alterian june 2009 webinar addressing retail trends through an integrated approach by merkle

1Proprietary – Shared under NDA

Addressing Retail Trends Through An Integrated Approach

June 18, 2009

Agenda

• Corporate Overview 5 minutes

• Trends in Retail Industry 5 minutes

• Key Aspects of Merkle’s Retail Solution 20 minutes

• Summary 5 minutes

2

Merkle’s Focus on Retail

• Merkle is a leader in the database marketing space servicing large scale clients across complex industries such as financial services, insurance, and travel & entertainment.

• Merkle entered the retail space, recognizing that the industry is underserved and that there was an opportunity to bring industry best practices to the retail vertical.

• We have recruited significant talent from the retail space across all key areas, including Interactive, Database Technology, Analytics, and Strategy

• To date, we have developed our core retail technology solutions, incorporating not only the most advanced technology tools and processes but also specific retail modules embedded in our solution.

3

Change the BusinessMerkle uses a framework driven approach to systematically help clients identify opportunities to optimize FUTURE growth

Change the BusinessMerkle uses a framework driven approach to systematically help clients identify opportunities to optimize FUTURE growth

Run the BusinessMerkle provides analytical and strategic support to maximize our partners’ CURRENT marketing efforts

Run the BusinessMerkle provides analytical and strategic support to maximize our partners’ CURRENT marketing efforts

Merkle’s Engagement Perspective

Marketing Strategy Develop a retail strategy roadmap consisting of an array of integrated marketing programs that will maximize business impact

AnalyticsProvide the quantitative support to bring to life the initiatives outlined in the retail strategy roadmap across offline and online activities

Marketing TechnologyBuild the right infrastructure and processes that support data integration, campaign, and business intelligence needs going forward

4

LoyaltyLoyalty efforts are enabled through a technology platform but designed to drive long term customer value and retention, capturing greater share

InteractiveProvide thought leadership and vision around advancing interactive and emerging technologies that are relevant to the customer

Stra

tegy

& A

naly

tics

Our DifferentiationMerkle’s engagement is to support the existing business to hit key metrics and short term priorities while also laying a foundation for future initiative and long term growth

5

Production & Media

(Factory)

Creative& Messaging

(Studio)Strategic Consulting

(Boardroom)

Database Marketing Agency Structure

Database Technology

(Power Plant)

Analytics& Insight

(Lab)

Data Content

(Fuel)

Delivery

6

Implementation Gap – Why does it exist?

Implementation Gap

MarketingStrategy

Marketing Execution

Over abundance of data, inability to fully utilizeLack of understanding, business intelligence and infrastructure/processHigh cost and investment of time to implementLack of clear ROI metrics Organizational silos

Abundance of Ideas

Available Capacity

Lack of Action

Surplus of Data

Available Infrastructure

Lack of Ability

7

Agenda



• Key Aspects of Merkle’s Retail Solution 20 minutes


Retail Industry Perspective

• Retailers have grown their business over the last 10 years by brick and mortar expansion, while traffic to existing stores has steadily declined

• To offset for the decrease in traffic retailers have increased price points over the last three years, but have reached a "boiling point" due to the recent economic crises

• eTailing has been recognized as a growth opportunity, and both budget and talent has been shifted to eCommerce

8

Retail Industry Perspective

• As a result most retailers offer multi channel of purchases included brick and mortar, call center and eCommerce and have began to adopt new CRM practices to manage their customers.

• Today many retailers have expanded their push media including: – In-store promotions– Kiosks – POS messaging – Direct mail, catalog– Email and mobile messaging

As well as their pull media including: – SEO– Affiliate Networks – Social Networks – Banner advertising

• The retail industry has faced challenges integrating the CRM practice across these channels of purchases and new media vehicles

Merkle’s primary objective in the retail space is to help retailers manage these complex multi-channel and media challenges and become more relevant to their current customers and prospects

9

Agenda



• Key Aspects of Merkle’s Retail Solution 20 minutes– Framework for integrated strategy, analytics and database– Technology approach– Multi-Channel Retail Analytics– Allocation Schemes– Interactive


