INTEGRATING ADDRESSABILITY ACROSS MARKETING, MERCHANDISING, AND CHANNEL OPERATIONS
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The Fundamental Hypothesis
By treating customers better, they will buy more from you.
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself” – Peter Drucker
“You’ve got to start with the customer experience and work back toward the technology – not the other way around” – Steve Jobs
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Better means…
UNIQUE INDIVIDUALIZED TREATMENT
ALIGNED WITH EXPECTATIONS
ANSWERS MY NEEDS
Each customer is unique with different attributes and characteristics. By acknowledging those differences and treating them accordingly, the customer feels special.
Each customer has certain expectations that when met or exceeded, drives resonance and outcomes that are both emotional and durable
The brand has what the customer wants, at the price that they want. The brand knows the individual customer, anticipates his/her needs, knows what they like, educates them, introduces them to things that will be of interest.
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By treating customers better, they will buy more from you.
Larger purchases
Preference over
competitors
Greater brand loyalty
More frequent shopping
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Customer experience drives competitive advantage
Media Targeting
Personalization
Touch point Integration
Distribution
Product
Service
Ope
ratin
g M
odel
Cha
nge
Min
imal
Si
gnifi
cant
Tr
ansf
orm
ativ
e Com
petitive Advantage
Average Above Average
Market Disrupting
What Does Good Look Like?
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Creating a framework for transformation
1. Enterprise segmentation, including value and lifecycle dimensions, forms the foundation
Experience Delivery
Financial Management
Customer Strategy
4. Financial management informs customer strategy and experience delivery decisions as a closed loop process
2. Strategies are translated into actionable media and channel plans (web/stores), resulting in highly personalized experiences
Portfolio Strategy
Segment Strategy Program Strategy
3. Experience delivery performance is continuously attributed across media and channels driving optimized budget allocation
Media Planning Channel/Offer Planning
Targeting & Personalization
Measurement & Attribution
Budget Allocation
Org
aniza
tion,
Ope
ratio
ns, T
echn
olog
y
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Scenario-What good looks like
Maria is an existing customer in the “Young Professionals/High Value” segment
She receives an email from the retailer notifying her of new Spring styles available in stores and on-line
She clicks through the email to the retailer’s website, and is directed to a personalized landing page where she browses new merchandise
The next day, while she is on Facebook she is exposed to a display ad from the retailer featuring selected styles
Maria decides to visit a nearby store and check out the new merchandise
The entire event stream associated with Maria’s purchase is stored and the appropriate credit is allocated to each touch point
Maria ends up purchasing a new jacket along with a couple of tops and opts in for e-receipts
Maria tweets about her purchase after arriving home
Maria has opted in to receive special offers through the retailer’s mobile app, so as she walks into the store she immediately receives an offer
© 2014 Merkle. All Rights Reserved. Confidential 9
Scenario-What good looks like
Maria is an existing customer in the “Young Professionals/High Value” segment
She receives an email from the retailer notifying her of new Spring styles available in stores and on-line
She clicks through the email to the retailer’s website, and is directed to a personalized landing page where she browses new merchandise
The next day, while she is on Facebook she is exposed to a display ad from the retailer featuring selected styles
Maria decides to visit a nearby store and check out the new merchandise
The entire event stream associated with Maria’s purchase is stored and the appropriate credit is allocated to each touch point
Maria ends up purchasing a new jacket along with a couple of tops and opts in for e-receipts
Maria tweets about her purchase after arriving home
Maria has opted in to receive special offers through the retailer’s mobile app, so as she walks into the store she immediately receives an offer
Enablers Advanced segmentation combining: • 1st party transactional and behavioral data • Insight into a customer’s lifetime value • 3rd party demographic, lifestyle, and attitudinal
data Impact Increased customer engagement and higher lifetime value resulting from treating the customer in a more relevant, personalized manner
Enablers • Email engagement analytics designed to
optimize cadence, timing and drivers of contact
• Analytics driving relevant product/category recommendations
Impact Higher click-through and conversion rates both in-stores and on-line
Enablers Personalization engine enabling dynamic serving of landing pages with product recommendations, content and messaging relevant to the customer segment Impact Increased conversion rates and increased average transaction sizes
Enablers • Retailer’s customer segments used to
drive custom audience creation via dsp’s and social media (facebook/twitter) for remarketing
• Advanced analytics drives personalized recommendations and content
Impact Increased engagement/higher average transaction sizes both on-line and in stores
Enablers • Predictive modeling and recommendation engine
driving personalized and relevant offers/content to the mobile device
