Putting the Shopper in Your Shopper Marketing Strategy

Introduction:Shopper Marketing offers great potential for retailers and manufacturers to engage their most valuable shoppers more completely and more profitably. It offers new ways to reach shoppers in ways that can make a dramatic difference in their experience and their spending.When done well, Shopper Marketing is ...An expression of shopper-centric thinking and a deeply rooted shopper-centric culture.Shaped by a company's commitment to earn and grow shoppers' lifetime loyalty.Informed by an intimate, household-level understanding of what shoppers buy and why they buy it.Recognized by both retailers and manufacturers as an area of strategic collaboration.Managed as a dynamic set of activities benefiting from continual measurement and improvement.(Also critical is brilliant execution, but that aspect is out of scope for this article.)Unfortunately for the industry and for shoppers, Shopper Marketing is rarely done well. Most Shopper Marketing programs and projects have weaknesses in at least one of the areas above. Many struggle in several areas. What goes wrong?Offers are irrelevant to the shoppers who receive them.Share-of-wallet opportunities among current shoppers are not seen or valued, and thus ignored.The primary targeting method ignores purchase behavior.There's a focus on beating the competition instead of winning over shoppers.The priority is almost exclusively on short-term results.Retailers and manufacturers are at odds over strategy and execution.Marketing and Sales argue over "above-the-line" vs. "below-the-line" funding while failing to develop a test-and-learn approach to optimize business impact.Traditional measurements are applied to non-traditional activities.Creative and media choices reflect a "one-size-fits-all" strategy.Consumer marketing concepts are reapplied without tailoring to the "shopper" mindset and opportunity.There is no process for continual improvement.With so many ways to get off track and lose focus, the primary element missing from most Shopper Marketing programs is the shopper. Many companies are struggling to expand their Shopper Marketing capabilities dramatically while relying on limited shopper understanding, outmoded concepts and metrics, and poorly aligned organizations.As a result, Shopper Marketing often fails to deliver on its promise. Instead of playing a key role in helping companies earn lifetime loyalty, it becomes yet another way to rent market share from week to week. Given the growing enthusiasm and spending associated with Shopper Marketing, it is important to understand what separates effective from ineffective efforts.This article will explore the underlying factors that make Shopper Marketing programs effective in building shopper loyalty, sales, and profits over the short and long term. The structure will follow from the five factors listed above which are associated with successful Shopper Marketing programs.1. Successful Shopper Marketing programs are an expression of shopper-centric thinking and a deeply-rooted shopper-centric culture.An expression of shopper-centric thinking.Most companies believe that they put shoppers and consumers at the center of their thinking and action. But as the conversation goes deeper, a different entity often emerges at the center: the brand or the store. To be fair, it is very difficult to wake up every day with the responsibility for growing a brand (or portfolio of brands) or a store (or a chain of stores) without those brands and stores dominating your thinking throughout the day.These normal pressures make it hard to be shopper-centric and it shows up in the way questions are asked and answered in the normal course of the day. The questions in the center column below reflect the traditional and pervasive brand- or store-centric perspective. If you're ready to move your company from brand- and store-centric thinking to shopper-centric thinking, start asking questions like those on the right side. Asking the right questions is one of the most powerful steps company leaders can take to accelerate change in their organizations.AreaBrand- or Store-Centric Thinking and ActionShopper-Centric Thinking and ActionTargeted MarketingCan we send a mailing to shoppers at the top 500 stores?Can we send individualized communications to our top 2,000,000 shoppers?LoyaltyHow can I make shoppers more loyal to my brand?Am I focusing most of my efforts on the shoppers who matter most?GrowthIs our market share growing?Is our share of wallet growing?Efficiency / EffectivenessHow can I simplify and standardize to achieve efficiency and savings?How can we understand what our best shoppers want and figure out how to give it to them?ROIWhat was the cost-per-thousand for the ad campaign?What was the ROI for the ad campaign?WinningHow can we beat the competition?How can we win with the shoppers who matter most?Tracking SalesHow much did we sell last week?Who bought what we were selling last week?PromotionHow well did that promotion lift sales?Did that promotion engage our best shoppers in the short term and long term?PricingHow much will it cost to match our competitor's prices on 500 items?How can we understand who our Price Sensitive shoppers are, the items on which they are most price sensitive, and the prices at which we hold and grow