PivotLink_Best Practices in Marketing Intelligence
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marketing intelligence
HOW RETAILERS ARE USING MARKETING INTELLIGENCE TO OVERCOME THEIR BIGGEST MARKETING CHALLENGES BEST
PRACTICES INMARKETING
INTELLIGENCE
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 2
The four sections of this ebook are:
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!
SO WITH THAT OUT OF THE WAY, LET’S GO!
1 2 3 4ATTACKING
ACQUISITIONCROSS-SELLING
AND UP-SELLINGCUSTOMER RETENTION
CUSTOMER WINBACK
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.
WHAT AREYOUR BIGGESTMARKETING CHALLENGES
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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.
Maybe you should be focusing on one of these instead (or all of these):
• Drivingcross-channelshopping• Buildingloyalty• Retainingcustomersinthefaceofincreasingcompetition• Increasingaveragetransaction/basketsize• Leveragingallcustomer,transactionalanddigitaldata• Acquiringnewcustomers• Understandinghowdifferentoffersandchannels
drive conversion• Reducingchurn
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,
YOUNEEDMARKETINGINTELLIGENCE.Untilthen,readontolearnhowothersareusingMarketingIntelligence to attack these different challenges in four different areas.
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SO WHAT IS YOUR SINGLE BIGGEST MARKETING CHALLENGE?
ARE YOU SURE IT SHOULD BE THAT AND NOT SOMETHING ELSE?
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 5
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.
Drillingdown,you’llstarttoaskquestionslike:• Whatisthemoststrategicapproachtoacquiringcustomers
based on our overall corporate goals?• HowdoIknowwhattypeofprospectismostlikelyto
engage with my brand?• HowdoIidentifymybestcustomers,andthenhowdo
I use that insight to better target new customers?• WheredoIusethisinformation,andwhen?• HowdoImeasuresuccessincustomeracquisition?
Once again, you need Marketing Intelligence to answer these questions.Sure,youcanjustuseyourdisconnected,siloed,weeks-old data to make an educated guess, but you know how that usually turns out, right?
CHALLENGE: CUSTOMER ACQUISITION
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 6
Butlet’snotjustthrowthosequestionsouttherewithoutanswers.Here’showretailerswithMarketingIntelligenceareanswering thosequestions:
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What is the most strategic approach to acquiring customers based on our overall corporate goals?
Lookforprospectsthatfita“mostlikelytoengage”modeltobecome 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?
LookatRFMvariables,thenappendage,gender,familytypeandbuying 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 strategiesbysegments.Leverageattributionmetricstomeasurewhich channels and tactics were most successful.
Themostsuccessfulacquisitionstrategieslookbeyonddrivingone-timetransactionsandmoretowardsidentifyingprospectswhoare 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 acquireyourbestnewcustomers.
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 bestwaytodriveincrementaltrafficwasbyacquiringnewcustomers 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.Identifiedthetop30%oftheircustomersbasedonRFM 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.
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RESULTS:200% MORE NEW
CUSTOMERS VS. PAST CAMPAIGNS.
40% NEW CUSTOMER RETENTION AFTER 1 YEAR.
CASE 1: DISCONNECTED ON-AND OFF-LINE INSIGHTS
ATTACKINGACQUISITION
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges
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 easilyviewcustomerpurchasehistories.However,ifthey wereright,theyneededtoquicklyunderstandtheirnewcustomers and actively attract more.
CASE 2: CHANGING MIX ATTRACTS NEW CUSTOMER TYPES
88RESULTS:
16% INCREASE IN TARGETED
SEGMENT SPEND.REVERSED DECLINING
SALES IN UNDER 45 DAYS.
Here’s How Marketing Intelligence Helped: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.
existingcustomers,purchasefrequency,andtransaction 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 quicklyrevisingtheirmarketingtactics,thecompanyreversedtheir sales decline in less than 45 days.
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges
Somaybeattractingnewcustomersiseasyforyou.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.
WHAT NOW?
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CHALLENGE: CROSS- SELLING AND UP-SELLING
Whatever your motivations, you’re probably already asking yourself these types of questions:• Arecustomerswho’vepurchasedacrossmultiplemerchandise
categories more engaged and more valuable?• AmIeffectivelyusingup-sellandcross-sellpromotionsas
relevant content in marketing programs?• Arewetakingadvantageofpastpurchaseknowledgetodrive
add-on sales with our customers?• CanIuseup-sellingtocounteractthemarginhitresulting
from discount promotions?
You’re probably also asking yourself, “But wouldn’t Marketing Intelligenceanswerthesequestions?”
