Delivering Growth Through High Value Customerswebapps.iriworldwide.com/summit/b/Capture a Greater...

Delivering Growth Through High Value Customers

Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 2

Our Goals Today

Help you understand:

1. The impact that focusing on high-value-customers can have on growing your business

2. How we do it

3. How you can use it


Retail / CPG Markets Are Low Growth

Source: IRI POS FDMxC, excl tobacco

Annual Sale

s G

row

th

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Retail/CPG Revenue Growth


Much of The Growth is Going Online

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Retail/CPG Annual Sale

s G

row

th

Source: IRI POS FDMxC, excl tobacco; online growth from multiple sources

Online Grocery Sales Growth

Retail CPG Industry Growth


Areas of Non-Traditional Growth Disrupting the Industry

At Home

Away-from -Home

Spending on Food-at-Home vs. Away-from-Home

AWAY-FROM-HOME ONLINE GROCERY MEAL PLANNERS

…with revenues going to new competitors


Facing That Challenge, What Can You Do?

99.3% 99.0% 98.7% 98.6%

0%

20%

40%

60%

80%

100%

A B C D

HH Penetration1

When the pie isn’t growing, need to carve off a bigger piece

No new customers No new revenue

Grocery Chain

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Retail/CPG

1. Among grocery shoppers; Source: NCP

Annual Sale

s G

row

th


Opportunity: Share of Your Customers’ Wallet

0%

20%

40%

60%

80%

100%

Share of Wallet

$ ROM

You

Spend Among Your Own Shoppers in CPG Products

Avg. CPG $/HH = $3,400

Avg. Grocery Banner SOW = 15-20%

Leaves about 80-85% of HH spend, or $2800 per HH per year for you to go after

Share of Wallet


How Can You Do It? Customer-Centricity

Deeper Understanding

Focused (smarter) investment

More Relevant

Greater engagement


Impact of customer-centricity across industries

0.5

1.0

1.5

Customer-centric organizations are 15% more profitable

Source: WATC Consulting AG, 2015. “The Impact of Customer Centricity on Profitability”

43%

15%

-34%

-40%

-20%

0%

20%

40%

60%

Customer-centric businesses return more to shareholders

Profitability Rate

1.0

1.15x

Total Return 2007-2012

Non-customer-centric

businesses

Customer-centric

businesses Customer Experience

Leaders

S&P500 Index

Customer Experience Laggards

Source: Forrester Customer Experience Index


How Do We Get There?

Guiding Principles:

Not all customer are created equal

Look below the averages

Focus on the customers who can drive your growth

Who are they, and how can I find them?


Not all customers are created equal

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

% o

f sale

s

% of customers

Category Customer Value Total Market Spend

0%

20%

40%

60%

80%

100%

20%

62%

55%

% of customers

% of sales

Source: NCP


Top Households in the Category Spend Significantly More

$78 $60

$77 $54

$181 $149

$316

$215

$0

$50

$100

$150

$200

$250

$300

$350

Cat A Cat B Cat C Cat D

Category Spend per HH Avg. vs. Most Valuable HHs

20% biggest spender HHs

Avg. HH

Source: NCP

Category $ per HH per Year


But I Already Know Who My Most Valuable Customers Are


You could focus on your best customers…

SOW

$91

$131

$59

$100

$63

$118

$0

$20

$40

$60

$80

$100

$120

$140

Category 1

Retailer Best

Market Best

Retailer Best

Market Best

Category 2 Category 3

Retailer Best

Market Best

Total $/HH

Source: NCP

…but the most

valuable households

in the market on

average spend more

than your most

valuable customers


…and you may miss them, because many of the best market customers aren’t your best customers

0%

20%

40%

60%

80%

100% Your top customers & top market customers

Top market customers who aren’t your top

All your other customers

13%

20%

67%

% of a retailers’ customers

Source: NCP


…and even among your best customers, you’re probably still only capturing about 50% of their wallet

52% 54% 46%

0%

20%

40%

60%

80%

100% Share of wallet among retailers’ best customers1

1. Best customers are largest spending 20% at each retailer; Source: NCP

Retailer

Speclty Grocery Club


The Opportunity

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

ROM

Avg. HH

Your Best

SOW

ROM ROM

Mkt Best

CPG Spend/

HH

• Biggest spenders in the market are worth significantly more

• Highest spenders in the market spend on average more than your best

• Many of the best customers in the market are not your top customers


What Does It Get You?