their business?InnovationHow can we create a competitive new product line?How can we create a new product line that is very relevant to our high value shoppers?AssortmentWhich products can we de-list when we stock 2 national brands and our store brand?Which products do our best shoppers need and want?Shopping ExperienceHow can we revolutionize the way this category is shopped and drive more shoppers to our brand?How can we reflect shopper behavior and put our brand where our best shoppers will naturally expect to find it? Several of the examples in the center column above share a common theme — attempting to change shopper behavior through irrelevant brand or store-centric initiatives. This impulse must be subdued, sometimes quite directly, in order to put the shopper at the center of the action. Here's a favorite quote from a client who urged her colleagues to shift from their brand-centric view and accept a shopper-centric shelving recommendation: "This is how people really behave. We can't argue with that. We can only decide if we're going to reflect their behavior in our plans or ignore it."Another client confessed that his company spends substantial time and resource trying to change shoppers' fundamental behaviors. When he asked for our opinion on that strategy, I remarked that my colleagues focus on changing our clients' behaviors by helping them put the shopper at the center of everything they do.A deeply rooted shopper-centric culture.Beyond the powerful step of asking the right shopper-centric questions, establishing a deeply-rooted shopper-centric culture transforms, aligns, and sustains a business. But how do you know if the culture is really shopper-centric? The same way you understand other business issues: Collect the right data and evaluate it objectively.Below is an example output from a Consumer / Shopper Assessment for a CPG business. The company is scored from 1 through 5 on seven different areas of capability. A "fully capable" company would score "5s" for all seven areas.Based on this data — which is collected from a series of in depth interviews, process reviews, and an objective evaluation of the client's ways of working — the largest opportunity gaps are around Organizational Alignment (score of 1 out of 5; "no evidence" of capability) and Shopper / Consumer Strategy (score of 2 out of 5; "limited" capability).An assessment such as this — when completed by an objective 3rd party — provides an important call-to-action about gaps in a company's capabilities, and (sometimes) about gaps between a too-rosy self assessment and a more challenging reality.Two actions are essential to move ahead from the Assessment: (1) Executive (C-level) endorsement and enforcement of the transition to a more shopper-centric culture, and (2) a specific action plan which creates clear accountabilities across the enterprise.2. Effective Shopper Marketing programs are shaped by a company's commitment to earn and grow shoppers' lifetime loyalty.Focusing on growing the number of loyal shoppers, and on growing the spending by loyal shoppers, is a potent and sustainable strategy to drive sales and profit. For years, financial analysis has pointed to the relative benefits of growing with current shoppers vs. acquiring new shoppers. However, these benefits remained largely theoretical until two kinds of capabilities emerged: (1) Powerful data analysis techniques that can tear apart billions of transactions, and (2) the development of new communication capabilities which can deliver fully individualized messages at the household level based on each household's unique shopping behavior.However, the value of these exciting capabilities is undermined unless and until a company prioritizes growing with its current shoppers instead of on acquiring new shoppers.Tesco is the leading grocery retailer in the UK, but it hasn't always been that way. While they earn around 32% of all grocery dollars today, Tesco's market share was less than 10% in the early 90s. Tesco has achieved a steady rise in same-store-sales driven by an equally steady focus on earning and growing the lifetime loyalty of their best shoppers. This greater-than-decade-long commitment is well documented in Scoring Points (Humby, Hunt and Phillips; Kogan Page, 2nd Edition, 2007).Perhaps the most famous of Tesco's Shopper Marketing initiatives is the Tesco Quarterly Statement. This communication, which is customized for each household, provides two benefits to the shopper: A financial reward, which can be used at the store, plus offers for highly relevant products based on past purchase behavior. The Statement is so anticipated and so highly-valued by shoppers that it's become known as "Four Christmases a Year." The mailing has an open rate of nearly 100% and is a major contributor to Tesco sales and profits because it keeps bringing shoppers back to the store to spend their "dividend" on the products they want and need.In the US, The Kroger Co. dramatically changed its focus several years ago. Per Simon Hay, CEO of dunnhumbyUSA: "Kroger recognized that continuing to focus on attracting new customers meant a lot of money from existing customers was being left on the table." Virtually everything about their approach to the marketplace has changed as a result of their "Customer 1st" strategy which strongly emphasizes the