Smart Data Smart Decisions Smart Profits

The new definition of their target customers led to

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Unformatted text preview: e and by frequency 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 Opportunity areas Opportunities identified to increase transactions and basket size for specific customer segments based on • Customer segment profile vs. national average • Competitive priorities • Research on local customer needs and competitive strengths 18 ©McKinsey Convert customers' supplementary shopping trips to main shopping trips Steal new customers or purchase occasions from competitors Create new purchase occasions for existing and new customers & Company 2000 Example initiatives • Change Sunday opening hours for convenience • In-store events • Leverage nursery availability Results: • Communicate parking availability and security as competitive advantage • Link marketing activity to new store opening 7% sales uplift across 6 pilot stores in 3 months • Better lunch offer • Catering services to offices • 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.

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