10

The Objective

Connecting Customers & Products Across Channels

11

Promo Calendar Optimization - Event Specific - Seasonal/Product Category

Contact Strategy - Media - Channel of Purchase - Offer - Cadence - Seasonality

Lifecycle CRM - New To-File - Active customers - Lapsed/Inactive

Media Mix Optimization

Category Mix Optimization - Store/Regional Levels - Key Items/Category

Basket Analysis - Cross/Up Sells - Category Affinity

Product Driven Segmentation - Customer Profile/Segment - Category Consumption - Segment Value

Pricing Strategy

Full Price vs. Outlet- Site Selection/Trade Areas- Expansion vs. Cannibalization

Performance Classifications

Clienteling

Retail Enterprise: Customer-Centric View

Customers LocationsProducts

Marketing Merchandising Store Operations

12

Multi-Channel Retail Marketing Programs: Purchase

13

Merkle evaluates the marketing calendar and considers adding the following programs utilizing all data, targeting and media platforms to influence shopping behavior

Loyalty / Rewards

Best Customers

Proprietary Card

EventsIn-Store Activity

Prog

ram

sM

edia

• Acquire new members

•Migrate Loyalty Tiers• Point Balances• Redemption Balances• Loyalty Extra Points

Promotions

• Acquire new cards•Monthly Balances• Card Promotions

• Private Sales• Exclusive Products• Exclusive benefits• Special Gifts

• Show new lines•Meet with..• Store Openings• Store Events• Private Sale• New Mover

Programs

• Holiday• Valentines’ Day•Mothers’ Day• Back to School • Graduations

Multi-Channel Retail Marketing Programs: Purchase

14

Gift With Purchase (GWP)

Friends & Family

New-to-File

•On-boarding• Circulate early

merch categories to determine product interests

• Different value• GWP by customer

segment

• Referral Programs• Tie-In offers

Gift Cards

• GC purchases• GC balances &

redemptions

Bouncebacks

• Bounceback offers upon purchases

• Bounceback reminders

• Bounceback redemptions

• Abandoned Carts

Prog

ram

sM

edia

Merkle Loyalty Approach

Loyalty System of Record

Analytics & ResearchProgramDevelopment

– Loyalty Currency– Loyalty Tiers – Surprise & Delight Benefits– Loyalty promotions– P&L

– Profile customers by tier– Identify tiers cutoffs – Assign customers to tiers– Target customers based on

Loyalty parameters– Measure migration patterns

– Currency Accumulation – Redemption– Track other benefit transactions– Cost– Data exchange– Updates

Marketing Database

15

16

Strategic Planning

Merkle recommends an initial strategic engagement to define key goals and prioritize resulting initiatives accordingly. The strategic engagement would answer the following:

17

Strategic Engagement Process

Merkle’s Strategic Engagement Process (SEP) is designed to identify the key areas that need focus via the discovery, assessment and gap process. Once determined, detailed recommended roadmaps and project plans are then constructed.

Current Future RoadmapGaps

1 2 3 4

Manage Profile & History

Evaluate / Promote Prospect

Message Prospect

Prospect & Customer

Mgmt.

Analyze Prospect

Manage Action Plan & Calendar

Manage Relationship

Manage Products & Pricing

Analyze Needs

Manage Point of Sale

Product Selection

Monitor Status

Assess Finances

Create & Revise Quote

Create Contract Package

Create Purchase Agreement

Obtain Internal Approval

Contract

Execute Contract

Obtain Credit Approval

Obtain Loan Approval

Y

R

G

Y

G

G Y

Y Y

G Y

G Y

Y Y

G Y

Y Y

Y Y

Y R

Y Y

G Y

G Y

R

R R

Y Y

Y Y

H

M

H

M

L

H

M

M

H

H

H

L

M

M

M

H

M

L

Future State Bus. Priority: = Critical / High Value = Important/Med. Value = Marginal/Low Value H M L

Media and Targeting assessment

Customer Lifecycle and Interaction Modelling

E E E E

B B

E E E E E

B B B B

B B B B B

B B

E E E

B

E E E

E E E E E E

E E E E

B B

E E E E E

B B B B

B B B B B

B B

E E E

B

E E E

E E E E E E

Benefits of Internet Marketing Design to Company

Revenue Enhancement Cost Reduction/Avoidance

Cross sell and up sell to existing

customersRetained revenuesRevenues from new

customers Cost effective sales1 2 3 4

Reduced costs of inputs

More efficient solution delivery

65

Key:

E: Initiative enables these benefits

B: Initiative potentially delivers quantifiable benefits

A. Customer Experience

C. Sales Forecasting

D. Content Management

E. Contact Management

B. Marketing / Segmentation

G. Lead Management

I. Customer Self Service

H. Search Optimization

J. Appointment Scheduling

F. Online Leasing/ Quoting

Strategyconcurrent engineering

shared P.D.M & CAD

customer web enabled input to design

single view of technical documentation

outsourced design for both concept & majormodules

tier 1 leadership through standard modules and shared assembly

mix and match modular design (1)

Technology

each vehicle needs new long lead time tooling

complicated & long development lead time

P.D.M + design data visible to community

P.D.M linked to tooling + evaluation

parallel to R + D + flexible tooling

disconnect module toolingfrom car R + D

tooling not linked to launch (2)

Strategy

engineering constrained processes

The adoption of multi-channel advertising

more customer participationmulti-media I-TV etc

on-line vehicle configuration

marketing led notengineering led

in-line visibility for test drivewith virtual reality

dynamic schedulingfor test drive

virtual T/D and no-stock dealerships (3)

Technology

single model assembly tracks

the development of supplier parks

KANBAN common components treat them the same as fixings

Greater use of multi model flexible tracks

global leveling of capacity

yield management

postponement technologycomplete options at thedealer

Small assemblyplants close

to customer

3-day car (4)

Build Out

excess stocks & obsolescence

single view of capacityfor new and old models

increase use of common componentsto reduce obsolescence

Assemble old & new models on same track

Pricing old new

No impact from balance-out

mixed model production line (5)

JD

Sal

es &

Ser

vice

Eff

ecti

ven

ess

Pricing Effectiveness Change Management

Future State Transformation Roadmap

Long Term Initiatives and Quick wins

Enterprise Insight, Media Targeting and Optimization and

Measurement Strategy

Enterprise Infrastructure Plan

Gap and BP Analyses and Recommendations

Description

Situation• xx

Milestone Summary• xx

Dependencies• xx

xxx

Complication• xx

Solution Summary• A consistent customer interaction across divisions and an optimised

xx

Capabilities addressed• xx

Project Duration: xx

Prepared by: Benefits Owner:

xxx

Project Scope• xx

Benefits Summary• xx

Yearly $ benefits: $xxxk

Strategic Priority M

Implementation Effort L

Benefit Potential L

Initiative and Program Charts – Quick-wins and Long Term Initiatives

Depiction of BenefitDepiction of Benefit

Description of Benefit and CalculationDescription of Benefit and Calculation

For each of the new solutions being considered:Number of leads from existing and new customers = xConversion rate = yAverage value of products sold = zRevenue from new products sold = x*y*z

For each of the new solutions being considered:Number of leads from existing and new customers = xConversion rate = yAverage value of products sold = zRevenue from new products sold = x*y*z

• New solution development

Initiatives driving this benefitConversion rate (Dev, C&I)Average value of services provided (DEV)Number of leads for service (DEV, SC, C&I)Average value of services provided (3rd party) (C&I)Number of leads (DEV)Retention of tenants at lease end (SC, C&I)

KPIs affected

Cross sell and up sell to existing customers

Retained revenuesRevenues from new customers

Cost effective sales

1 2 3

4Reduced costs of inputsMore efficient solution

delivery

65

Relevant division(s)

SC, C&I, DEV

• Improved matching of offering to customer needs.• Leveraging Stockland wide buying power.• Offer more holistic solutions.

SRM levers involved

• By offering complementary products, Stockland will increase the number of customers, the share of wallet of existing customers and customer tenure. Ideally the new solutions will make existing products more accessible to all customers.