value of loyal shoppers and the potential which remains in these shoppers. Their actions related to Shopper Marketing have seen some of the most dramatic changes. Here are three ways Kroger's Shopper Marketing efforts have changed since beginning their Customer 1st journey.AreaBefore Customer 1stAfter Customer 1stContact strategyAllowing unmanaged direct mail contact of virtually any shoppers with known addressesDeveloping contact principles which put loyal shoppers at the top and creating clear communication guidelinesInvesting in Loyal ShoppersNot recognizing or thanking loyal shoppersRecognizing and regularly thanking loyal shoppersRelevant offersPlacing products on the front page of its circular based on sales history and gross marginsEvaluating every item in its circular based on the purchase behavior of loyal shoppersKroger's focus on loyal shoppers is well-known within their organization and among their trading partners, and it's becoming increasingly clear to the financial markets as well. Here's part of the Q&A from a recent earnings call:Financial analyst: In this environment, you really seem to be widening the gap with the competition. Do you think that you're gaining sales from new customers or gaining a greater share of Walmart from existing customers?Dave Dillon, Kroger CEO: I don't think we try to pinpoint who it's coming from [in terms of which retailer] as much as it's coming from our customers. And, as you know, we target our existing customer base because of the opportunity we see, that in even our very best customers, there are still a lot of purchases they make outside of Kroger and, by targeting them, we have had very good results.In other words, Kroger is "loyal" to its loyal shoppers by focusing the lion's share of resources on these valuable customers. These loyal shoppers respond to Kroger's initiatives with even more of their spending. And there's an additional benefit, per Simon Hay: "Getting the shopping experience right for your best shoppers attracts profitable new customers too." Importantly, the reverse does not hold true: Focusing on acquiring new shoppers rarely leads to greater loyalty among current shoppers.To date, a handful of leading retailers, including Kroger and Tesco, have made an enterprise-wide commitment to focus on, understand, and engage their best shoppers. Other retailers are beginning to follow this path, as well. For example, The Home Depot is realigning its marketing efforts (including Shopper Marketing) to differentiate its approach to Professionals (contractors, builders, etc.) after uncovering that 2% of its shoppers (the Pros) drive almost 30% of their sales.To be blunt, manufacturers are lagging these leading retailers in their efforts to know their loyal shoppers and treat them well. They are paying the price for this lack of commitment with high levels of shopper churn and an increasing need to subsidize volume. Below is a revealing and alarming loyalty-based analysis for one Candy Bar brand. The results and conclusions have been reinforced by similar studies of many other brands across a range of categories.The charts below show four shopper segments with decreasing brand loyalty from left to right.The most valuable shopper segment (Champions) includes 6,910 households who average 76 buying trips per year in the candy category and for whom spending on this brand represents 15.4% of their candy category spending (share of wallet). ChampionsValuablesPotentialsUncommitteds# of Shoppers6,910125,755314,501176,797Category Buying Trips / Shopper (annual)76.132.633.727.4Brand's Share of Wallet15.4%7.0%2.1%0.8%The Champions spend nearly $25 per year on the brand — about 4 times the amount spent by Valuables and more than 12 and 35 times the amount of Potentials and Uncommitteds, respectively. ChampionsValuablesPotentialsUncommittedsBrand $s$171,834$718,381$612,061$123,516Brand $s/HH$24.87$5.71$1.95$0.70The Champions contribute roughly 10x their fair share of sales based on their size. ChampionsValuablesPotentialsUncommitteds% of $s10.6%44.2%37.6%7.6%% of Shoppers1.1%20.2%50.4%28.3%$ / Shopper Index(954)(219)(75)(27)When you know these facts, the "opportunity math" is powerful and appealing: By focusing on growing loyalty among Champions and Valuables (22% of shoppers in this example), the brand could grow total sales by 7% through increasing its share of wallet among Champions from 15.4% to 18.0% and among Valuables from 7.0% to 7.7%. No growth is required among Potentials and Uncommitteds and no new shoppers are required to achieve 7% sales growth!That's a great opportunity to focus spending where it will do the most good. But, despite today's tight spending climate, almost no brand is taking advantage of this opportunity. Most brands' strategies overemphasize acquisition of new shoppers ("grow household penetration") instead of cultivating growth among current loyal shoppers. As a result, the sad story depicted in the following graphic is a common situation experienced by brands today. This chart reflects the year-over-year behavior of the same candy bar brand shoppers in each of the loyalty tiers.The headlines are that among the Champions — the candy bar brand's most valuable shoppers — 10% of last year's households have left the brand, and another 60% have reduced their purchase levels of the brand. No new