alterian june 2009 webinar addressing retail trends through an integrated approach by merkle
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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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• Key Aspects of Merkle’s Retail Solution 20 minutes
• Summary 5 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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• 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
• Summary 5 minutes
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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• 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
• Summary 5 minutes
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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• 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
• Summary 5 minutes
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
• 19% with Bachelors or higher
• 6.7
• 38%
• 50% married
• 33%
• 4.7 Years
• 17%<30 yrs; 15%>60yrs
• 29% with Bachelors or higher
• 7.7
• 48%
• 60% married
• 47%
• 5.6 Years
• 15%<30 yrs; 18%>60yrs
• 37% with Bachelors or higher
• 7.6
• 38%
• 58% married
• 41%
• 5.0 Years
• 6%<30 yrs; 45%>60yrs
• 44% with Bachelors or higher
• 8.9
• 18%
• 62% married
• 56%
• 7.0 Years
• 7%<30 yrs; 40%>60yrs
• 37% with Bachelors or higher
• 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
• 15.2% First Time Insured• 6.5% Provider A• 5.0% Provider B• 7.9% Provider C• 2.5% Provider D• 1.3% Provider E
• $887• $620
• $705
• 14.8% First Time Insured• 7.1% Provider A• 5.5% Provider B• 8.3% Provider C• 2.7% Provider D• 1.4% Provider E
• $850• $617
• $708
• 15.3% First Time Insured• 6.6% Provider A• 5.2% Provider B• 8.3% Provider C• 2.5% Provider D• 1.5% Provider E
• $871• $640
• $724
• 13.2% First Time Insured• 7.9% Provider A• 6.0% Provider B• 6.5% Provider C• 2.6% Provider D• 2.0% Provider E
• $887• $620
• $705
• 14.8% First Time Insured• 8.3% Provider A• 5.7% Provider B• 7.2% Provider C• 2.4% Provider D• 1.6% Provider E
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: Kristen@hotmail.com123 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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• 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
• Summary 5 minutes
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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• 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
• Summary 5 minutes
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
• Corporate Overview 5 minutes
• Trends in Retail Industry 5 minutes
• Key Aspects of Merkle’s Retail Solution 20 minutes– Framework for integrated strategy, analytics and database– Technology approach– Enterprise Segmentation– Allocation Schemes– Interactive
• Summary 5 minutes
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– scone@merkleinc.com
• Yoram Greener– ygreener@merkleinc.com
• Najeeb Uddin– nuddin@merkleinc.com
42
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