IRI studied share of wallet among top buyers • How well do retailers do? • Does it drive incremental growth?

Steps:

• Look at grocery divisions in regions across chains, across the US

• Identify highest total-market CPG spenders

• Compare Divisions based on how well they capture wallet share with those highest total market spenders

• Compare sales growth by Division


What Does It Get You? Growth Across the Division

-

0.5

1.0

1.5

2.0

2.5

x

2.3x

Top 20% SOW Divs

YOY Growth Among Grocery Divisions by Mkt-HVC Share of Wallet Performance

All Other

Total CPG sales, mix of 30 grocery banner divisions; Source: NCP, IRI POS

Reven

ue G

ro

wth

In

dex


But Decisions are Made at the Store Level


What Does It Get You? Growth Across Stores Category Sales Growth by Store

1. Identify highest total-market category spenders shopping in each store

2. Estimate the store’s share of wallet with those HVCs

3. Compare stores based on how well they capture wallet share with those highest total market spenders

4. Compare category sales growth by store group


What Does It Get You? Growth Across Stores

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0C

at

Sale

s G

ro

wth

Top 20% SOW Stores

All Other Stores

1.8x

Category Sales Growth by Store

Category sales growth at best 20% of “wallet share” stores was nearly 2x higher than avg. of all other stores

x


What Does It Get You? Growth in Market Value

31% 28%

23%

12%

-6%

-24%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Public Grocery Company Performance by Mkt-HVC Share of Wallet

Top 1/3 HVC Share of Wallet

Middle 1/3 HVC Share of Wallet

Bottom 1/3 HVC Share of Wallet

Avg. M-HVC SOW

YOY mkt cap growth

Source: public company records, NCP. Includes 12 public CPG retailers

Public CPG Retailer Group


How?

1. Identify

2. Understand

3. Activate


Step 1. Identify: IRI ProScores models use data from clients and the market to predict total market spend at the HH-level

HH Total Mkt Shampoo $

Client SOW Decile

Mary $50 2

Joe $65 3

3rd party integration

ProScores Modeling Factory

Library of 40k+ variables

Competitive Intensity

Store Attributes

HH Demographics HH Total Market Spend

HH Transaction/FSP data

Trade Area Attributes


Step 1. Identify: We now have a total market spend (and SOW) estimate for every customer in your database at the HH-level

HH Total Mkt Shampoo $

Client SOW Decile

Mary $50 2

Joe $65 3


Step 1. Identify: Store-Level Opportunity

Grow mix Grow mix & spend

Maintain Grow spend

WALLET SHARE INDEX

SH

OP

PE

R M

IX I

ND

EX

(Attracting HVC HHs)

(Converting HVC HHs) Store Index Calculation: • HCV Share Index: Calculate index of category T20 SOW at your store vs. the average SOW for all stores • HVC Shopper Mix = Index of your store mix of T20 Shoppers vs. average of for all stores

• Household performance data enables identification of store-level opportunities for growth

HVC = Top 20% (T20) of Total Market Product Buying HHs


By region, market type or division, we can identify high and low performing stores

Example: Division A Stores’ Mkt-HVC Share Index & Shopper Mix

WALLET SHARE INDEX

SH

OP

PE

R M

IX I

ND

EX

(Attracting HVC HHs)

(Converting HVC HHs)


Step 2. Understand Suite of Tools and Analyses to Harness HH Value


Step 2. Understand: How do more valuable customers shop and engage the store differently?