Champions were cultivated. Close to 45% of the Valuables have left the brand and roughly 30% of the remaining shoppers are buying less than they did last year. The largest growth segment? Uncommitted shoppers are growing in response to the increased promotion dealing meant to stem the losses. (By the way, we controlled the analysis to include only households which continued to buy candy in Year 2 so that there is no unintended impact from category departures.)Here's a financial view of the issue:The loss of 10% of the Champions costs the brand 1% of its annual sales.The loss of roughly 50% of the sales among 60% of Champions costs the brand 3% of annual sales.Net, whatever growth the brand was able to achieve, it could have grown 4% faster if it had focused on retaining sales among its best shoppers. For those who might still argue there is no upside from marketing to current shoppers, here is one last item on this topic. It shows the return-on-investment for every dollar spent in a well-established targeted marketing vehicle. The measurement was made with a control group in place to ensure the return was truly incremental.ROI from Brand-Level Offers to Different Shopper Loyalty TiersShopper Segment LabelSegment DefinitionReturn for Every Dollar Spent (Indexed to Average for Total)"A"Buys Brand and Brand represents more than 50% share of requirements (share of wallet)(234)"B"Buys Brand and Brand represents less than 50% share of category requirements (share of wallet)(135)"C"Buys category but not Brand; Brand has 0% share of requirements (share of wallet)(24)"D"Does not buy category(6)These results clearly demonstrate that targeting current, loyal shoppers offers a superior return. The ROI from targeting Segment "A" (brand loyals) is almost 10 times greater than the ROI from targeting Segment "C" (category buyers/brand non-buyers).3. Effective Shopper Marketing programs are informed by an intimate, household-level understanding of shopper behavior and its influences.Companies involved in Shopper Marketing need to know:Which shoppers matter most?What do they buy?How do they buy?Why do they buy?Now that I know the answers to 1 - 4, how can I use Shopper Marketing to grow loyalty, sales, and profit? You may be among the large proportion of people who see these questions and say, "That makes sense." But, you may be surprised by the gap that exists between agreeing that these ideas make sense and actually living by these ideas.One of the first issues to address is the data your company currently uses to support Shopper Marketing efforts. If you don't start with the right data, Shopper Marketing (and other) initiatives will always be less effective and efficient than they should be. Here's a quick round-up of some commonly-used data sources and the gap between them and the "real" shopper who is your ultimate target.Segmentation ModelAlso Known AsUsed ByThe "Real" Shopper SaysCan Support Superior Shopper MarketingYou are what you earnDemographics / Social classMass market Media Buyers and their clients"I spend very differently from my 'social peers'"No - Demographics are a proxy for how people might behave; not actual behaviorYou are where you liveGeo-demographics"Targeted" marketing industry and their clients"I can't eat at our neighbor's house - they don't buy organics!"No - Same as above; not actual behavior and not predictive of actual behaviorYou are what you say you areSurveysMany research firms and their clients"I try to tell the truth as best I remember it"No - Surveys are helpful on "why" but not on "what"You are what a small sample buysTraditional household panelMany retailers and manufacturers"I don't see myself in here"No - Sample is small, not directly addressable, and not projectable based on behaviorYou are what average shoppers buyPoint-of-Sale dataMany retailers and manufacturers"I'm not an average, I'm me"No - marketing to averages drives irrelevanceYou are what you buyBehavior-based insightsSome leading retailers and manufacturers"OK, now you've got the real me"Yes - Behavioral data from individual HHsAs an example of the power of behavior-based targeting, let's look at a real-world "niche" soft drink brand (masked here to preserve confidentiality). In traditional segmentation language, consumption of this brand "skews" toward households with incomes of less than $35,000. Compared to other income groups, the < $35,000 group consumes 1.3 times its fair share of the brand, based on its share of the population. This is the highest level of development among the income groups. Based on this data, many brand leaders would market this brand toward the < $35,000 demographic via media choices and mailing list purchases. There are two problems with this approach:It's enormously wasteful: The brand's actual level of household penetration among the < $35,000 group is only 3%. in economic terms, investments made in this group are likely to be irrelevant to 97% of its members.It misses many important shoppers and consumers: While the < $35,000 group is "overdeveloped" it still represents only 30% of the brand's sales. The other 70% is purchased by other demographic segments.The solution is behavior-based targeting. By starting with 1) regular shoppers at a retailer, and then 2) segmenting the highest volume shoppers of the brand, a relatively small group of shoppers