personalising the customer’s experience · customer segmentation communication strategy –...

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Personalising the © dunnhumby 2011 | confidential Personalising the customer’s experience Clive Humby Chairman, dunnhumby

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Page 1: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

Personalising the

© dunnhumby 2011 | confidential

Personalising the customer’s experience

Clive HumbyChairman, dunnhumby

Page 2: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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© dunnhumby 2011 | confidential

Page 3: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Clive Humby andEdwina Dunn

found dunnhumby1989�2 2001

dunnhumby / Tescocommercialise ClubCard insight

�140 2003

dunnhumbyUSA opens - Kroger

�250 1995�30

Tesco and dunnhumbylaunch ClubCard

�700 2007

dunnhumbyFrance opens - Casino

�1500+ 2010

© dunnhumby 2011 | confidential

Page 4: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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£350m+ revenue from 150+ clients

© dunnhumby 2011 | confidential

24 countries and growing

Europe, Asia, North America, South America

1500+ employees and growing

Page 5: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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dunnhumby’s “win win win” approach

Retailer Value Creation

Proposition: Grow Like for Like sales and Net Margin via better decisions throughout the business

Model: Private service team for retailer

Insights to Suppliers Media to suppliers

© dunnhumby 2011 | confidential

Proposition: Sell the unique customer data

asset to suppliers through customer reporting

and analysis service

Model: Collaborative 50:50 profit sharing

Proposition: Sell targeted communications

(Statement and interest mailings etc) and in

store media to suppliers

Model: Collaborative 50:50 profit sharing

More Relevant Customer Experience

Customer experience is improved; channel, promotions, products, prices and communications

Page 6: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

666

to help brands and organisations engage more completely and profitably with their customers

by developing customer based action plans built on

integrating “real-time” data

© dunnhumby 2011 | confidential

integrating “real-time” data insights, creativity and change capability

so delivering increased brand value to our clients

Page 7: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Customer Data

Customer Insight

Customer Management

Long Term Customer

Loyaltyenables...to

drive...

to grow...

Customer segmentation Communication strategy

– Retention

Increased Customer

Clubcard has enabled Tesco to know their customers

© dunnhumby 2011 | confidential

– Lifestage

– Value & Loyalty

– Lifestyles

– Retention

– Growth

– Win-back / prospecting

Business strategy

– Price

– Promotions

– Ranging

– Availability

Customer Lifetime Value

– Sales growth

Page 8: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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What do we need to understand?

AttitudesDrivers ofBehaviour

Behaviours Transactions Profit

Focus on profit leads to little

relevance, increasing issues of

Focus on attitudes is difficult to convert

into driving behaviour and profits

© dunnhumby 2011 | confidential

relevance, increasing issues of

customer churn and dissatisfaction

into driving behaviour and profits

Understand what customers want

Become more relevant

Keep customers engaged for longer, engender trust,

long term loyalty and drive value creation

Page 9: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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more information

more choices

exercising choice gets quicker and easier

Customers don’t get stolen …they walk

© dunnhumby 2011 | confidential

exercising choice gets quicker and easier

if you want to protect and enhance your brand value

your offer must be relevant and valued

Customers are now data savvy, they see clearly where you

fail to make the engagement relevant

Page 10: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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How do we achieve Relevance?

● What are the key attributes of the products you choose?

● What are your favourite purchase channels?

● When you buy

© dunnhumby 2011 | confidential

● Promotional Behaviour

● Clubcard Offers

● Clubs

Page 11: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Segmentation allows us to build this picture for millions of customers

LifestageApplication form, what they buy

Shopping

HabitsShare of shopping, Recency & frequency

LifestylesMotivations behind shopping behaviour

“You are what you eat”

Primary ChannelPreferred format (Supermarket, Express, On-line, Petrol)

Brand AdvocacyParticipation in extensions (Tesco.com, TPF, Baby Club, Wine club)

Promotional PromiscuityCherry picking deals, bulk buying to larder fill

ProfitabilityBrand choice, packaging preference, weight of purchase

© dunnhumby 2011 | confidential

eat”Baby Club, Wine club)

This is how our customers behave.

AttitudesDrivers of

BehaviourBehaviours Transactions Profit

Page 12: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Pareto is almost right in Grocery

Valuable

Premium

% active customers

%

sales

8% 34%

14% 31%loyal

© dunnhumby 2011 | confidential

Potential

Uncommitted

25% 22%

43% 11%

Lapsing 10% 2%

opportunity

lapsing

Page 13: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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this is a friend we know…

– she is a busy young lady

– she looks after her health and loves fresh produce

– she drives to the supermarket on a Saturday morning

– she reads Hello Magazine

© dunnhumby 2011 | confidential

we know 176m people around the Globe as well as we know Miss Jones

– she reads Hello Magazine

– she has a cat

– she doesn’t pay attention to the price of products

– she does look out for promotions

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1

2

3

4

lifestyles are built from “DNA profiles”

Miss Jones’s DNA Profile: a “time-poor, food-rich” customer

– 25,000 products are used to create a customer’s DNA

– we have a DNA profile for every single customer

© dunnhumby 2011 | confidential

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Page 15: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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We will talk to customers in different ways…

loyal opportunity newlapsed

quarterly statement

coupon at the till

© dunnhumby 2011 | confidential

local store mailings

clubs

thank you

trade driver home mover

slippage

win back

prospecting

welcome

FS

Promotional Flyers

Page 16: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Key levers for the retailer and CPG?