• Integration of predictive analytics engine to mobile infrastructure in-store
Impact Increased in-store transaction sizes resulting from driving relevant messaging to mobile-engaged customers
Enablers • Advanced analytics to determine what is the
most relevant merchandise mix for high value customers in specific stores/on-line and to ensure that the retailer is in stock
• Store associates trained to optimize engagement with customers
Impact Increased transaction sizes/increased customer loyalty and engagement and advocacy
Enablers • Technology providing retailers with a holistic view of a
customer’s event stream across all on-line/off-line touch points
• Modeled attribution enables correct allocation of credit to touch points resulting in conversion on-line or in stores
Impact Accurate understanding of what marketing investments drive conversion by customer segment; future investment by segment optimized to maximize conversion in store and on-line
Organizational Enablement
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Integrated Structure – Decision making governance
Channel Objectives
Product Objectives
In well run organizations, handling scope overlap is clear
Channel Objectives
Product Objectives
New handling rules must be defined
Customer Objectives
Old Way Key decisions between product
and channel
New Way Increased focus on customer
objectives
Adding customer objectives as a key priority has major implications for how decisions are made and groups integrate; Failing to recognize creates distraction and drains profits
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Most significant customer initiatives are driven from the top…
Source: Customer Centric Transformation 2013 Research study
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Product Design
Marketing
Merchandising
Supply Chain
Store Operations
Leading Practices • Incorporate insights into
emerging needs, expectations and motivations of target segments into the design process
• Enhance segment understanding with insights into overall market trends
Leading Practices • Define and execute segment-
specific engagement plans (optimal channels, platforms by segment)
• Incorporate relevant product recommendations into messaging
• Testing and measurement should drive optimal media and channel spending by segment
Leading Practices • Score products based on
relevance to high value segments in specific store/on-line
• Optimize assortment and space plans to maximize value with key segments
• Pricing and promotion analytics should account for impact on top segment demand
Leading Practices • Account for product relevance
to top segments when determining inventory policies
• Design and implement processes and systems enabled to react to demand signals seamlessly across channels
Leading Practices • Incorporate 1st and 3rd party
segment insights into store design/re-sets
• Ensure that store associates are trained to maximize the in-store customer touch point
• Retailer/Consumer Product Company collaboration around in-store compliance
Enabling the Experience Organizationally
Challenges & Strategies
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Amidst all of this scale and automation, the addressability of channels and media is increasing every day
Addressability uses customer data (anonymous or identified) to increase the targetability and relevance of marketing impressions and experiences
The Addressability Spectrum
Anonymous Partially Identified Identified Identification:
Knowledge: Unknown Some Knowledge Well Known
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But in reality, optimizing behavior has become increasingly complicated as channels and media options grow
TV & Radio
Display
Social
Search
Web
Store
Care
Phone
Affiliate
Position Expectation Product Price
Service Sales
Purchase Promotion Experience Customization
Med
ia
Cha
nnel
s
Brand Value proposition
Customer portfolio
How do we operationalize this complexity?
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Challenges: Organizational Alignment
Chief Merchant
GMM
Buyers Planners
VP, Supply Chain
SVP Stores
VP, Region
District Manager
District Manager
VP, Region
CMO
CRM
Digital Marketing
Marketing Analytics
Brand
E-Commerce
Experience Design GMM
CFO
CIO Accounting & Control
Who owns the customer experience?
According to a 2013 Retail Systems Research survey, the top 3 Retail executives identified as customer experience owners were: •CMO (43%) •CEO (38%) •VP Stores (35%)
Bingham Research 2014
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Organizational Alignment: Guiding Principles
Implement a shared measurement framework oriented around customer value
Centralize customer insights and analytics functions
Institute a “Chief Customer Experience Officer” role
Ensure collaboration with vendors/retail partners around customer value goals
Align incentives to customer experience
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Challenges: Data and Technology
RMS
Marketing Insights
Merchandising Insights
Store Operations Insights
Supply Chain Insights
EDW E-Comm
Stores GL CRM
Social Print
DM &EM
Display
Search TV/Video
Mobile
Site
Product
LTV Segment
Demographics Life Events
Call center
Meetings
Disparate systems and data sources
Insights not shared across organization
Fragmented view of customer behavior
According to a 2013 Retail Systems Research survey, the internal owners of customer data were identified to be: • Marketing (61%) • IT (34%) • Customer Service/Call
Center(23%)
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Data and Technology: Guiding Principles