Benefit Description

Current FutureRevenue from new solutions

Revenue from existing products Revenue from existing products

** Complementary products to Stockland’s existing portofolio will bring in additional revenue streams.

Economics and Benefits Summary

ProspectNew

CustomerActive

CustomerInactive

Customer

Lo w En gage d

(B EMLe ve l 1 )

M e d ium En gage d

(B EMLe ve l 2 )

High En gage d

(B EM Le ve l 3 )

Fi rst Time B u ye rs

R e activate d B uye rs

R e ce n t B u ye rs

R e p e at B u ye rs

Lap se d(7 -1 2

M o n ths)

In acti ve (1 3 -3 6 M o n ths)

De e p In acti ve (3 7 +

M o n th s)

Data, Capability and Program Inventory and Assessment

Future State Program Needs20

Strategic Plan: Database Management

Current StateCurrent StateDatabase Management

LEVEL 5• Data across all marketing

channels (web, call centers)

• 24/7 access• Real time updates

• Promo history TOM data capture

LEVEL 3• Name/Addr hygiene• Duplicate elimination• Historical data capture

DATABASE MGMTData

LEVEL 5• Real time model scoring• Auto model updates

• Scoring within the database• Regular model updates• Model review process

(report card)

LEVEL 3• Individual level models• Analytical playground• Multi-wave campaigns

DATABASE MGMTAnalytical

LEVEL 5• Complete content

evaluation process; Access, evaluate, integrate

• Comprehensive derived data and velocity data

• Regular access to new test data for evaluation

• Implementation of Merkle’s content lab

• No activityLEVEL 3

• Test and evaluate content on a regular basis through model redevelopment.

• Access to historical data• Basic derived data

DATABASE MGMTContent

DABASE MGMTStrategy

LEVEL 5• Complete integration of

DbM actions to Corporate, Brand Management and Customer strategies

• No disconnects between strategy and execution

• Use of a quantitative based framework

• Quarterly DbM strategy meetings

• Integration of prospect and customer strategies

• More disciplined review and agreement of prioritization to resources

LEVEL 2• Informal, ad-hoc Merkle

thought leadership• Limited use of a framework,

primarily Merkle’s strategy map.

• No integration of prospect and customer strategies

Next StepsNext StepsIn ProgressIn Progress Vision(End State)Vision

(End State)

10

4.1 Culture

4.4 Knowledge Management

4.3 Competencies and Training

Organizational Maturity

4.0

3.6 Message/Creative

3.5 Channel

3.4 Media

3.3 Contact

3.2 Offer

3.1 Audience

Profit Drivers3.0

5.3 Robustness

5.2 Integration

5.1 Functionality

4.2 Structure/Staffing

2.6 Performance

2.5 Campaign

2.4 Analytical

2.3 Data

2.2 Content

2.1 Strategy

1.3 Customer Value

1.2 Market Definition

1.1 Strategies

Level 1 Level 2 Level 3 Level 4 Level 5

1.0Customer Management

2.0Database

Management

5.0Infrastructure Maturity

GAP Analysis

Current State

Desired End State

14

• Bundled or Tied to other products: (1) use of rewards (e.g credit card) to reduce premiums• Premium Sweepstakes – insurance for life• Match audience to offer• Capture knowledge of value proposition by audience

PROFIT DRIVERSOffer

PROFIT DRIVERSMedia

PROFIT DRIVERSAudience

• Media mix modeling and optimization

• Profitability Modeling: (1) use of component models; (2) validate components and back score overall amount is correct; (3) may negatively impact CPA optimization; (4) need for a strong retention component; (5) recognize some components prediction more accurate than others; (6) use ½ life to determine LTV; (7) continuous learning approach

• Target to Steal Share • Model review process – board, report card etc.• Segmentation: (1) enterprise vs. tactical; (2) tie to lifecycle; (3) tie to brand-specific offers

Brainstorm: DbM Best Practices

Profit Drivers are the key levers that determine the performance of a marketing campaign.

Brainstorm / Options

PROFIT DRIVERSContact

• Name rotation within practice• Creative rotation

17

Create Campaign Work Plans3

Automate Trigger Programs6

Establish Document Management System2

Decouple Kroger 8

Improve File Loading Capabilities7

Improve Marketing Suppression5

Build QC and Audit Processes4

Standardize Campaign Requirements Documentation1

InitiativeInitiativeRankRank1 2

5

3

4

6

78

9

8

7

6

5

4

3

1

2

(M)

(L-)

(H+)

98765431 2(H+)(M)(L-)

IMPA

CT

LEVEL OF EFFORT

Priority Map

8

Organizational Maturity Map

• Formal KS internally & externally continuously applied in DbM Process.

