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CX Next Recap: Empathy, Emergence, and Money

May 11, 2018

Sam Richardson

As Customer Experience (CX) professionals gather in New Orleans for the Customer Experience Professionals Association (CXPA) 2018 Insight Exchange, I’m still reflecting on key themes from the recent CX Next 2018 conference in Boston. This exclusive event, which Nepa was honored to Chair, featured heavyweight CX thought leaders and a great roster of practitioners. Here’s what still resonating two weeks later:

Empathy is the bedrock of Customer Experience

Understanding and embracing customers’ needs and their context is the basis for delivering great experiences. Katherine Deschene of Steward Healthcare preaches that hospital staff must first connect with the patient before completing the task. Marijke Maartense from Philips Healthcare doubled-down on this point with an insightful talk about how to keep it human amidst a sea of technology and digitization.

CX professionals have an obligation to help every person in the organization understand their customers and their context. CX Author & Thought Leader, Kerry Bodine, introduced a bold vision for moving from orchestrated experiences to emergent experiences, guided more by simple principles or rules than a detailed playbook. Kerry borrows the concept from emergent properties in the natural order, best exemplified by the beautiful formations of starling flocks. Every employee in your company should act as individual starlings do – following a simple set of shared rules – to create beautiful customer experiences. Companies that are already doing this, like Zappos.com and Southwest Airlines, are already reaping the customer retention benefits.

Delivering on Customer Experience is heavy lifting

While empathizing with customers and having a vision for better experiences is the starting point, there is a lot of nuts-and-bolts work behind the scenes to make improvements a reality.

Dave Hodgman, Digital Transformation Strategist at Comcast, shared what goes into meeting his team’s goal of having customers spend less time on routine service requests (like paying a bill or changing a plan). Enabling new experiences for customers requires applying a deep understanding of available tools, data management systems, and corporate policies to customer needs. And, creating new experiences is not enough – CX professionals need to drive the customer adoption of new service methods. This work requires collaboration across many groups at Comcast, and without it, dreams of better experiences would not become reality.

Customer Experience Professionals need to learn a new language

The standard measurements for Customer Experience success – C-SAT, NPS, Customer Effort Score – are no longer sufficient to gain the commitment of executives. The essential metric of business is money, and we must point to financial results – including increased revenue and decreased costs – to earn the investment required to deliver better customer experiences.

Diane Magers, CXPA CEO, hammered this point in “Building and Executing a CX Strategy in an ROI Driven World”, a workshop on mapping techniques that lead you to the business value of a strategy. Diane cited an example of a CX professional who delivered on their goal of improving NPS. The program was then closed, in favor of other investments that visibly demonstrated cost savings and/or increased revenue.

The good news for CX professionals is there are many opportunities to demonstrate how their strategies and programs are driving bottom line results. There are also new ways to translate your CX measurements into financial values – a topic that I spoke on in my “Level up Your CX Measurement” presentation. The key is to link each aspect of customers’ experience to its financial impact on company financials, which both validates the current impact and enables further optimization. It’s all available in our Cultivating Customer Experience Measurement eBook.

I’d like to thank Knect365 for organizing this great event and for asking Nepa to chair this gathering of CX professionals. Look forward to next year!

Blog Posts

Nepa insight partner to Oriflame

January 30, 2018

Sam Richardson

Oriflame choose Nepa as insight partner for global brand research. There is a common denominator among successful brands. They all know how to get their brand to really deliver. Oriflame has chosen Nepa to help them continuously track and explain trends and the wills and actions of their customers and competitors in 10 countries.

“We are proud to be the supplier for this strategic project. Oriflame is a strong brand and we feel confident that our collaboration will help Oriflame gain actionable insights to improve the brand position even further”, says Johan Rinaldo, Commercial Director at Nepa.

Nepa will conduct brand tracking for Oriflame in Mexico, Colombia, Indonesia, India, China, Turkey, Portugal, Poland, Morocco and Russia. Countries with widely varying market conditions. Research is done among both end consumers and Oriflame sales consultants. The main purpose is to gain insights about Oriflame brand position and the development over time.

“We set target to countries on performances according to our global strategic directions. Nepa will help us to understand our brand position in detail and how to find the formula for market success. We chose Nepa as partner because of their experience of global projects and innovative solutions”, says Frédérique Jacqmart, ‎Consumer Insight Manager at Oriflame.

For more information:
nepa.com or contact Deputy CEO and CFO P-O Westerlund,
p-o.westerlund@nepa.com
+46 706 404 824.

Blog Posts

The value of a magical experience!

January 12, 2018

Sam Richardson

Both of my sons’ hands where all sweaty as they looked up at the huge snow-clad mountain. You could see the desire and fear battling in their eyes. Was it fun, was it dark, what would happen, was it to scary? You could see the result of the battle shifting as they heard the laughs and screams coming from all the people riding it. And here I was, the impatient dad, “Do you want to go on the ride or not? The line is 40 minutes long and I don’t want to stand in line for 40 minutes for you to back out in the last minute”.

I know, I’m a very patient and understanding father, I know. My ten year old looked at me, then at the ride, then back at me again… ”I don’t know… I want to, but what if it is too scary?” My six year old just looked at his brother with big eyes and squeezed my hand.

As a man of action, I finally went up to one of the staff (sorry cast member), and asked the young lady; “Is this ride scary? The reason I’m asking is that my kids are really hesitant and we don’t want to wait in line and then have a bad experience.” She looked at my kids, asked them, not me (also a pretty unique experience) what they wanted. Again, “don’t know, scary, want to but…”, from my 10-year old. Then came the magic, the young lady said to my sons “you know what, if you want, I can get you to the front of the line right now, and then you can decide right away… If you want to go on the ride, jump in, otherwise you can continue enjoying the rest of the park”. Speechless, my sons nodded their heads, and I gaped. What, just like that? She took my sons hands and led them around the whole line and spoke to her colleagues. The last I heard as we approached the ride was the young lady saying; “It’s a magic moment”, and that it truly was!

