Leveraging Loyalty Card Data to Improve Trade Promotion - - PowerPoint PPT Presentation

Leveraging Loyalty Card Data to Improve Trade Promotion Effectiveness

Megan R. Margraff Chief Analytic Officer – Spire, LLC

Objectives

• Show how loyalty card data can be

used to drive shopper-based trade insights and more effective trade plans

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

About the Data Source

The Spire Shopper Panel

Essence /Engagement Segmentation™ Store Level & Store Cluster Access Demographically Representative Sourced from 30mm Loyalty Card Households 15 Banners

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

 Group shoppers by behavior, purchase history or differences

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

Execution Shopper Analytics and Consulting Services Loyalty Card Data Access Shopper Activation

Custom Analytics Shopper Intelligence Portfolio Behavior-Based Segmentation Aggregate Shopper Intelligence Platform Retailer Banner Level Shopper Intelligence Platform

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.

Putting the Shopper at the Center of Trade Planning

Traditional trade promotion analysis leverages two to three data sources

Volumetric Data

100 200 300 400 500

Units

Baseline Sales Incremental Sales F&D 2/$3 FO $1.79 F&D 10/$10

Causal Data Financial Data

Cost: $100K ROI: $0.75 Cost: $75K ROI: $1.05 Cost: $250K ROI: $0.88

…but traditional trade promotion analysis leaves critical shopper-based questions unanswered

Volumetric Data

100 200 300 400 500

Units

Baseline Sales Incremental Sales F&D 2/$3 FO $1.79 F&D 10/$10

Who is buying

• n deal?

% Buyers

Heavy Medium Light New

% Buyers

Heavy Medium Light New

% Buyers

Heavy Medium Light New

Causal Data

Traditional analysis leaves many shopper based questions unanswered…

Volumetric & Causal Data

100 200 300 400 500

Units

Baseline Sales Incremental Sales F&D 2/$3 FO $1.79 F&D 10/$10

How do promotions affect purchase behavior during the deal?

Average Purchase Size on Deal

1.5 units 1 unit 6 units

Traditional analysis leaves many shopper based questions unanswered…

Volumetric & Causal Data

100 200 300 400 500

Units

Baseline Sales Incremental Sales F&D 2/$3 FO $1.79 F&D 10/$10

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?

Putting the shopper at the center of trade planning

• 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 Need…

 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

The Benefits

Case Study

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

Recommended approach leverages a variety of data sources for a “from the ground up” view of trade events

Detailed Tactics Many Events

Thousands of Trade events Multiple Client and Competitive Promotable Product Groups Hundreds of Unique Tactical Combinations 12 Retail Banners 2 Years Promoted Price, Multiple, Discount FSI/Shopper Marketing Timing & Frequency Other Promoted PPGs/Brands Season & Holiday

Varied Data Sources

Actual, Card-Based Purchase Behavior & Pricing Detail Syndicated Merchandising Calendars MarketVision AdViews Trade Planners

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

Recommended three phase approach begins with a comprehensive database of trade events and tactics

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?

Phase 1 Trade Tactics 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

Second phase is to analyze the purchase behavior impact of each trade event, comparing deal buyers to non-deal buyers

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 1 Trade Tactics Phase 2 Behavior Impact Phase 3 How Tactics Drive Behaviors

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 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

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?

This approach provides a consistent framework to address a wide range of 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 Business Questions

 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

• f 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 post- holiday planning

Sample Insights

Short-Term Lift Long Term Lift per Buyer

826% 404% 265% 171%

F&D FO TPR RTPR

% Increase in Avg. Weekly Brand A Volume, Deal Weeks vs. Non-Deal Weeks

7.1% 2.3% 1.4%

• 1.2%

F&D FO TPR RTPR

% Increase in Brand A Volume, Deal Week + 12 Weeks Post, Deal Buyers vs. Control

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

Brand A Event Type: Don’t Do TPRs or residual TPR after a quality event

Brand A Price Point: Aim for at least a 40% discount, or target efficiency

Short-Term Lift

388% 387% 408% 752%

20-30% 30-40% 40-50% 50-60% 20-30% 30-40% 40-50% 50-60%

Short-term lift is fairly flat until you hit a key 50% discount threshold (too costly)