who represent 60% of brand sales can be identified and targeted. There is no waste as non-buyers are excluded from the targeting model. And there is plenty of upside: The brand's share-of-wallet among these households is only 30%, leaving room for substantial growth.Behavior-based targeting is useful and effective beyond brand-specific issues. The world's largest and most sophisticated program built on the principle that "You Are What You Buy" is the Loyal Customer Mailer, sent to 9,000,000 Kroger shoppers every quarter. Each mailer has a different composition of offers and messages based on the prior 52 weeks of household-level purchase behavior. While each shopper receives 16 offers (12 from manufacturers and 4 from Kroger), no two shoppers receive the same set of offers: 9,000,000 mailers = 9,000,000 versions. The recipients are the combined set of consistent Kroger shoppers and consistent manufacturer shoppers. Thus they are being recognized for their mutual value to the retailer and the manufacturer. In turn, they are rewarding the retailer and manufacturer with incremental sales.To get to the "why" (purchase influences), some leading clients are pioneering the practice of linking household-level stimulus data to household-level behavioral data. Below is a partial list of factors measured at the household level. The resulting insights have led to stronger Shopper Marketing programs and other improvements:Household-Level Influences Under MeasurementExampleKey Questions AddressedAffinity group membershipsNASCAR promotion respondersDoes my sponsorship reach my target shoppers? Does it pay out?Mailed vehicles (coupons, samples, magazines)Recipes plus couponsDoes my vehicle engage the right households? Does it earn greater loyalty over time? Do I really need to include coupons?In-store demos and samplesFood sample plus coupon in-storeDoes sampling pay for itself via high levels of repeat purchase vs. "naked" coupons?Attitudinal data (from a 200k+ panel)Needs-based segmentationHow do different needs-based segments buy? Are my segment-targeted efforts working?Media inputsTV campaignDid our advertising appeal to our target shoppers? Did it drive incremental sales?Brand-owned loyalty programsPoints-based programDo shoppers become more valuable once they join? Are we attracting the right shoppers to the program?As media become increasingly targetable to households and shoppers, the insights used to drive marketing plans must keep pace. The only way to do that is through deep household- and shopper-level understanding.An insight from Edwina Dunn, CEO of dunnhumby ltd., connects the dots between relevance, efficiency, and effectiveness: "The more targeted the offer, the fewer gimmicks you need to sell it. It will sell itself because it's what people want."4. Successful Shopper Marketing programs are recognized by both retailers and manufacturers as an area of strategic collaboration.Strategic collaboration between retailers and manufacturers is a powerful concept because it redefines "what great looks like" from the perspective of high-value shoppers and delivers on this new vision. It's also very rare. That's because many trading partners are ill-equipped and inadequately motivated to put aside their traditional "zero-sum game" approach to growing their own businesses. How are some retailers and manufacturers getting past this limiting model?A small group of trading partners is achieving breakthrough collaboration by combining a new level of shopper understanding with an unwavering commitment to keep the shopper at the center of decision-making. The question they tenaciously ask and answer is, "How will this benefit our mutual high-value shoppers?"When you start asking different questions, you start getting different answers and seeing new opportunities. Here are some questions which illustrate the "traditional" versus "shopper-centric" approaches to collaboration. The shopper-centric approach is changing the dialogue and results for companies who can set aside yesterday's model:AreaTraditional CollaborationShopper-Centric CollaborationShoppersHow can we drive more shoppers into the store?How can we understand who are our best mutual shoppers and grow their basket size?Shopper Marketing communicationsWe want you to buy space in our coupon booklet.We want to invest in our mutual best shoppers.Category growthCan we grow 7% this year?Can we grow 12% by improving share of wallet by 20% among our best mutual shoppers?Engaging shoppersWe need to lower our prices in the [HBC, etc.] section.We need to improve the shopping experience in the [HBC, etc.] section.AssortmentWe are removing 15% of all items.Let's work together to remove the 15% of items that are least relevant to our best shoppers.TrendsLet's do an analysis of this trend using household panel data and a demographically-representative survey sample.Let's do an analysis of this trend using your shopper data with an overlay of attitudinal surveys within your shopper base.BudgetingWe need 10% more promotion support than last year.We need to know which promotions worked with our best shoppers last year, and what didn't, so we can budget and plan effectively.MerchandisingWe will trade off End Caps between your brand and our brand.We can maximize sales by sharing the end cap because your brand and our brand attract different