• Accessible knowledge library and companywide DbM results sharing forums

• Some regular DbM knowledge sharing of results

• Project level learning and sporadic DbM results sharing

• Unstructured DbM learning as needed. Knowledge

Management

• Thought Leadership exist in all DbM Management areas

• Group competency now considered a strategic advantage.

• All DbM Management skill sets defined. Group has robust analytical capabilities and is actively trying to fill any core gaps.

• Ability to execute at the DbM Management level, group has infrastructure and analytic capabilities

• Specific skill sets identified to execute DbM efforts. Beginning to build basic quantitative competencies

• No DbM competencies exist internally. Most of the groups focus is in vendor

management

Competencies

&

Training

• Manages all DbM activities focusing on achieving initiatives & best ROI. DbM Leader on a peer level with other CMO direct reports

• DbM expertise readily available to support enterprise initiatives. Performance targets in place and firm ROI understanding. It has strong relationships internally & externally

• Established DbM group linked to marketing and has some ROI group level understanding. Relies on outside groups for enabling infrastructure

• Limited resources with heavy reliance on more targeted DbM vendors. Continues to rely on shared resources to deploy DbM efforts

• Matrix type group that is assembled for project level work that utilizes total solution type vendors

Structure & Staffing

• A culture of learning, with full training and education. An entrepreneurial group that helps determine & execute marketing initiatives

• A results oriented group that is viewed as a partner -leader when implementing DbM efforts

• The Group is adding value to various enterprise DbM efforts and acting as a supplier in other initiatives

• Considered DbM tacticians, viewed as a partner to some regular DbM users

• Execution focused, with heavy reliance on vendors and act as a service provider

Culture

Level 5Level 4Level 3Level 2Level 1

X

X

x

Str

ateg

icTh

emes

Initi

ativ

esO

utco

mes

Audience

Media Optimization

Contact

Achieve 11% Combine annual

growth rate trhough 2012

Message / Creative

Derived Data Creation

Creative Sequencing

Value / Retention Modeling

Maximize Lifetime Premium

ProspectSegmentation

Media Interactions and

ROI

PerformanceForecasting

Controlled Frequency

Testing

Media

Channel

Lifecycle Program

App-Mail PAMM Model

Web Analytics

Channel PreferenceModeling

Bundling / Offer Testing (RV, Homesite)

Audience Hierarchy

Future State Strategy Map

18

Agenda





19

Our Approach to Technology

UsabilityHow it will be used

FunctionalityWhat capabilities are needed

Technology

TCO

Business Driven Approach

Best Approach

20

KnowledgeCenter Schematic

Offline ChannelsContent Management

Customer

SKU

Transaction

Demographic

Email Interactions

Data Management :

KnowledgeLink

ETL Data Hygiene Address Standardization Matching Update Process

Database Marketing Strategy & Analytics

Cross- Sell / Up-sell

AcquisitionSequential

Survey ( Profiling)

Notifications / Service-oriented

ModelingTriggered Messaging

Creative Library

Deployment Engine

Campaign Management:

Alterian

Segmentation Suppressions List Sizing List Selection

Knowledge Warehouse:

MS SQL Sever

POS

Promotion

Web AnalyticOnline Channels :

Dynamic Messenger

WEB

Loyalty :Merkle’s Solution

Data Management Reporting Member Management

Reporting :

