personalized offers: the cure for tired, ineffective ...€¦ · thank you for attending 32...

Personalized Offers: The Cure for Tired, Ineffective Promotions

Dr. Sean Coary, Saint Joseph’s UniversityGraeme McVie, Precima

Graeme McVie

VP & GM

Business Development

Precima

Sean Coary

Assistant Professor of

Food Marketing

Saint Joseph’s University

Today’s presenters

CONFIDENTIAL 2

The Present State of Trade Promotions

and Why It Needs to Change

Why Are Personalized Offers Both

Better and the Wave of the Future?

So What Should I Do?

Trade

Promotions

Personalized

Offers

Looking

Forward

01

02

03

Today’s discussion topics

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“You’re Special”

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“You’re Special”

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“You’re Special”

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Treat Me Like I’m Special

• Consumers have a desire to feel special

• Are we filling that need?

• Traditional trade promotions • Generic - For the masses

• Is this mass, generic approach optimal?

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Manufacturers: Are You Satisfied?

CONFIDENTIAL 8

Manufacturers: Are You Satisfied?

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State of Trade Promotions

• 66% of trade promotions do not break even

• 22% did not generate any sales lift

• Who suffers?• Manufacturers – Sunk cost?

• Retailers – Opportunity cost?

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What Do We Do?

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Compliance: Trust and Execution

Manufacturers have issues with putting together a good plan but not getting retailers to execute it as agreed upon.

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Greed or Logistics?

• Trade promotions can be complicated

• Analytics and evaluation of trade promotions• Struggle for both manufacturers and retailers

• Analytical tools and personnel issues

• Leads to “copy and repeat”

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Challenges Finding Qualified Personnel

Manufacturers have challenges finding qualified personnel who can use and understand existing solutions.

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There Has to Be a Better Way?

• Traditional trade promotions aren’t working well

• Coordination and personnel issues

• Follow the consumer

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Who Wants What?

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How Do We Do It?

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Looking Forward:

So What Should I Do?

03

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How should retailers and manufacturers

address these issues?

Stop Fix Slant

Relevance Incrementality Scale

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Heavy Promo

Promo at Right Time

Promote Less

Do Not Promote

How did my items in the weekly ad

perform?

Which promotions should I continue

executing and which should I stop?

StopStop non-performing promotions;

perform post-promotion analyses

CONFIDENTIAL 20

-60%

-40%

-20%

0%

20%

40%

60%

0% 10% 20% 30% 40% 50%

Revenue

Gross

Profits

% Lift

Impact of Different Discounts on Volume, Revenue & Profit

Volume

At 30%: Revenue turns negative

Discount

At 40%: overall Volume begins to level-off; Gross Profits have turned

negative

FixFix promotion mechanics to

improve performance

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Maintain for Overall Category Value

Maximize Promo Investment

Fix or StopMaintain for Best Customer Value

Value to Best Customers

Val

ue

to O

vera

ll C

ateg

ory

High

Low

HighLow

Coffee Example

Design promotions for loyal

shoppersSlant

Private label ground coffee

CONFIDENTIAL 22

$0

$3,000

$6,000

$9,000

$12,000

0% 10% 20% 30% 40% 50%$0

$3,000

$6,000

$9,000

$12,000

0% 10% 20% 30% 40% 50%

Low Value Customers

Secondary Customers

Priority Customers

At 40%: overall revenue begins to decrease

Sales $’s

Sales $’s at Different Discount Depths Overall and by Segment

All Customers

At 30%: priority customer revenue starts decreasing; low value customer

revenue increases

Discount

Discounts should be designed for

loyal shoppersSlant

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I have offers Which customers?

For this customer What content/offers?

Strategy, Process &

Analytics shift from

“limited offer bank” &

rules management…

…to ”total store offer

bank” and customer

level optimisation

Personalization efforts need to

evolveRelevance

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Price

All $1.9990% of Shoppers

Volume Sales GP$’s Delivery

Shelf

10% of Shoppers

Price

$1.89

$1.85

$1.95

$1.80

$1.75

$1.80

$1.65

$1.69

$1.79

$1.89

Delivery

email

app

paper

email

email

app

email

app

paper

app

Current Value

Potential Value

Intent

high low Defend & retain

high med Retain & grow

med high Grow

high low Defend & retain

high low Defend & retain

high med Retain & grow

med high Grow

high low Defend & retain

med high Grow

high low Defend & retain

+2.2% +2.3% +1.4%

Personalized pricing is possible Relevance

CONFIDENTIAL 25

How do I identify offers for each customer

that drive response and incremental sales?

How do I incorporate customer-driven

offers into the personalization process?

Thank You

Incremental Sales (Cross Sell/Up Sell)

Improve Category Penetration

Support Brand Objectives

Total Spend and Frequency

Driving both relevance and

profitability is essentialIncremental

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IncrementalOffer optimization delivers 100%

personalized prices/offers

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$5 off when you

spend more than $100

Offer Bank Content & Channel Bank

Paper

Web

Email

Each individual customer receives 100% personalized communication:

‒Content (Creative and Copy)

‒Offers (products, discounts, spend stretch levels, rewards, etc.)

‒Offer type combinations (Thank You, Basket Builder/Continuity, Up/Cross Sell, etc.)

‒Channel of delivery (paper, digital, mobile, social)

Need to build scalability into

funding and process

Shoppers

CPG Trade Promotions

CPG Consumer

PromotionsCPG Media

Retailer Catman Team

Agencies

TV, Print, etc…

3rd Party Partners

FSIs, Coupons,

etc…

In-store Trade

Promotions

Retailer Marketing

Team

Retailer Personalized

Offers

CPG Sales Team

Scale

CONFIDENTIAL 28

Supplier Collaboration

MerchandisingShopper

Marketing

Loyalty Programs

1-1.5X 2-3X 4-6X 5-8XROI

Collaboration delivers significant

personalization benefitsScale

CONFIDENTIAL 29

Stop non-performing promotions

Fix promotion mechanics

Design trade promotions for loyal shoppers

PromotionsA

Deliver personalized prices and personalized offers

to key shoppersPersonalizationB

Design scalable collaboration processes

Provide sufficient funding to drive significant sales

impact from personalization

ScalabilityC

Personalization delivers but needs

to be scalable

CONFIDENTIAL 30

Q&A

https://www.precima.com/content/poi-personalized-offers-the-cure-for-tired-ineffective-promotions

CONFIDENTIAL 31

Graeme McVieVP & GM of Business Development

Precima

gmcvie@precima.com

(301) 652-0694

@GraemeMcVie

@Precima

Sean CoaryAssistant Professor of Food Marketing

Saint Joseph’s University

scoary@sju.edu

(610) 660-2275

@ saintjosephs

Thank you for attending

CONFIDENTIAL 32

Personalized Offers: The Cure for Tired, Ineffective Promotions

Dr. Sean Coary, Saint Joseph’s UniversityGraeme McVie, Precima