Pam Lawson May 27, 2016

LCBO Customer Insights for Sale Customer Insights & CRM

Customer Insights Analytics

Capabilities

• In 1999, LCBO introduced Air Miles rewards as a value-added feature

• Highest penetration loyalty card in Ontario: 75% Air Miles Penetration

The Relationship

• 68% of Air Miles customers purchase at LCBO

• 4.6 Million collectors at LCBO that are Ontario residents.

• 50% of LCBO Customers have Air Miles:

• 54% Vintages, 53% Wines, 37% Beer, 42% Spirits

• Profile: GenX, families, boomers, seniors

• A household card

The Relationship

• Understand what products customers are purchasing, and where and when they’re purchasing them.

• Products and categories

• Stores and regions • Frequency

Air Miles Advantages

• Determine the value/cost of customers.

• Customer value

Air Miles Advantages

• Linkages to other consumer databases

• Demographics • Psychographics • Usage and attitude

studies

Air Miles Advantages

• More effective advertising and promotions through targeting

Air Miles Advantages

• Purchase Cycle • Affinity Analysis • Brand Switching • Top Shoppers • Market Customer

Analysis • Share within a Category • Surveys

Types of Analysis using Air Miles

Purchase Cycle

• Determining average length of time it takes for a customer to make a repeat purchase of the same product

• Usually calculated in days (i.e average/mean/mode # of days) • Helps determine the number of repeat customers vs. single visit customers

• This type of report takes a look at customers before, during, and after, a time period to find out whether a promotion/new brand/price change made an effect.

• Some customers shop in all three time intervals, while others shop only during one or two periods. (Venn diagrams are particularly useful here.)

A/M Customer Profile Previous Promo Post

The Lost X

Cherry-Pickers X

Bar-Stockers X X

Loyalists X X X

Won-Overs X X

Asleep-at-the-Wheel X X

Late-Risers X

The Lost

Late -Risers Cherry Pickers

Bar Stockers

Won-Overs

Brand Switching

(Lost, Loyal & New)

Loyalists

Category

• Products in an AM customer’s basket over a fixed period of time. • What else does a person who buys a particular product normally buys over time.

Affinity Analysis

• These reports usually conducted in conjunction with Brand Switching reports • Explores the story of shoppers who are Loyal, Lost, and New to particular product • What products are these people buying now?

Affinity Analysis/ Sourcing Reports

$3,646,617 $6,675,128

ABCDEF Revenue ABCDEF Non-Top ShoppersABCDEF Top Shoppers

$13

$79

$- $20 $40 $60 $80

$100

ABCDEF Non-TopShoppers

ABCDEF TopShoppers

ABCDEF Average R13 Spend Top Shoppers

For any product, set, subset, etc… we look at the mean spend over a time interval and those customers who spend more than that value are considered as ‘Top Shoppers’.

• Looking specifically at product /set/etc.. combinations • How many AM customers purchased these products together • This report shows the combinations of products purchased by AM collectors

• These reports show the popularity of products bought together. • It’s used to identify promotional operations and for selecting customers to target for email

campaigns

Market Basket &

Customer Analysis

Market Basket &

Customer Analysis

• This report determines how much spend customers allocate towards a subset of a larger set

• i.e. Vintages Releases compared to all of Vintages • Over time, patterns can emerge where spend in certain sets/subsets increase or

decrease

Share within a

Category

• Age • Gender* • Income • Education • Segment • Ethnicity • Engagement level

This information is available through data collected from LCBO surveys. * Air Miles is a household card

Profiling Customers

• Postal Code • Psyte Clusters

Loyalty One shares Postal Codes with LCBO once a year. Psyte HD clusters (Life stage segments by Postal Code) are available through Pitney Bowes.

Surveys

Surveys & POS Data

Examples Where do Top Beer Customers live?