Standard Ad Hoc Dashboards

21

Associative

Membership

Household &Residence

Individual

Basic Attributes &ID Links to all other

tables

Communication

Channels

Location /DistrictEmailText

Communication Preferences

Opt Outs &Suppressions

TransactionalAttributes

SKUs

PaymentsDiscounts

Tender

TransactionalHistory

PurchasesReturns

DerivedAttributes

Model ScoresDerived Variables

Promotional

History

Campaigns &Segmentation

Criteria

Customer Data Warehouse Key Customer Data Elements

22

Agenda





23

Segment A

Popu

lati

on

Age

Education

Wealth Rating

Children in Household

Married

Homeowner

Length of Residence

Prospects

Dem

ogra

phic

sIn

quir

y Pr

ofile

Inquiries

% of all US Households

Customers

52 63 4

16%

1

• 27%<30 yrs; 14%>60yrs

• 24% with Bachelors or higher

• 5.5

• 39%

• 39% married

• 21%

• 2.9 Years

Segment B Segment C Segment D Segment E Segment F

Cancels

% of Inquiries(funnel Index)

% of Customers (funnel Index)

% of Cancels (funnel Index)

133

75

137

11%

111

83

126

13%

119

99

100

27%

108

104

97

20%

67

133

66

15%

65

125

79

Cust

omer

Pro

file

• 17%<30 yrs; 21%>60yrs


• 6.7

• 38%

• 50% married

• 33%

• 4.7 Years

• 17%<30 yrs; 15%>60yrs


• 7.7

• 48%

• 60% married

• 47%

• 5.6 Years

• 15%<30 yrs; 18%>60yrs


• 7.6

• 38%

• 58% married

• 41%

• 5.0 Years

• 6%<30 yrs; 45%>60yrs


• 8.9

• 18%

• 62% married

• 56%

• 7.0 Years

• 7%<30 yrs; 40%>60yrs


• 8.4

• 22%

• 62% married

• 44%

• 6.0 Years

Quoted Premium

Premium per Driver

Premium per vehicle

Stated Previous Insurer:• First Time Insured• Provider A• Provider B• Provider C• Provider D• Provider E

• $781• $593

• $686

• 17.3% First Time Insured• 6.2% Provider A• 5.5% Provider B• 8.4% Provider C• 2.2% Provider D• 1.0% Provider E

• $801• $583

• $668


• $887• $620

• $705


• $850• $617

• $708


• $871• $640

• $724


• $887• $620

• $705


Revenue per Household

Revenue per Individual

Premium per Policy

% New Customers

Tenure

% Internet Sale

% With a property

% with claim

Gender

• $669

• $371

• $471

• 15.0%

• < 3 yrs (72.6%), 4-9 yrs (22.7%), 10+ yrs (4.7%)

• 33.9%

• 6.8%

• 3.0%

• 50.0% Female

• $670

• $350

• $447

• 14.2%

• < 3 yrs (69.9%), 4-9 yrs (23.7%), 10+ yrs (6.5%)

• 30.7%

• 5.6%

• 3.2%

• 52.0% Female

• $749

• $370

• $468

• 12.8%

• < 3 yrs (67.1%), 4-9 yrs (26.0%), 10+ yrs (6.9%)

• 31.2%

• 6.7%

• 3.6%

• 50.6% Female

• $732

• $366

• $472

• 13.2%

• < 3 yrs (68.5%), 4-9 yrs (24.7%), 10+ yrs (6.9%)

• 31.6%

• 6.6%

• 3.1%

• 49.5% Female

• $714

• $370

• $465

• 10.9%

• < 3 yrs (64.0%), 4-9 yrs (25.1%), 10+ yrs (10.9%)

• 27.0%

• 7.3%

• 3.3%

• 47.8% Female

• $700

• $354

• $450

• 12.0%

• < 3 yrs (63.8%), 4-9 yrs (26.2%), 10+ yrs (10.0%)

• 26.0%

• 6.4%

• 3.1%

• 50.1% Female

Segmentation: Becoming Customer-centric

Having a customer-centric view of your customers (across the lifecycle) is critical. Segmentation provides the ability to make customer-centric decisions

24

The Enterprise Segmentation “Funnel”

16%11% 13%

27%20%

Segment A Segment B Segment C

Segment DSegment E

MarketableUniverse

7583 99 104

133

ActiveCustomers

Conversion RatesConversion

Onboarding

137 126 10097

66

LostCustomers

Retention RatesDevelopment

Retention

• The Funnel has become the primary framework for marketing efforts

• The two permanent segments are the Enterprise Segments (across the funnel) and Lifecycle (down the funnel)

