© dunnhumbyusa 2010 | confidential 1 rewarding the behavior you seek by knowing your customers,...

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© dunnhumbyUSA 2010 | confidential

Rewarding the behavior you seek by knowing your customers, shoppers and consumers

13th October 2010, Chicago, IL

Presentation to: LEAD Conference

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today’s agenda………

introductions who am I?

introduce you to dunnhumby

the burning platform today’s choices

knowing and treating your customers the root causes

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to help brands and organizations

engage more completely and

profitably with their customers

by developing customer based

action plans built on integrating

“real-time” data insights, creativity

and change capability

thus delivering increased brand

value to our clients

dunnhumby mission is to drive brand value

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improving clients’ knowledge, thinking, action, and results across the globe

2010 (In Progress)Acquisition of KSS Retail

Canadian Tire

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our culture is connected and committed to our core values

Curiosity – an endless appetite to understand, challenge, innovate and learn

Customer first – we are the voice of the customer, we start with the customer at all times and follow the customer to deliver genius insights and actions for our clients’ growth and ours

Passion – relentless in our positive enthusiasm to give our clients the best to make a dramatic difference to their business and ours

Collaboration – working at our best together and communicating openly with respect and integrity, to build trust over time, for better results

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The Customer


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Offers are irrelevant to the customers who receive them due to poor targeting

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Headroom among current customers is not seen or valued, and is ignored

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There’s a focus on winning market share instead of winning over customers

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The priority is almost exclusively on short-term results

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Retailers and manufacturers are at odds over strategy and execution

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Traditional measurements are applied even when superior new metrics are available

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Creative and media choices reflect a one-size-fits-all strategy

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Consumer marketing concepts are reapplied without tailoring to the customer framework

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1. The wrong questions are being asked

2. The wrong data is driving decisions

3. Loyalty and acquisition are not balanced

4. There is little systematic improvement

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1.

The wrong questions are being asked

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Area Brand- or Store-Centric Questions

Targeted Marketing

Can we send a mailing to shoppers at the top 500 stores?

Loyalty How can I make shoppers more loyal to my brand?

Growth Is our market share growing?

Efficiency / Effectiveness

How can I simplify and standardize to achieve savings?

ROI What was the cost-per-thousand for the campaign?

Winning How can we beat the competition?

Shopping Experience

How can we change how this category is shopped and drive more shoppers to our brand?

Tracking Sales How much did we sell last week?

Shopper-Centric Questions

Can we individualize communications to our top 2MM shoppers?

Am I focusing most of my efforts on my best shoppers?

Is our share of wallet growing?

How can we learn what our best shoppers want and give it to them?

What was the ROI for the campaign over time?

How can we win with our best shoppers?

How can we put our brand where our best shoppers will naturally expect to find it?

Who bought what we were selling last week?

are you asking customer-centric questions?

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2.

The wrong data is driving decisions

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what research is used to shape your customer activity?

Source: In Store Marketing Institute’s 2008 survey of consumer goods manufacturers

65%: Survey, focus groups, panel – thin sample

50%: Scanner data – average shoppers

50%: Primarily rely on “instinct and experience”

20%: Shopper Insights drive Shopper marketing

65%: Survey, focus groups, panel – thin sample

50%: Scanner data – average shoppers

50%: Primarily rely on “instinct and experience”

20%: Shopper Insights drive Shopper marketing

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averages at the category level mask dramatic changes at shopper level

Category Unit and Sales Change

Sales Change

Unit Change

Unit Growth by Household Behavior

Unit change for HHs increasing units

Unit Change for HHs decreasing units

12%9%Frozen category

-45%92%

-3%6%Dairy Category

-52%77%

5%-13%Shelf Stable Category

-45%84%

-1%0%Breakfast Category

-44%64%

-5%-2%Beverage Category -46%

60%

Category

z

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you can’t find the right customers based on demographics

0%

5%

10%

15%

20%

25%

30%

Brand Increasers Brand Maintainers Brand Decreasers

Under 15K 15-24K 25-34K 35-49K

50-74K 75-99K 100-124K 125-149K

150-174K 175-199K 200-249K 250K+

Household Income

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behavior-based segmentation is key

Model – You are:What you earn

Where you live

What you say you are

What you do

Geo- demographics

I can’t eat at Jane’s house: No organics!