shoppers.While most of these examples reflect the operational or category level, it's critical to establish a practice of collaboration at the top-most levels of the trading partners. The most successful top-to-tops are those where the company leadership of the retailer and the manufacturer each lay out a clear vision of what they are trying to achieve, play back their understanding of what the other party is aiming for, and propose concrete ideas for working together to advance each other's strategic aims ... all grounded upon a focus on shoppers and how to win with them. Top-to-top collaboration is also important because it creates an example for other levels in organizations where collaboration has not been a core way of working.The net impact of collaboration must be that each participant accomplishes more by working together than by working separately or without alignment. Strategic collaboration which includes asking the right questions, aligning at the top, and focusing on shoppers will deliver this result.5. Successful Shopper Marketing programs are managed as a dynamic set of activities benefiting from continual measurement and improvement.A dynamic set of activities.Nothing about a good Shopper Marketing program involves standing still or repeating activities just because "they worked last year." In a good Shopper Marketing program, plans are executed, shoppers react, strategies are sharpened, capabilities are improved, and new ideas come forward. When used in this way, Shopper Marketing offers a high-speed, closed-loop learning environment that can improve your confidence and speed your decision-making.To make full use of the many learning opportunities, you'll need to be both bold and humble. Living comfortably with that paradox makes great companies even better the next year.Be bold: Imagine the possibilities that exist when you're not being held back by precedent, habit, or past limitations. Take "we've never tried that" as an encouragement instead of a rejection. Keep your focus on how to do a better job for your best shoppers and you can overcome almost any argument that stands in your way. A reliance on data and insights — rather than making you cautious — should empower you and your organization to try well-grounded, game-changing ideas. Example: A retailer recognized that, in a category with a growth rate of close to 5%, sales could be doubled if they could convince a subset of existing loyal shoppers to revisit the aisle. The question changed from the typical "how do we grow 6% or 7%" to the bold "how could we double the size of the category?"Be humble: Recognize that learning to be shopper-centric is a journey, not an event. Mistakes will be made, unintended consequences will occur, and confusion will appear again and again. Learning to win at Shopper Marketing is essentially a knowledge competition and practitioners who are most ready to say "I have a lot to learn and I am ready" are going to be ahead of the pack.A few years ago, I witnessed a great example of humility and its link to learning and winning. It was at a top-to-top meeting when the manufacturer's CEO asked how the retailer's learning journey was going. The retailer's COO responded: "We're learning a lot every day about our customers and we're working hard to put it all to use. I feel good about that ... about the fact that we're relying on data. But sometimes someone will ask me a question with some connection to shoppers. I'll answer it and later wonder if I was right. The problem is that since I've been in the business for decades and have had a pretty successful career, I have some confidence in my knowledge and so does the rest of the organization. But we're learning so much that challenges what we have believed, we may find out later that what I thought was true was never true, or was once true but is no longer true, or is only true under certain circumstances. So I need to make sure that I don't try to answer questions that can best be answered by the data we have from our customers. I have to remember that my job is to participate in figuring out what to do with our customer insight, not to replace it based on my personal experience."Measure strategically for impact.Measuring strategically means measuring what is most important to the business. It also means highlighting what is important to the business through better measurement and reporting.All commercial organizations have "outcome" goals like sales, profit, and volume. Companies commit to shopper- and consumer-centric strategies in order to increase the magnitude and certainty of achieving these outcomes. If you have a point of view on how outcomes are to be achieved (for example "grow same-store-sales by growing shopper loyalty"), you better measure whether those choices are being translated into successful execution.The old adage "what gets measured gets done" is not just an encouragement; it's also a warning: If you don't measure what you say is important, you're unlikely to achieve your goals. If this happens over a meaningful time horizon, you will also undermine your organization's commitment to achieving the goals.Strategic measurement doesn't just change things within your company. It also changes your dialogue with trading partners. One client at a manufacturer reported that his dialogue with a key retailer