumption Single-unit and 2-for pricing miss a critical opportunity to drive loading, which leads to expanded category consumption and long term volume gains. 3-for pricing hits the sweet spot between short-term lift and long term volume gains 3/$4 works best, but if you can t afford to hit 3/$4, use 3/$5 Discounts of at least 40-50% (3/$4) drive best short-term lift, trial, loading, expandability and long term volume Unless you re hitting this 40% threshold, discount doesn t matter as much. Long term benefits of promotion occur in the first week, followed by subsidization First week drives trial, loading, expandability and long term volume Second week drives lower short term lift, and does not drive volume gains in the long term, as it subsidizes buyers who would have bought anyway Frequency 5-6 events per year Use the savings from one-week events (instead of 2-week events) to drive greater frequency of promotion Brand A deals require only a 4-5 week gap between them for best response in season. (Deals that occur <5 weeks after the last Brand A deal will generate sub-par lift.) Other tactics analyzed include stacking with portfolio and competitive events, timing, seasonality, and stacking with consumer/shopper marketing events

25 Key Don t Do recommendations are also developed Brand A - Trade Plan Don t Do s Event Type Price Point Event Duration Portfolio & Competitive Impact Don t Do TPRs or Residual TPR following a quality event Don t Use Singleunit Pricing, 2-for Pricing, or Must Buy Multiples Don t Run Multiweek Events Don t Promote with competitor or Brand B TPRs subsidize volume you would have achieved anyway Without feature or display support, Brand A TPRs drive small short term lift, but TPR buyers don t actually buy more Brand A in the long run this short term lift just time-shifts purchases that would have been made at full price! If you can t get quality support, don t deal There is no benefit to single-unit pricing vs. multiples, and 2-fors are too low Single-unit pricing does not help drive trial or buyer reach compared to multiples. Two-for pricing and single unit pricing are too low to drive loading, expandable consumption, and long term volume gains, and subsidize heavy buyers This is particularly important at shallower discounts: the shallower the discount, the higher the multiple needs to be to drive volume Shallower discounts on Brand A tend to appeal more to existing Brand A buyers, vs. new/light buyers Since many deal buyers will be existing Brand A buyers, it s important to combine shallower discounts with higher multiples to drive volume promoting at shallow discount with a low multiple will definitely subsidize volume Multiples usually don t turn away buyers, but Must-Buy multiples do Must-buy multiples reduce deal reach and skew deals to heavy buyers Similar to TPRs, multi-week events subsidize Brand A s baseline sales Second week drives lower short term lift, and does not drive volume gains in the long term, as it subsidizes buyers who would have bought anyway Better to pull back & re-load than to promote head-to-head with competitor or stack with Brand B Volume impact will be significantly lower with these brands in the mix look to other times

26 Recommendations are boiled down to simplified Cheat Sheet format for easy execution and field sales reference Brand A Cheat Sheet DO DON T DO Event Type F&D, min. 75% Display TPR or residual TPR after quality event Price Point 3/$4 or 3/$5 Single-unit pricing or 2-for pricing Must Buy multiples 4/$5 Event Duration 1-week Multi-Week Frequency 5-6 Events per Year -- Timing First two weeks of the month -- Stacking Time deals to stack with Shopper Marketing (any) and FSIs -- PROMOTE BEFORE: PROMOTE WITH: UNSTACK & GAP WITH: Portfolio & Competitive Brand C -- Brand B

27 Recommendations are also prioritized based on anticipated volume (and/or profit) impact Brand A Prioritized Recommendations Priority Action Why? 1 F&D Unstack & Gap w/brand C Unstack & Gap w/comp X Unstack & Gap w/ Brand B Sales Five to Six 1-week Events Instead of Four 2- week Events 6 3/$4 or 3/$5 7 8 Stack with Shopper Marketing & FSIs First 2 Weeks of Month Display drives a huge impact to ST & LT volume for Brand A & category Big impact to ST lift on both Brand A & Brand C - highly negative to total Client Volume Index Strong impact to ST lift on Brand A 52 Big impact to ST lift on both Brand A & Brand B - highly negative to total Client Drives similar ST lift, stronger LT lift, and subsidizes 2 fewer weeks of baseline volume Stronger expandable consumption, but more subtle LT differences vs. other price points/multiples. At anything less than a 50% discount, the multiple matters more to volume than the discount Moderate impact to ST and LT Brand A lift 20 Better for category expandability, but moderate impact to Brand A ST & LT lift

28 Sample : Shopper Marketing Synergy with Trade for Brand A Impact to Behavior Deals with SM Support vs. Deals Without SM Support Total Category Planning Shopper Marketing Synergy with Trade For many Client brands, stacking trade deals with FSIs and/or Shopper Marketing support drives synergy with trade deals, making the trade deal more effective in the short and long term benefits in addition to baseline gains driven by Shopper Marketing. Short Term Lift # New Brand Buyers LT Volume per Buyer 1 Loyalty 2 FSIs + 71 % pts - 2 % pts % pts % pts Shopper Marketing Any + 96 % pts % pts % pts % pts Targeted Marketing (Catalina) % pts % pts % pts % pts Shelf Signage % pts % pts % pts % pts POS In-Ad Support (Buy $X Get $Y Off Next Order) - 5 % pts % pts % pts % pts 1 Cumulative Volume, Deal + 12 Weeks Post, Deal Buyers vs. Control. Pt. Difference, deals with support vs. deals without support. 2 SOR, 12 Weeks Post the Deal, Deal Buyers vs. Control. Pt. Difference, deals with support vs. deals without support. For Brand A, Shopper Marketing Support + Trade Deals drive benefits in terms of long term loyalty that no single trade driver alone can drive

29 Total Category Planning Shopper Marketing Synergy with Trade The impact of Shopper Marketing with Trade varies by brand. The table below summarizes the best Shopper Marketing vehicles by brand in terms of their ability to drive synergy with trade deals*. Shopper Marketing Summary Best Vehicles by Brand by Synergy with Trade Brand A Brand B Brand C Brand D Brand E Brand F Importance of Shopper Marketing/Trade Synergy Across PPGs 1 Drives big ST gains in lift, plus LT loyalty & volume 6 Helps trade volume expand category, little SH benefit 4 Some vehicles drive significant ST lift & trial, less LT benefit 2 Drives lift, trial, LT volume per buyer & loyalty 5 Some vehicles drive significant ST lift & trial, less LT benefit 3 Drives lift, trial, LT volume per buyer & loyalty Vehicle Rank 1 Targeted Mktg (e.g. Catalina) Targeted Mktg (e.g. Catalina) Shelf Signage POS In-Ad Support (e.g. Recipes & Basket Builders) Floor Signage POS In-Ad Support (e.g. Recipes & Basket Builders) 2 FSI FSI Milk Media (e.g. BoxTop) Shelf Signage Milk Media (e.g. BoxTop) 3 Shelf Signage Floor Signage Floor Signage FSI Shelf Signage 4 POS In-Ad Support FSI Other In-Store (e.g. Sampling) Floor Signage 5 Shelf Signage FSI * Vehicles are ranked on their synergy with trade in driving ST lift, trial, LT volume per buyer, and loyalty. These may or may not be the best vehicles overall, including trade and baseline impact, but they are the most important vehicles in terms of aligning Shopper Marketing support with Trade deals.

30 Thank you! Questions? Spire is an industry leader in quantitative Shopper Intelligence providing smart, actionable shopper analytics and marketing program execution to retailers and manufacturers. Megan R. Margraff Chief Analytic Officer Spire, LLC