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and ad placement. The new definition of their target customers led to
multiple changes across the business, involving banner ads, media placements,
messaging, and cross-sells – all directed toward novice buyers. As a result,
site performance improved dramatically, through both increased customer
conversion and retention.
Smart data, smart decisions, smart profits 17 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 18 Increase store-level customer penetration Finally, customer data improves store-level decisions about what services
to offer, what local marketing to undertake, what local promotions
and offers to provide, and how to target the proposition in a specific
market. Many retailers with centralized decision making and business
processes are benefiting by using customer data to reshape their
approach to maximizing local market opportunities. They are gaining
insights into the local customer base and position in the catchment
area; they are also able to identify areas of strength and weakness by
studying the relative penetration of customer segments in the
catchment region versus the national average. Thus informed, they can
encourage local customers to visit stores through promotional events,
links to the local community, and direct communications.
Exhibit 6 Tailoring Store Assortment and Local-Market
Communications Increases Sales: European Grocer Example
size for specific
• Research on
strengths 18 ©McKinsey Convert customers'
to main shopping
trips Steal new customers
competitors Create new
for existing and
new customers & Company 2000 Example
• Change Sunday
• In-store events
• Leverage nursery
availability Results: • Communicate
and security as
• Link marketing
activity to new
store opening 7% sales
months • Better lunch offer
• Catering services
• Links with local
retailers MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 19 Consider the process and impact when a European retailer wanted to
tailor the national store proposition to local needs. It gathered data
to help it understand local customer profiles, market shares, spending
potential by individual catchment and housing area, and competitor
strengths and weaknesses. Based on the analysis, it developed
store- and segment-specific action plans covering assortment events,
communications, and local marketing. These initiatives increased sales
by 7 percent in local markets in 3 months (Exhibit 6).
All of these gains were possible because retailers made smarter
decisions based on insights into their customers and their business
operations. To continue to enjoy rising sales and profits, particularly
in the face of growing Internet competition retailers now must have
robust information about all aspects of customer behavior and
preferences to t...
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This note was uploaded on 02/08/2014 for the course RCS 391 taught by Professor Jeanielim during the Fall '14 term at University of Tennessee.
- Fall '14