YEP,YOURPARENTSWOULD BEPROUD!
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges
Beyondjustthosejuicyquestions,you’llstarttogetcuriousaboutwaysthatMarketingIntelligencewillbeabletogiveyouinsightandideasaboutimprovingyourcross-sellandup-sellinitiatives.Here’show:
What’s a more effective way of introducing new products to my customers?
Lookatpastproductpurchasesandtargetcustomerswhohavebought similar, adjacent, or complementary products.
How do I figure out what other products my customers may be interested in?
Leverageaffinitiesbylookingatthemarketbasketsandnearbypurchases 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?
Lookforthetimeswhensalesincrease,peakanddecline,andidentifytheuniquecyclesforthosespecificproductcategories.
Knowledgeofwhatmerchandiseyourcustomershavealreadypurchasedprovidesanopportunitytobuildproduct-andprice-driven marketing campaigns targeted at those customers who are more likely to open, click and convert.
And,it’snotjusttheabilitytoansweryourmostpressingquestions;MarketingIntelligencegivesyouideas,theabilitytoquicklydrilldown on those ideas, and the tools to turn those ideas into action.
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CASE 3: NEW PRODUCT LINE SUCCESS
CAPTURING CROSS-SELLS, UNCOVERING UP-SELL OPPORTUNITIES
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 directchannels,plusevaluatetheROIoftheprogram,sincethecosts were to be shared between the vendor and the retailer.
Here’s How Marketing Intelligence Helped:1.Usingpurchasehistories,theyidentifiedthepersonas,
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.Dailyreportstrackedthesuccessofthevariouscampaignsand 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%higherthantypical,givingthemanoverallprogramROI of nearly 400%.
RESULTS:53% INCREASE IN
CONVERSION RATES.NEARLY 400%
OVERALL PROGRAM ROI.
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CASE 4: OFFSETTING THE COST OF “FREE SHIPPING”
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.
Tostart,theyneededtoquicklyfigureoutasegmentationcriteriafornewcustomers,thenquicklybuckettheminto segments.Next,theyneededtoidentifywhichproducts should be promoted to these different segments, plus when and where to promote.
Here’s How Marketing Intelligence Helped:1. Identified “free shipping” customers who purchased
across different online “shops.” 2.Drilleddowntocreateprofilesforcustomersbasedon
RFMmetricsandcategoryaffinities.3. Connected the products purchased most often with other
high-affinity products that were likely to be purchased.
Marketingwasabletoquicklyidentifyproduct-profileaffinitieswhich 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 acquisitionmessagingtoincreaseconversionsby18%.
RESULTS:7.3% INCREASE IN PROMO-RELATED
MARGINS.18% INCREASE IN PROMOTION
CONVERSIONS.
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges
CHALLENGE: CUSTOMER RETENTION
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Regardlessofhowwellyouattractandmonetizeexistingcustomers, 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, andasksquestionslike:
• HowdoIdealwithincreasinglyaggressivecompetition and decreased customer loyalty?
• HowdoIprovidevalue-addedopportunitiesfor existing customers to engage with me instead of looking to the competition?
• Willtargetingcurrentcustomerswithrelevantmessaging and products and great service drive increased loyalty?
MAYBEMARKETINGINTELLIGENCECANHELP?NOPE,AIN’TNOMAYBEABOUTIT!
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 14
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:
How do I determine the best way to communicate with different groups of customers?
Developkeycustomersegmentssuchasloyalists,potentials, activeandinactivebasedonRFM,behavior,andotherattributes.
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?
Developbest-customerprofileswithdemographicattributesalong with transactions, then identify look-a-likes within your segments.
To retain your customers, you must first know your customers. I think Confucius may have said that.
Retainingnewcustomersandstrengtheningtheloyaltyofalreadyengagedcustomersrequirestheabilitytoidentifycustomerswith potential.Developing“bestcustomer”profilesbasedonpurchasebehaviorsanddemographicdatawillgiveyoutheinsightstoengagewiththem 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.
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CASE 5: BATTLING AGGRESSIVE COMPETITOR DISCOUNTS
REMARKABLE RETENTION
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.
Here’s How Marketing Intelligence Helped:1.Developedvariouscustomerprofilesbasedonproducts
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.
RESULTS:31% INCREASE IN
PROMOTION CONVERSION RATES.
12% INCREASE IN SEGMENT’S AVERAGE TRANSACTION.
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CASE 6: REDUCING TIME BETWEEN PURCHASES
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,whichwouldalsomeanfeweropportunitiesto 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.