● Right mix of good prices & great promotions

● Right range of products on the shelf

● Successful New Product Developments

© dunnhumby 2011 | confidential

● Successful New Product Developments

● Good service in the store

● Relevant personal offers and rewards

● Reacting to changing customer needs

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What a bargain, I’ll

sssss ss ss ssss

sssss

Now what’s ss

sssssss sssss

ssss sssss

Gsssss sssss sss

ss

sssssssss ssssss

Promotions have different impacts on customers

© dunnhumby 2011 | confidential

Pssssss I ssss sss

ssss

sss sss ss I ssssss

ss

Psssssssss Wsss

ssssssssss

Page 18: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Promotions – what is the right mix & discount?

100

120

140

160

180

200

Cherry Pickers

Trialists

© dunnhumby 2011 | confidential

0

20

40

60

80

100

Full Price Upto 30% 30% to 40% 40%+

Trialists

Repertoire

Loyals

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� improved reach

� improved balance

More effective flyer promotions

Reward Anchor• Broad Appeal• Large Associated Sales• Medium Baskets

Incentive Anchor• Middle Appeal

© dunnhumby 2011 | confidential

� improved balance

� improved return

• Middle Appeal• Large Associated Sales• Medium Baskets

Low End Helper• Low End Appeal• Small Associated Sales• Medium Baskets

Page 20: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Optimised merchandising in cleaning products

© dunnhumby 2011 | confidential

increased facings of low end products at price sensitive stores

Sales increase +16%Units increase +48%

Page 21: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Retailers today… relevant communications

Loyalty

Themed Mailings Magazine

© dunnhumby 2011 | confidential

ClubsCoupons @ Till

Web & Internet

Page 22: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Clubs allow us to develop more in-depth customer relationships

In the UK we have 4 customer Clubs:

Baby & Toddler

Food

Healthy Living

World of Wine

Clubs provide relevant information and offers

© dunnhumby 2011 | confidential

Clubs provide relevant information and offers

Significant supplier interest

dunnhumby provide targeting and sourcing of offers

Give permission to engage more often

Customers who join Babyclub spend an additional 10% above

other customers having babies

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© dunnhumby 2011 | confidential

We can populate “My favourites”

from your store shopping

Increasing “click through” and reducing “abandoned” visits

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What’s changing

● Focus on protecting your loyal customers– Increased promotional activity across categories

– Trading down to Private Label or cheaper lines

● Promotional Activity– Some categories are 50%+ volume on promotion

– Surge in “Cherry Pickers”

– Educating consumers to look for deals, have we taught customers a new

© dunnhumby 2011 | confidential

– Educating consumers to look for deals, have we taught customers a new paradigm?

● Recognise huge “headroom” in trialists and repertoire shoppers

– NPD cycles are getting shorter

– Stop thinking “my customers” and “his customers”

– Most consumers have broad repertoires in most categories

● Develop annual communication plan for your brands and integrate with retailer trade plans

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... making data make sense ...

market

research

new product

analysis9

£800,000

£900,000

£1,000,000

£2,500,000

£3,000,000

Total Archers Aqua

Total Bacardi Breezer

Total Gordons Edge

Total Smirnoff Ice

Although category sales are very seasonal 23 week

pre v post sales remain stable at £16.5 millionLaunch of diet lemon

loyalty

measurement

promotion

analysis

using data insights with suppliers and vendors

© dunnhumby 2011 | confidential

tailored

analysis

The Shoptargeted

communicationrange analysis

media

planning +

evaluation

retailer / dunnhumby£0

£100,000

£200,000

£300,000

£400,000

£500,000

£600,000

£700,000

£800,000

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£500,000

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Total Smirnoff Ice

Total WKD

Other FABs

Total Category

© Copyright, dunnhumby 2003 — confidential

Bacardi Breezer

promotion

Cate

go

ry s

ale

s

Bra

nd

sale

s

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What your loyal customers are worth versus occasional users ?

© dunnhumby 2011 | confidential

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What are the right tactics to build the brand?

Brand

Share

Stimulate growth Protect Share

& encourage growth

Protect Share

& Reward

Stimulate growth

Encourage

Repeat Behaviour

Stimulate

Increased

© dunnhumby 2011 | confidential

Category

Usage

Stimulate growth Repeat Behaviour

Grow Brand & Category

Increased

Share of Wallet

Non Users Stimulate Trial Stimulate Trial

Page 28: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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What are the right tactics to build the brand?

Brand

Share

Stimulate growth Protect Share

& encourage growth

Protect Share

& Reward

Stimulate growth

Encourage

Repeat Behaviour

Stimulate

Increased

LOYALSLIGHT LOYALS

REPERTOIRE

© dunnhumby 2011 | confidential

Category

Usage

Stimulate growth Repeat Behaviour

Grow Brand & Category

Increased

Share of Wallet

Non Users Stimulate Trial Stimulate TrialOCCASSIONAL

REPERTOIRE

PROSPECTSNON USERS

DABBLER

Page 29: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Use different mechanics for different shoppers

Incre

asin

g lo

yalty

MEDIA PLAN

1 2 3

SH

OP

PE

R S

EG

ME

NT

PROTECT

GROW

© dunnhumby 2011 | confidential

Incre

asin

g lo

yalty

SH

OP

PE

R S

EG

ME

NT

ACQUIRE

REACTIVATE

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© dunnhumby 2011 | confidential

Page 31: Personalising the customer’s experience · Customer segmentation Communication strategy – Retention Increased Customer Clubcard has enabled Tesco to know their ... Baby Club,

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Summary

● We are in an age of real-time, in-depth insights &

targeted communication to consumers

● Consumers get “data”– They understand the loyalty “contract”…

– Relevant messages from their supermarket, Amazon, eBay etc.

– Are you being relevant to them?

© dunnhumby 2011 | confidential

– Are you being relevant to them?

● What are you doing to be more relevant?– With retailers as a partner you can understand the consumer

better

– We can engage customers through better promotions, range

and communications

– Do you use the data and show its value?

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© dunnhumby 2011 | confidential