Long Term Lift per Buyer

• 1.6%

0.0% 3.7% 7.0%

20-30% 30-40% 40-50% 50-60% 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!

nearly 3x the lift

The major benefits of promotion are achieved in the first week of the deal, with: Short-Term Lift Trial Impact

826% 307%

1st Week 2nd Week % Increase in Avg. Weekly Brand A Volume, Deal Weeks vs. Non- Deal Weeks

419% 248%

1st Week 2nd Week % Increase in New Brand A Buyers per Week, Deal Weeks

• vs. Non-Deal Weeks

44% 21%

1st Week 2nd Week % Increase in Brand A Volume per Buyer, Deal Buyers vs. Control

Buy Rate Gains

• ver 2x the buy rate gains

nearly 2x the trial gains

compared to the second week of a multi-week deal.

Brand A Event Duration: Run 1-week Events

Expandable Consumption

13% 5%

1-Week Deal 2-Week Deal 1-Week Deal 2-Week Deal

Long Term Lift per Buyer

5.0%

• 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, multi- week deals erase the long-term volume gains achieved in the first week of promotion

Brand A Event Duration: DON’T DO Multi-Week Deals

For each brand, a full trade plan is developed with the shopper rationale behind each recommendation

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.)

Event Type

Feature & Display Target minimum 75% Display ACV

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

Event Duration

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.

Price Point

3/$4 or 3/$5 Multiple of 3 Discount >40% is best, but if you can’t hit at least 40%, aim for efficiency

Frequency

5-6 events per year

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

Other tactics analyzed include stacking with portfolio and competitive events, timing, seasonality, and stacking with consumer/shopper marketing events

Brand A - Trade Plan Do’s

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 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

• ther times

Event Type

Don’t Do TPRs or Residual TPR following a quality event

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

Event Duration

Don’t Run Multi- week Events

Price Point

Don’t Use Single- unit Pricing, 2-for Pricing, or “Must Buy” Multiples

Portfolio & Competitive Impact

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

Key “Don’t Do” recommendations are also developed

Brand A - Trade Plan Don’t Do’s

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 B

Brand C Recommendations are boiled down to simplified “Cheat Sheet” format for easy execution and field sales reference

Brand A – Cheat Sheet

Priority Action Why? Volume Index

1

F&D Display drives a huge impact to ST & LT volume for Brand A & category 100

2

Unstack & Gap w/Brand C Big impact to ST lift on both Brand A & Brand C - highly negative to total Client 63

3

Unstack & Gap w/Comp X Strong impact to ST lift on Brand A 52

4

Unstack & Gap w/ Brand B Sales Big impact to ST lift on both Brand A & Brand B - highly negative to total Client 36

5

Five to Six 1-week Events Instead of Four 2- week Events Drives similar ST lift, stronger LT lift, and subsidizes 2 fewer weeks

• f baseline volume

25

6

3/$4 or 3/$5 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 22

7

Stack with Shopper Marketing & FSIs Moderate impact to ST and LT Brand A lift 20

8

First 2 Weeks of Month Better for category expandability, but moderate impact to Brand A ST & LT lift 17

Recommendations are also prioritized based on anticipated volume (and/or profit) impact

Brand A – Prioritized Recommendations

Sample : Shopper Marketing Synergy with Trade for Brand A

Impact to Behavior Deals with SM Support vs. Deals Without SM Support Short Term Lift # New Brand Buyers LT Volume per Buyer1 Loyalty2 FSIs

+ 71 % pts

• 2 % pts

+ 6.5 % pts + 1.5 % pts

Shopper Marketing – Any

+ 96 % pts + 117 % pts + 3.6 % pts + 0.4 % pts

Targeted Marketing

(Catalina)

+ 150 % pts + 191 % pts

• 1.2 % pts

+ 1.8 % pts

Shelf Signage

+ 132 % pts + 122 % pts + 4.6 % pts + 1.0 % pts

POS In-Ad Support

(Buy $X Get $Y Off Next Order)

• 5 % pts
• 146 % pts

+ 16.8 % pts

• 1.8 % pts

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.

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

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

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*.

* 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.

Total Category Planning Shopper Marketing Synergy with Trade

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 meganmargraff@spirenow.com