Here’s How Marketing Intelligence Helped:
1.Uncoveredpurchasehistories,thenbuiltpersonasbased on categories purchased.
2. For each persona, built a timeline segment to understand time between purchases for first-time, second time, and repeatcustomers,andtoseeiffrequencywasdifferent 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 inahigher-than-expected430%ROIforthisspecificprogram.
RESULTS:27% INCREASE IN CAMPAIGN
CLICK-THROUGH RATE.430% ROI FOR FIRST
INTELLIGENCE-DRIVEN CAMPAIGN.
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 17
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 anewsub-segment.Howeverithappens,there’svalueintryingto win them back.
WHYSHOULDYOUADD CUSTOMERREACTIVATIONTO YOURMARKETINGPLAN?
Here are just a few reasons:• Lostcustomersmaybefuelingacompetitor’sgrowth.• Manylostcustomerswereoncevaluable,loyalcustomers
who may just need a reminder about what you offer.• Ifyoucaneasilyandcheaplygetsomeofthemback,
it’sadditionalprofitthatmighthaveabigROI.
Best of all, you already know something about them since they were a customer at one point. That’s a great place to begin.
COULDMARKETINGINTELLIGENCEHELP?YOUBETCHA!
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges 18
The easiest place to start is by determining the duration of no activity that categorizes someone as inactive. It might be days, months, oryears,butit’sdefinitelyuniquetoyourmarket.
Then,starttoaskyourselfmorequestionsabouthowtogetthembackandthinkaboutwhatdatayouneedtobeeffective.Startwith questionslike:
How do I reactivate lapsed customers? Developamarketingstreamthatincludesacompellingreason 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 havebeenvaluablecustomersinthepast.LeverageRFMmetricsto prioritize the different segments.
How can I get ahead of the problem and reduce my churn rate?
Determineredflagstoindicateslowingshoppingbehaviors and reduced brand interest, then proactively communicate with those customers.
Identifyingpreviously-valuablecustomerswhohavenotshoppedrecently(and“recent”isuniquetoyou),thendeterminepotential opportunities to win them back by looking at their past marketing behaviors and purchasing activities.
YOUALREADYHAVETHISDATA,SOALLYOUNEEDTODOISACTONIT.
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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.
Here’s How Marketing Intelligence Helped:1.Integratedmarketing,CRM,POSandotherdataforasingle,
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: TARGETING “AT RISK” CUSTOMERS
WINNING AT WINBACK RESULTS:
11% REDUCTION IN ATTRITION IN ONE
QUARTER.FIRST CAMPAIGN REACTIVATED
“100S” OF CUSTOMERS.
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CASE 8: COMBATTING A DROP IN SAME STORE SALES
A brick-and-mortar consumer electronics retailer noticed a reduction in year-over-year same store sales, as well as a drop inaveragetransactionvalue.Sincetheircompetitorsweren’texperiencing 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.
Here’s How Marketing Intelligence Helped:1. Identified customers who had recently become inactive
and what they purchased when active.2.Sub-segmentedthosecustomersbypotentialvalueby
lookingatpastspendvaluesandfrequencylevels.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.
RESULTS:REACTIVATED 2,000 CUSTOMERS WITH
ONE EMAIL.LESS THAN 30 DAYS TO STEM
ATTRITION TREND.
PivotLink | How Retailers are Using Marketing Intelligence to Overcome their Biggest Marketing Challenges
WHAT NOW?
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WHAT ARE YOUR BIGGEST MARKETING CHALLENGES?WHAT ARE YOU DOING TO TACKLE THEM?
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’stakethatback.The best place to start is www.pivotlink.com.
WHAT ARE YOU WAITING FOR?
marketing intelligence
PivotLink HeadquartersOnePostStreetSuite#825SanFrancisco,CA94104
P:866.625.9884
PivotLink.comPivotLink.com
THISeBOOKISBROUGHTTOYOUBYPIVOTLINK
Over60mainstreamretailersrelyonPivotLinkeverydaytodelivermerchandisingandmarketinganalyticsinsights.AsoneofthepioneersofSoftware-as-a-Servicedeliveredanalyticsandintelligenceapplications,PivotLinkhascontinuallyevolvedboth its application portfolio and cloud computing infrastructure to keep up with new data sources and to power more sophisticated analytics.
Ourvisionistoleveragecloudcomputing,theSoftware-as-a-Service(SaaS)busi-ness model, and advanced computing innovation to take cost and complexity out of retail and marketing analytics, effectively leveling the analytics playing field. By allowing organizations of any size to leverage sophisticated yet easy to use and affordable marketing and retail analytics applications both consumers and the companies that serve them are the winners.
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