9% 8%

17% 16%

13% 16%

40% 31%

17% 21%

5% 8%

0%

20%

40%

60%

80%

100%

Stock up

Big Shop

Add on

Fill in

Quick

Special

Trip Mix Example Most Valuable Market Spenders vs. Average

Average Most Valuable


Example: Identify Brands With Untapped Growth Potential Among the Most Valuable Customers

T20 HVC Total Market Penetration

T20 HVC per-HH Competitive Spend Gap

T20 HVC per-HH Spend Gap

(Your Spend per T20 Buyer – Compet

Spend per T20 Buyer)

T20 HVC customers spend ~$15 more per HH on Starbucks ground coffee at competitor than with you


Step 3. Activate

• We know who the High Value Customers (HVC) are

• We have estimated the share of wallet of our HVC’s

• We understand where their opportunities are HVC

• The challenge is to choose the best activation opportunities

• The solution is develop a personalization architecture to effectively activate your HVC’s


Personalization Engine is used to find where the greatest opportunities lie with your HVC’s

HVC’S Pasta spend

TM pasta spend

Pasta SOW

Pasta Oppty.

Juice Spend

TM Juice spend

Juice SOW

Juice Oppty

…

Kelly $63 $100 63% $37 $10 $50 20% $40 …

Helene $30 $80 38% $50 $25 $35 71% $10 …

Diego $75 $150 50% $75 $30 $50 60% $20 …

Mark $15 $25 60% $10 $20 $40 50% $20 …

Pasta is the best opportunity to grow Helene’s & Diego’s value because a. The opportunity is high and b. Relatively low share of wallet


Collaborate with your supplier partners to develop compelling content and the most appropriate offers

HVC’S Pasta Brands – Likelihood of Purchase

Barilla De Cecco Private Label

Helene High Low Medium

Diego Low Low High

Identify the brand or attributes that best meet the

needs of your shoppers

Helene’s Offer

Ingredients Barilla Fettuccini Barilla Basil Pesto Fresh Kale Hierloom Tomatoes Pine Nuts

Offer Order the meal

and try our Basil Pesto for free

Meal Solution from


Create integrated marketing communications across retailer-owned channels to deliver those offers

ProScores Use Cases

ACTIVATION CHANNELS

Plan, target and activate across the digital eco-

system

Create more targeted email

campaigns

Improve direct mail ROI via

targeting

Email Direct Mail Digital Mobile

Deliver relevant and timely

offers

POS

One-to-one offers,

delivered in the store


Measure the short-term, and long-term, impacts of your communications to your HVC’s

0

1

2

3

4

5

6

7

8

P-3

P-1 P1

P3

P5

P7

P9

P11

P13

P15

P17

P19

P21

P23

P25

P27

P29

P31

P33

P35

P37

P39

P41

P43

P45

P47

P49

P51

Th

ou

san

ds

New Product Trip Conversion

Contact Grp.

Holdout Grp.

1 Week Time Periods

Promotion period

178%

308%

0%

100%

200%

300%

400%

$0.00

$0.50

$1.00

$1.50

8-week Promo 52-week Impact

Short Term Long Term ROAS

Incremental $’s per HVC

Focusing on the best opportunities with your HVC’s can lead to long term performance gains


Summary

• Retailers are facing growth challenges from multiple directions

• Increasing your share of wallet with your High Value Customers can help you grow sales 2x+ faster than your competition

• The core steps to growing wallet share with your HVC’s

• Identify who the HVC’s are and estimate your share of wallet

• Understand the opportunity you have with your HVC’s

• Activate those HVC’s thru a multi-channel, structured approach

Questions?

Thank You!

For more information:

Web Fletcher [email protected]

Eric Winters

[email protected]

Delivering Growth Through High Value Customerswebapps.iriworldwide.com/summit/b/Capture a Greater...

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