• The Funnel data can be selected based on recency and geography via ‘drop down boxes’

• Many different metrics can be displayed within the boxes (population % and indices shown to the left)

133

111119

10867

Awareness

Consideration

Acquisition Rates

Inquirers

KEY: % of Lifecycle BucketIndex to Total Market

6565

Segment F

12%55

15%15%

124124

7979

2525

Using the Database for Insight

Overall Profile“I Am” Personal Information

Name: Kristen SmithE-Mail: [email protected] Main Street, Manhattan Beach, CA 99989

“I Wear”Product Information

Shoe Size: 7Apparel Sizes: Tops – S, Bottoms – MFavorite Colors: Black and Pink

“I am Looking For” Online Shopping Interests

Black raincoat - Beige handbag

“I Buy”Purchase History last 12 months

3 pairs of shoes - 6 Tops - 2 Suites

“I Like to Shop In”Channel Preference History

2x in your store in Laguna CA1x in your store in the Las Vegas Mall1x over the phone

Promotion History Profile

“I Like To Receive Emails” EM Promotion History

To receive emails from time to time but not too manyOpt-inLow number of clicks

“I Also Like to Receive Catalogs”Catalog RequestsThree phone calls to the call center over the last six months

“I rarely shop online”No online registrations Rare website visits

“Kristen Consumer”

26

Sample: Strategy Map

We use strategy maps to directly link themes and initiatives to desired outcomes.

This assures that we work on the right things.

Stra

teg

ic

Th

em

es

Initia

tives

Ou

tcom

es

Develop Merchandise Mix

Optimization

Customize Retail Specialty and Outlet

Targeting by Promotion

Optimize Merchandise Mix

Cross-Sell Offer Targeting by Segment and

Merchandise Mix

Targeting and Test Schemes

Color and Size Optimization

Seasonal Discount Strategy

Increase Multi-Channel By 20%

New-to-File Strategy

Support Store Openings &

Closings

Trigger Program Engine

Custom Retail Trade Areas

Store and Regional Level Category Model

Optimize Circulation Per

Promotion

10% Increase Y-O-Y Same Store Sales

Cross Channel Models

Agenda





27

Match Back / Fractional AllocationCustomer Insights: Closed Loop Measurement

Lead and sales attribution feeds a closed loop campaign process enabling analytically-driven activities. This feedback loop ultimately influences marketing decisions.

There are a number of ways to attribute leads and sales back to marketing activity supporting both precision marketing (addressable activities like DM or email) and mass and interactive media

Best practices to support various levels of attribution across media are outlined in the following slides and incorporate the analytic and technical components of the process. All methods can be leveraged to assess historical data.

Exec

ution

Feedback

Planning

28

Sal

es

Time

Catalog Mailing

Holiday

Purchase

The goal of the attribution processes is to understand the impact of different marketing interventions at a point in time or over time. These measurements can be relative to one another, absolute, and may take into account other factors including brand and retail presence

Match Back / Fractional AllocationMetrics And Attribution

29

• There is no single, ‘correct’ method of attributing responses.• Different methodologies can produce different conclusions.• Different approaches fulfill different needs.

• Sophisticated marketers use a combination of attribution approaches, leveraging the strengths of each approach to assess appropriate aspects of program performance.

• Merkle’s strategic experience and technology supports the following attribution approaches.

• Direct Attribution

• Indirect Attribution

• Fractional Attribution

• Probabilistic Attribution

Match Back / Fractional AllocationMerkle Solution

30

Our attribution approach is to shift away from linking a purchase to one single marketing activity and instead assess how various factors can influence it

Attribution is not limited to response and new business

Campaign Specific • (800) number• Unique URL• Key code

• Utilizes Media mix models to assess performance by medium and over time

Direct

(Cam

paign

-

Specif

ic)

Probabalistic

Attribution

Indirect (Campaign-

specific)

