Merging Online & Offline to Deliver Omni-channel Experiences: A Journey from Measurement to Merchandising to Management

Michael KahnCEOPerformics

Chris DuncanVice President, Strategic MarketingKohl’s

PerformicsA performance marketing agency network focused on the relentless pursuit of results

Kohl’sA leading specialty

department store focused on

inspiring and empowering

families to lead fulfilled lives

The digital of everything is driving this retail journey

Executive Summary

The evolution and revolution required to master this journey is evergreen and relentless

Mastery will be built on data, measurement, platforms and technology…strategic infrastructure to drive strategic management and engagement across channels, screens and platforms

An Agency Perspective:Our Omni-Channel Journey

Performics Journey1998Performics launches network to drive online sales for catalogers

2001Performics adds paid search as distribution channel

2003Performics adds organic search as distribution channel

2009Performics adds social & display as distribution channels

2011Analytics practice evolves to address cross channel needs (search to display and social)

Biddable Media Scale& Efficiency

Technology & Platform Integration

Data-DrivenContent &

Optimization

2015

Attribution

Media Mix

DMP

Performics Omni-Channel Evolution

2012 - 13Mobile reaches critical mass: strategy, optimization and measurement focus on cross channel and online – offline dimensions

2005Performics initiates analytics build out focused on clicksteam

How Do We Avoid

Data Paralysis?

How Do We Create Fully Connected

Experiences?

Questions Our Clients Are Asking

How Do We Better Understand Consumers?

NON-BUYERS BUYERSacquisition of retention of

enjoy

aware

buy

unaware consider

Ultimately, How Do We Win in the Decision Point Battleground?

Changing Consumer Behavior Driving Omni-Channel Demands

More Touch-points, Channels & Devices than Ever Before . . .

StimulusAwareness

TV, OOH, Display

Zero Moment of

Truth (ZMOT)Decision

before Store

Search, Social, CSE

First Moment of Truth (FMOT)In-Store

Product Placement, Packaging,

Signage

Source: Google/Shopper Sciences, Zero Moment of Truth Macro Study (N=5,003)

72% said physical stores are important in shopping

Compared with 67% who rated the Internet similarly

73% people research online, then buy in-store

PwC, Total Retail 2014 Survey

Physical & Virtual Shopping have Merged . . .

With Mobile at the Center . . .

Source: Google/IPSOS (May 2014)

Marketers Working To Keep Pace

Marketers Agree: Omnichannel is Key

• As consumers bounce from device to device, brands are trying to figure out how to track them

• 67% of marketers state that integrating all marketing activities across channels is a main goal

Econsultancy Cross-Channel Marketing Report 2014

But this Doesn’t Mean Marketers are Delivering It

Econsultancy Cross-Channel Marketing Report 2014

Major barriers to implementingan omni-channel approach include:

Lack of appropriate tools/tech

Available media options not optimized

Lack of addressable data sources

Substantive Obstacles To Be Solved For

Elevating Our Practice for Omni-Channel Success

Uncovering Intent

Planning for a Digitally-Bridged Store Future

Digital Maturity Mapping

Focusing on the data that matters

Searches for store increase

by 33%

Average online sale $45

Find her where she’s active

Fall campaign ads drive 9 million impressions

Women aged 19-29 value price over brand

1,209 active SKUs on display

Recent searches

Coupon websiteLeather jacket customer review Top fall trends for 2014

Data that uncovers consumer intentThe largest marketing variable. It shapes

queries, dictates paths-to-purchase & mediates meaningful inter-actions with brands regardless of channel, media or content type.

Our Work To Uncover Intent

The process of identifying intent & applying that insight toward improving brand engagement to drive measureable performance

• Primary research• Brandwatch• SocialTools• Benchtools• eMarketer• Forrester Research

Initial Intent Hypothesis

Planning & Insights

Refined Intent Hypothesis

Analytics + Planning & Insights

Testing, Learning, Scaling

Analytics

Pla

nA

lyti

cs

Outp

uts

Sourc

es

of

Data

• Glance• Google Analytics• CRM Data• YouTube Analytics• Bluekai• Axiom

• Client Brief• Draft KPIs• Tech & Data Audit• Content Audit

• Digital Maturity Plan• CX Loop• Audience Segmentation• Learning Agenda• Organizing Idea• Brand Experience Map

• Performance Strategy, Activation & Optimization

Process

Digital Maturity Mapping: Four Strategic, Data Infused Areas

Business Intelligence

Fully Attributed Media

Audience-centric Advertising

Predictive Analytics

Deep integration with CRM and DMP systems creates hyper-relevant customer experiences

Maximize return & scale through performance budget allocation based on optimal spending

scenarios

Aligning with seasonality, new arrivals & promotional events maximizes investment

Unified reporting provides omni-channel single point of view of customers

Digital Maturity Mapping: Elevational Roadmap

Fully Attributed Assets

Business IntelligenceMulti-Channel

Reporting

Attribution & Budget Planning

Flighting Strategy Based on Attribution Findings &

Forecasts

CRM Enabled Search

Multi-Touch Attribution

Audience-centric Media

Predictive Analytics

Mobile Search

Geo-Specific & On-Site User Experience

GDN

Call Metrics TrackingNew Customer

Attribution

Site Design and Conversion

Optimization

Integrate SEM + SEO Reporting

Local PLA Extension

YouTube TrueView

Shared Media Plans

Report Automation

Channel Specific Regression Models

Dynamic Media & Content Delivery

Customer Decision Engines

Basics Competitive Standard Market Leading

Personalized Experiences at Scale

All Channel Valuation

Media Mix Driven

Activation

Business IntelligenceAutomated omni-channel reporting

provides +50% reduction in

reports generation

Predictive AnalyticsPredicating demand

based on seasonality drives

+15% margin, -8% spend in paid search

Fully Attributed MediaCross-channel budget allocation finds thatSearch + display together drive 80% more conversions