changed when he started bringing in new kinds of measurement: "We used to bring in 20 pages of 'what.' Now we bring 2 pages of 'what' and 18 pages of 'who' and 'why,' and we have a much more productive discussion."Here are some examples which link a strategy to strategic measurement.StrategyStrategic MeasurementGrow brand loyalty# of Loyal shoppers (trended); % of brand purchased by loyal shoppers; % of marketing budget allocated to loyal shoppersContribute to shopper loyalty growth at XYZ retailer% of brand growth at the retailer from loyal vs. non-loyal shoppers; compare to retailer's overall growth % from loyal vs. non-loyal shoppersCreate more value for current store shoppersBasket size; categories shopped; visit frequencyCreate a more relevant assortmentShare of requirements by SKU among key shopper segments; sales rate by store type (based on shopper composition)Launch a premium line extension to extend brand reach and margins% of line extension sales from non-price sensitive shoppersBroaden the appeal of our organic productsPenetration of dedicated organics shoppers vs. general market; sales contribution from dedicated organics shoppers vs. general marketLeverage communications to drive loyalty and salesImpact on loyalty and sales from communications to targeted HHs vs. same measures among a matched control groupDrive quality trial via brand-equity (advertising, samples, in-store demos) vs. price incentives (coupons, discounts)Trial & repeat rates for equity "triers" vs. price "triers"; year 1 sales comparisons for shoppers who tried on equity vs. price incentivesMeasure relentlessly for improvement.Becoming shopper-centric creates sustainable growth because it isn't a one-time event. But, to drive steady growth, you must have an active learning plan. So the right measurements are in place, measure and review constantly to drive improvements over time. Below is an example showing how relentless measurement can lead to accelerating improvements. The activity being measured is the redemption rate for a targeted quarterly mailing, indexed to the industry average of 11.8% for response rates for house-owned lists (Penton Media 2007, as reported in the 2008 Direct Marketing Association Statistical Fact Book).In Phase 1 (events 1 - 5), we focused on getting marketplace experience, building a knowledge base, and uncovering early opportunities for improvement. All of the analyses in this and subsequent phases are conducted through a shopper lens.Phase 2 (events 6 - 10) saw the first wave of improvements to the targeting routines to tighten up coupon allocation logic and provide increasingly relevant offers based on past purchase behavior. There was also learning from a defined set of test-and-learn programs. Phase 2 redemption results indexed at (178) vs. the industry average.Phase 3 (events 11 - 14), we have further tuned the offer allocation model to ensure that each household is receiving the most relevant offers out of the universe of possible relevant offers. Redemption results are more than 2.5 times greater than our Phase 1 starting point. Encouragingly, the rate of improvement is accelerating rather than flattening.Midway through Phase 4 (events 15 - 16), the rate of improvement continues to accelerate. Redemption results are nearly 4x the industry average.Although redemption rates now exceed all relevant benchmarks, we are confident about achieving further improvements. Learnings are already in hand which can step-change today's already strong results.In closing, an encouragement.Becoming a shopper-centric organization is tremendously challenging and enormously rewarding. It won't be easy at first, but over time confusion and disruption will give way to new levels of clarity and momentum. Benefits will emerge in every part of your business, including your relationships with colleagues and trading partners and, of course, in your results. I encourage you to start — or accelerate — your shopper-centric journey.AppreciationThe Author would to thank Matt Stewart, Martin Hayward, and Diana Jones of dunnhumby and Kelly Camm and Ann Keeling of Cristofoli-Keeling, Inc. for their contributions to this article.About the AuthorMatt Nitzberg leads the Global Manufacturer Practice at dunnhumby ltd. In this role, Matt is responsible for defining the global practice strategy and creating robust and sustaining relationships with clients by working with senior levels within client companies. Prior to his current role, Matt established and led dunnhumbyUSA's Manufacturer Practice. Before joining dunnhumbyUSA, Nitzberg held Marketing roles of increasing responsibility at Procter & Gamble and Borden Foods. Nitzberg also held a variety of senior roles at Information Resources including the leadership of IRI's National Accounts client group.About dunnhumby ltd.dunnhumby helps brands and organizations engage more completely and profitably with their customers by analyzing billions of customer purchase records to determine customer purchase behaviors and patterns and converting insights into actionable strategies. Through joint ventures and long term client relationships, dunnhumby has established a global presence with offices in the Americas, Europe, and Asia/Pacific.

Putting the Shopper in Your Shopper Marketing Strategy

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