Lifestyle questionnaires

I try to tell the truth … as best I recall it.

Bottom-up behavior-based targeting

OK … now you’ve got me!

AKA Real ConsumerDemographics /

Social classI spend very

differently from my “peer.”

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develop multiple dimensions of behaviour

primary channelpreferred format (supermarket, express,gas station, online)

profitabilitybrand choice, packaging preference,weight of purchase

lifestagedemographics, what they buy

lifestylesmotivations behindshopping behaviour

“you are what you do”

promotional promiscuitycherry picking deals, bulk buying to larder fill

shoppinghabitsshare of shopping,recency & frequency

shoppingtrips missions

brand advocacyparticipation in extensions

understand each customer’s DNA to activate at the customer level

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3. Loyalty and acquisition are not balanced

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Brand $s $171,834 $718,381 $612,061 $123,516

Brand $s/HH $24.87 $5.71 $1.95 $0.70

% of $s 10.6% 44.2% 37.6% 7.6%

% Shoppers 1.1% 20.2% 50.4% 28.3%

$ / Shopper Index (954) (219) (75) (27)

Brand “A” Candy Bar Loyalty Tiers

Measures Champions Valuables Potentials Uncommitteds

# Shoppers 6,910 125,755 314,501 176,797

Ctgry Trips / Shopper 76.1 32.6 33.7 27.4

SOR % 15.4% 7.0% 2.1% 0.8%

earning and growing loyalty generates profitable growth

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Champions Valuables Potentials Uncommitted

Increased Stayed the same Decreased Left the brand

10% lost

60% buying

less

focusing on acquisition over loyalty can be an expensive choice

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4.

There is little systematic

improvement

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the feedback loop is much shorter but many are not taking advantage

Annual MarketingPlanning

Copy and Media Development

Launch Message / Media Evaluation

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

WAS

IS

Segment 1

Segment 2

Segment 3

Segment 4

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persistent and systematic improvement creates breakthrough results

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20.0%

22.7% 22.7%21.5%

18.4%

7 8 9 10

Phase 2(178) index vs. Industry Avg.

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27.2%28.7%

33.3%

35.7%

12 13 14


% of HHs redeeming at least one coupon

Earliest Most recent

17.0%16.0%15.0%

16.0%18.0%

1 2 3 4 5


Industry Avg.

(11.8%)

42.5%

15 16

49.2%

Phase 4 – Now a (389)

index vs. industry avg.

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make better business decisions by putting the customer at the center

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Previous Program1500 line program

Customer Centric ProgramBased on ~500 lines important

to PS customers

% o

f ba

ske

t /c

ust

omer

spe

nd

getting the right price program implemented

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how customers engage with promotions

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Loyalty propensity

Pro

mo

tio

nal

pro

pen

sity

Loyals

Pantry-LoadersDeal-Seekers

Repertoire

promotion escalation does…

this to sales on deal… …this to customers……this to value

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cultural attributes will differentiate winners who will grow brand value

Getting measurement, rewards, talent aligned with desired outcomes

Getting measurement, rewards, talent aligned with desired outcomes

Being loyal to those who matter most, to

earn and grow loyalty

Being loyal to those who matter most, to

earn and grow loyalty

Using insight to challenge embedded ways of thinking and

working

Using insight to challenge embedded ways of thinking and

working

Leading with customers, not with

brands

Leading with customers, not with

brands

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thank you

© dunnhumbyusa 2010 | confidential 1 rewarding the behavior you seek by knowing your customers,...

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