Fracti

onal

Alloca

tion

Performance

Campaign or medium specific

• Compares match-back rates of target vs. hold

out groups

• Utilizes business rules and logic to assess allocate a

portion of “credit” to various factors

Match Back / Fractional AllocationAttribution Point Of View

31

Spot TV budget

Corporate Goals and

Marketing Budget

DM budgetRadio budget

Online and search budget

Regional Focus

Channel and daypart mix

Weekly buys and flighting

Cost/purchase target

Audience selection

Offer/creative arbitration

GRP or cost/M targets

Contact strategy

Creative targeting/mix

Combined marketing

plan

Top-Down, Quantitative• Media mix modeling• Clear goals and consistent metrics• Considering all options at same time

Bottom-up, Qualitative

• Channel/Media specific silos• Specific goals may be unclear• Different metrics• Different planning process/systems

The Marketing Plan• Plans from each media brought together as

last step• Little cross-media coordination

Typical Approaches to Marketing Measurement

32

Agenda





33

Marketing dollars are shifting

34

Most companies have not addressed the marketing data implications

EmailEmail

SiteSite SocialSocial

MobileMobile SearchSearch

DisplayDisplayUGCUGC

35

Interactive data touch-points provide deep, new insights

Cust

omer

Val

ue

Customer Path

Low

High

P

D

D

P

P

WO

S

O

O

O

OW

W

WWW

WWO

O

S

S S

S

E

E EE

EE

E

E

E E

E

E

D P E SWOTraditional: Online:

Acquire Retain Maximize

Direct Mail Contact

Purchase

Website VisitEmail Response

Online Search Social ParticipationCall Center Contact

C

C

D

C

P

E

S

W

O

36

Identify customer behavior cues between buying cycles

• Click content in an email or website visit could lead to cross-sell / up-sell opportunities

Develop insights within and across media to drive better informed marketing decisions

• Leverage high-performing search keywords by customer segment in email subject lines and content

Enable move from reactive to proactive marketing• Identify dissatisfaction/churn indicators from

negative reviews, troubleshooting page visits, unsubscribes, etc

The Mobile Opportunity

• Over 86% of US population has at least one mobile device

• More than half (52%) of mobile subscribers use text messaging regularly

• 20% of mobile subscribers use web on their phone regularly

Sources: US Census 2008 EstimateNielsen Mobile Media- December 2008

37

Email ServicesDynamic Messenger Solution

Advanced Analytics & Reporting

Content Management

Data Management

Delivery Optimization

Dynamic Messenger APIs

Core Deployment Engine

Dynamic Messenger User Interface

Email Lists

Creative Assets

IO IOI

IO IOI

IO IOI

Custom Apps & Web SolutionsWeb AnalyticsDynamic

Content (DyCE)Subscriber

Management

Integration of multiple technology and process components to enable design, construction, delivery and analysis of email messages

38

Incorporating Interactive Elements into Consumer Database

A phased approach to integrating data

Customer DatabaseCustomer Database

Social CommerceSocial CommerceWeb ActivityWeb Activity Preference CenterPreference Center

Phase 3

EcommerceEcommerce

Email activityEmail activity

Opt-in DataOpt-in Data

Offline dataOffline data

DemographicsDemographics

Phase I

Program Activity 1Program Activity 1

Program Activity 2Program Activity 2

Wish listsWish lists

Online SurveysOnline Surveys

EventsEvents

Phase 2

39

Agenda



• Key Aspects of Merkle’s Retail Solution 20 minutes– Framework for integrated strategy, analytics and database– Technology approach– Enterprise Segmentation– Allocation Schemes– Interactive


40

Why retailers should do this?

Its all about maximizing relevance

• Retailers need to decipher today’s shoppers’ preferences, including:– Channels of purchase: Store, call center or web– Push Media of communications:

• Offline: catalog/ direct mail• Online: email, txt• Outbound calling

– Pull Media of communications: • SEO• Shopping websites• Social Networks

– Product mix: primary product categories, size and color– Seasonality of purchase: Holiday, Back-to-School or Spring

• Marketers need to use advanced technology and analytical methods to achieve better marketing results and show accountability

41

Contact Information

• Scott Cone– [email protected]

• Yoram Greener– [email protected]

• Najeeb Uddin– [email protected]

42

alterian june 2009 webinar addressing retail trends through an integrated approach by merkle

Business

retail trends

retail space

retail enterprise

retail vertical

retail strategy roadmap

minutes trends

specific retail modules

minutes summary