• Synchronize data sources • Harmonize cross-
functional systems and processes
• Centralize Analytics & Insights functions
• Integrate data from disparate customer touch points into longitudinal view
Disparate systems and data sources
Insights not shared across organization
Fragmented view of customer behavior
© 2014 Merkle. All Rights Reserved. Confidential 21
Customer event stream-Foundation for optimized customer experience
User ID Date Time Event ID Event Desc
1234 2/1/2012 DM437 DM Delivered
1234 2/2/2012 3:05 pm DI9076 Display Impression
1234 2/2/2012 3:06 pm CC068 Inbound Call Center
1234 2/2/2012 5:05 pm EM087 Sent Email
1234 2/2/2012 9:30 pm EM088 Opened Email
1234 2/2/2012 9:30 pm EM089 Clicked Email
1234 2/6/2012 9:00 pm PS674 Clicks Paid Search
1234 2/6/2012 9:15 pm Q8740 Completes Quote
Consumer Event Table
Event Meta Data
Event ID EM088
Creative A2346 Insurance you can count on
Offer OI92365 $14/Mth for $25K Coverage
Product P978 Term Life
DM Delivered 2/1/2012
Shown Display Ad 2/2/12 3:05pm
Calls 800# Requests Info and gives email 2/2/12 3:06 pm
Clicks Branded Paid Search Ad 2/6/12 9:00 pm
Sent Email 2/2/12 5:05pm Opens Email 2/2/12 9:30 pm
Completes quote request on site 2/6/212 9:15 pm
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Emerging Trend: Centralized Analytics & Insights Hubs
Roadmap
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We have identified six key building blocks that must be addressed by organizations pursuing customer centric business strategy
Business strategy
alignment
Leadership alignment
Integrated structure
Job design and skills
Linked interactions and
processes
Complementary incentives
Leadership and Organization-Top Six Things to Get Right
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Evolving the Capability and Operating Model together as a key driver of success
Operating Model
Infrastructure focus, basic capabilities
Single campaign, simple data, little offer and
customer customization
Basic multi-channel, model integration, and campaign
automation
Contact Optimization, multi-touch campaigns, integrated
measurement platform
Customer Value Optimization fully integrated programs
Cap
abili
ty M
atur
ity
Ideal investment zone
[Director]
[Vice President]
[CMO]
[C-suite]
[CEO]
[Key decision maker]
Level 1
Level 3
Level 4
Level 5
Level 2
Over-invested (poor return on capital)
Under-invested (poor return on management bandwidth)
Bottom-up path builds infrastructure and seeks to leverage incremental gains to expand effort and drive organizational change
(requires permission)
Top-down path compels Organizational change and
rapidly enables infrastructure for
efficiency and effectiveness (requires sponsorship)
© 2014 Merkle. All Rights Reserved. Confidential 26
Retail Technology Stack
Audience Platforms
Mar
ketin
g Au
tom
atio
n
Channel Execution Media Execution
Marketing Database
Search
Business Rules Engine
Personalization Engine
Decisioning Algorithms
Audience Management
Real-Time Data Transfer
Syndication
Advanced Analytics
Attribution / Forecasting
Business Intelligence
Customer 360° Data Assets Event Stream Cam
paig
n M
anag
emen
t M
RM
Messaging Mobile
Location Services Preference Center Tag Management
Insights Platform Data Management Platform
Decision Management Platform
Content Governance Content Management
Application Services
Asset Management
Lead
Man
agem
ent
Product Execution Development Merchandising Pricing POS Clienteling eCommerce Digital Media
Data Services
Loyalty Platform
Identity Management Onboarding CDI/DDI Event Management
Point Engine Reward Management Member Administration
© 2014 Merkle. All Rights Reserved. Confidential 27
Where do we start?
Technology
• Integrate key customer data feeds into centralized Customer Management Platform
• Implement Customer Identity Management layer
• Deploy Insights Platform enabling measurement framework and “self-service” insights
Organization
• Define executive steering committee focused on customer experience delivery
• Form cross-functional customer experience delivery strategy team
• Form centralized insights team, starting with Customer Insights Manager
Operations
• Implement process for sharing customer insights across organization
• Define cross-functional collaboration process structure/cadence
• Program Management dedicated to Customer Experience initiative; plans, milestones, etc.
On-going cross-functional collaboration
© 2014 Merkle. All Rights Reserved. Confidential 28
Module 4: Facilitated Discussion Questions
1. Within your companies, are there currently initiatives in place to move to a more customer-centric vs. product/brand-centric model? If so, who owns the initiative and what progress has been made?
2. Within your companies, how is customer information shared across various areas (Marketing, Brands, Sales, Merchandising, etc.)? ‣ What are the specific challenges that you are facing in sharing customer
information? How are you overcoming those challenges? 3. What level of customer segmentation exists within your companies, and how if
at all are those segments used to drive marketing/merchandising/operational strategies?
4. What kind of engagement/collaboration exists between Marketing, Merchandising, and Store Operations?
5. Has there been any movement towards centralizing analytics and customer insights across the organization? If so, have there been any key lessons learned?
6. Have you gone down a path of tying together the customer event stream, from digital engagement to purchase either on-line or in-store? If so, what have been the biggest successes/challenges?
© 2014 Merkle. All Rights Reserved. Confidential 29
Thank You