Where do Top Beer Customers live? Surveys & POS Data

Examples

Thank you

May 27, 2016

LCBO PSM Trade Symposium

2.9M Air Miles Collectors are active at LCBO Demographics

17.2% 29.0%

19.7% 18.1%

15.9%

41-50 31-40 19-30

64+ 51-64

Age

Gender

Household with Teen

27.9%

Household with Child

26.2%

Single/Couple

10.5%

Gen Y

4.1% Senior

15.9%

Empty Nester 15.4%

Lifestage Segments

30.3% 30.2%

39.5% Female Other

Male

2.9M Air Miles Collectors are active at LCBO [cont’d]

Air Miles Program Engagement

17.2%

21.3%

9.4%

Mid

Premium

High

Brand Engagement

Dream vs. AM Cash

44.7% 4 - 6 Partners

23.8%

1 - 3 Partners

24.1% 7 - 9 Partners

7.4%

10+ Partners

Collector Tier

Partners Visited

72%

28%

1% 12% 87%

2.9M Air Miles Collectors are active at LCBO [cont’d]

Air Miles Channel Engagement

Contact Language

72% 28% 92% 44% 48%

Mailable Emailable Web Active

EN FR

8%

Mobility

There are some differences by Category

• Beer Collectors tend to be younger than Wine and Spirits Collectors

• Beer and Spirits Collectors tend to be Male • Wine Collectors tend to be Female

• Spirits and Wine Collectors have a longer tenure in the Air

Miles Program than Beer Collectors • Beer and Wine Collectors shop more Partners than Spirits

Collectors

Air Miles Collectors love to earn Air Miles at LCBO

57% Would select WINE with a BAM Offer

over another

Perceptions

58% Have purchased a BAM Offer in the

past

Participation

68% Air Miles

encourages them to collect more Miles

(Baseline: 59%)

Young Adults

We have created segments that Suppliers can leverage to target Collectors based on their engagement at LCBO

• Reward – Always looking for BAM Offers

• Premiumization – Upsell to more premium BAM Offer products

• Frequent Engagement – Target regularly to switch product through bonus

• Occasional Engagement – Target mainly during peak seasons

• Bonus Introduction - Engage with richer BAM Offers on New products

• Growth Potential – Engage with richer BAM Offers on established products

LCBO Collector penetration is very high based on LCBO locations

• Overall, 86% of LCBO Active Collectors live within a 5km radius of an LCBO location

• Top 5 location for Bonus Miles Issuance in

last 12M: 1. Hawkesbury (Store 83) 2. Ottawa (Store 624) 3. Toronto (Store 164) 4. Ottawa (Store 38) 5. Toronto (Store 10)

• This can help improve targeting for in-store tastings with BAM Offer products, and eCommerce BAM Offers

And geo-targeting helps to target based on penetration

• LCBO sees strong Active Collector Penetration in much of the downtown Toronto and Mississauga core (+65%) vs. Overall Air Miles program

• This data can be

combined with BAM Offer Engagement Model for email and DM campaigns to optimize targeting

So, how does a Supplier create a strong BAM offer?

Define the objective 1 Sales Margin Volume

Product Launches

Determine the offers that will change customer behaviour

2 Geo Location

AIR MILES Customer Profiles

Customer Segments

LCBO Engagement Model

TAR

GET

C

ON

TAC

T

AIR MILES Channels

LCBO Channels

Measure the impact and optimize future campaigns 3

Measure Optimize

Examples: Best Offers to drive Sales

Optimal offers:

33

Sales

ROI

Buy 2 Get 5 AM

Buy 2 Get 2 AM

Buy 4 Get 3 AM

Buy 1 Get 1 AM

Offers to Avoid | 1:1 ratio

+

+

- -

Buy 3 Get 4 AM

Offers to Test | Multiples Units

Objective: Sales Category: Beer (single cans)

Examples: Best Offers to drive Margin

Optimal offers:

34

Margin

ROI

Buy 1 Get 8 AM,

Buy 2 Get 25 AM

Buy 2 Get 15 AM

Buy 1 Get 4 AM

Buy 1 Get 10+ AM

Offers to Avoid | Overly rich (Same customer behaviour; Use for product trial offers)

+

+

- -

Buy 500ml Get 4 AM,

Buy 1L Get 10 AM

Offers to Test | Upsell (Move customers to

larger format)

Objective: Margin Category: Spirits (mid)