Audience-centric AdvertisingUsing CRM to create hyper-relevant experiences wins2X conversion increase

Digital Maturity Mapping in Action

Tech

Retail

Tech

Tech

• Mobile drove significant traffic to stores• 3.1X lift in-store visits over control audience

(unexposed group)• 2.3X lift of the exposed audience vs. the general

population (consumers who may shop at retailer)

Planning for a Digitally-Bridged Store Future

We tracked store visitations as a control vs. exposed context to prove out a campaign’s true ROI Capture device surrounding store

More and more shoppers doing both

Entrance Checkout

Endcaps Category

Walmart: Physical Gets DigitalIn-store Shopping App

Allow for in-person pickups

Centers in close customer proximity

Amazon: Digital Gets Physical

In Q1 2015, opened a pickup and drop-off location on the campus of Purdue UniversityStudents could order everything from textbooks to mac and cheese to pickup

A Retailer Perspective:Our Omni-Channel Journey

1999Kohls.com founded

2012Launch of first mobile apps

2012Launch in-store WiFi

2013Re-platform of Kohls.com

2014Launch Ship from Store

2014Launch BOPUS test

2014New mobile experiences – t.com & mobile apps

2015Full chain roll out of BOPUS

2015Launch multi-touch attribution

Kohl’s Omni-Channel Evolution

Omni-channel planning

Omni-Channel Measurement

Consumers, devices and the changing media

landscape have added complexity

Internal AlignmentBuilding

consensus and proving what we think to be true

MerchandisingMarketing Marketing’s success and overall efforts

Omnichannel ManagementCombining measurement, alignment, and execution to become great

Today, Our Key Challenges Are . . .

Challenge #1: Measurement is More Complicated than Ever

Channel (both marketing & shopping) performance is measured separately, causing gaps in visibility and limiting optimization

The changing technology landscape makes ongoing scrutiny and internal education necessary to stay ahead

Media is managed by diverse partners without a completely neutral source to measure success and develop strategy

MEASUREMENT GAPS

A cross-channel organization requires more resources and a different type of experience that may not be available

MEDIA SILOS LIMITED RESOURCES

RAPID TECH ADVANCEMENT

Marketers Agree: Marketing Analytics are Contributing Less

• Contribution from marketing analytics has stayed relatively flat over the last 3 years

• This year, CMOs say analytics are actually helping them less now than they were in 2012

• Technology and data should provide ways for us to solve this

More Mobile, More Problems

Cross-Device LocationAccuracy

Offline & OnlineAttribution

Mobile

Targeting Privacy

Mobile Is Still Not Integrated

Econsultancy Cross-Channel Marketing Report 2014

Measurement Approach A: Customer Matched Analysis• Customers who engage with us digitally that we can track vs. similar customers

that don't

Positive

Simple to execute & measure

Negative

Not a complete picture; hard to make media decisions. Limited by what we can actually track.

Summary

Helps us directionally understand what digital is doing for our offline business

Measurement Approach B: Market Test v. Control• Increase spend in digital channels in distinct DMAs & measure vs. similar DMAs

where we didn’t increase spend

Positive

Helps understand how high is high, and how much impact we can truly have on our store business

Negative

Doesn’t help us understand customer behavior or media impacts

Summary

Simple view but it satisfies the most important stakeholders (CFO, CMO)

Measurement Approach C: Multi-Touch Attribution• Accounting for ALL media touch-points & ALL customer sales (where we’re

headed)

Positive

Best picture of how customers engage with media & accurately gives credit to all channels. Enables quick decisions on specific KPIs.

Negative

Very hard to setup & track. Process has been 18 months+ in the making. Reliant on tracking of customers

Summary

Go-forward best practice for most omni-channel brands

Challenge #2: Internal Alignment & Merchandising

• Market ourselves• Showcase results• Build trust

BUILD TRUST INTERNAL EDUCATION

• Explain to teams• Overcome skeptics• Prove what people

already know is true

REALLOCATE BUDGETS

• Take from print• Explain why this is better

Major barriers omni-channel success include:

Managing offers across campaigns

Resources & coordination across departments/brands

Adequate staff, IT, data support

Marketers Agree: Omni-Channel is Difficult

• However, it is worthless if we don’t put it to good use by:

– Scaling it– Effectively

managing at the speed of retail

• What we’re building, and the analytics & data that we manage will make us great

Importance of Omni-Channel Management

+80% of Online Purchases are multi-touch conversions(Either same marketing channel or multiple channels)

of Online Purchases are multi-channel conversions(Result of customer interacting with multiple channels, i.e. search/affiliate/social)

+70%

How Kohl’s is Approaching Omnichannel Management

Aligned Priorities

• All parties must have the same goals:

• e.g. managing spend to maximize sales/margin is different than maximizing to drive new customers

The speed at which consumers change & interact with media happens so fast. What took place last month may change this month.

Willingness to Change

• Soliciting feedback from partners, customers & associates

• They can help you understand & get ahead of the changes

Strong Feedback

Kohl’s Omni-Channel Success

The digital of everything is driving this retail journey

Executive Summary

The evolution and revolution required to master this journey is evergreen and relentless

Mastery will be built on data, measurement, platforms and technology…strategic infrastructure to drive strategic management and engagement across channels, screens and platforms

Questions?

Thank You!Michael KahnGlobal CEO, PerformicsMichael.Kahn@Performics.com

Chris DuncanVP, Strategic Marketing, Kohl’sChristopher.Duncan@Kohls.com