Two weeks ago, on a Christmas inspired round table discussion around customer experience with some of the industry’s leading CX experts, an interesting discussion emerged. What do companies that create a truly unique customer experience do, to get employees that are sincere in their will to create a truly exceptional customer experience

How do they do it?

I would say, thinking back on my own Disney experience, that each employee, given the right tools, can provide customers with magical experiences every day… But why don’t they?

I would argue that one of the major reasons are lack of empowerment. A common mistake is trying to micro-manage customer interactions, restricting the employee in servicing their customers. This is a growing trend that I have observed over the last 10 years. Today, all too often I hear the phrase “I have to check with my manager”, even for small things, like returning a 1,50 Apple at the local supermarket.

And it seems that Disney agrees with me.

I have been working with CX improvements for a long time and empowerment is one of a couple key areas that needs to be addressed if you want to create a magical customer experience. Contact me if you want to discuss how to use analytics to fuel empowerment, culture or something else that stand between you and magical customer experiences!

And yes, my kids went on the ride, and will forever remember the magic experience!

Erik Enecker
Chief Product Officer at Nepa USA & COO Global Product at Nepa

Blog Posts

What you learn when world class CX leaders come together

January 11, 2018

Sam Richardson

As the holiday spirit swept into New York in early December, Nepa hosted a round table discussion with CX leaders from the retail, hospitality and entertainment industries. Companies that are on the top of their games. Literally the Louisville City FC had just been crowned USL Champions, while a national retailer was riding high from a strong Black Friday performance, and an international hotel chain that is posting RevPar growth amidst difficult conditions.

I think I speak for all when I say one of the biggest takeaways was simply the value of meeting with leaders for other industries to share experiences. This open venue allowed for open dialogue about overcoming challenges to make an organization be customer led and brainstorm about the future. My professional new year’s resolution is to organize similar discussions. Comment below if you’re interested!

Without further ado, here are 4 key themes from the discussion.

1. Measurement is necessary; Story-telling leads to Success

There was a lot of talk about Executive Support. Funding alone is not sufficient – executives must evangelize CX programs through (and beyond) the organization to demonstrate their importance. Chick-fil-a – a company that has not been shy about its commitment to service – was mentioned frequently as a company that delivers great customer experience.

Not all measurements are created equal though, and measurement alone is not sufficient. The ability to translate CX measurement into financial predictions gives them more weight with analytical leaders. And, the best measurements need to be woven into stories that inspire all staff to be customer-obsessed. This is important for an industry that has too long relied on dashboards to inspire change.

2. Customers’ Experience your brand at the Front Line

Whether it’s an employee that lacks the empathy for a customer’s situation or a Disney employee that turns a problem into a Magical Experience – customers’ experience your brand at the front lines.

A common problem shared by CX leaders across industries is motivating and empowering front-line staff to deliver great experiences. This is especially important amidst increased reliance on partners to carry out parts of the experience in the gig economy.

Serving up CX dashboards and analytics are not sufficient – as data analytics rules the day in many corporate HQs, it does not on the front lines. While we didn’t solve this problem in an afternoon, there were some great tips shared:

Give authority to make the right decision for customers.
Provide the right decision support (e.g. customer data and focus on what is most important to get right).
Lead with passion and purpose – everyone need to see leaders putting customers first.
Communicate in the language of those in the front lines of your business.

3. Focus on the Customer over the Competition

Jeff Bezos (not in attendance) has said “If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.” This brilliant round table made similar points about the importance of being led by customers, not by your competitors.

A hotelier shared about how innovation to the room key by a competitor sent senior management into a frenzy to catch-up. But, their own customer data showed this innovation was not important to its customers. Chasing the competitor could have diverted valuable resources from delivering on what’s important to customers.

The point is simple here – have conversations with your customers and act on their needs and wants.

4. The attention economy – from Customer Experience to Customer Engagement

Anne Roggeveen, Professor of Retail and Marketing at Babson college, kicked off a discussion around the “owners” of different touchpoints – that is brand, partners, the customer, and externally (e.g. social/independent). In an increasingly connected and always-on world, the balance of touchpoints has shifted away from brand-owned and towards touchpoints owned by customers, partners, and other external sources.

With less control, Customer Experience needs to broaden to Customer Engagement. It is more important now to engage customers even at the touchpoints that you don’t own (e.g. review sites) and interact with customers beyond your traditional lines of business (e.g. branded credit card that builds loyalty through all a customer’s purchases). Journey Mapping and Path to Purchase solutions are making new strides in understanding all touchpoints along the journey, both on and off line.

You can also engage to help mitigate a bad experience at a partner touchpoint along the path to your brand (e.g. solving for a bad parking experience that is not owned by the sports club).

That’s it for now – there was some great content from this discussion that was left on the cutting room floor – please feel free to comment or email me (sean.dunn@nepa.com) to discuss more about CX trends heading into 2018. And, let me know if you can help me out with my resolution to participate/host more of these discussions this year.

Sean Dunn
Vice President, Client Solutions at Nepa USA

Blog Posts

How to steal foot traffic from competitors

December 12, 2017

Sam Richardson

Know what drives customers to walk by your competitor’s store and into yours, to drive more visits and more sales

What is it that Draws shoppers to stores in less convenient locations? I mean, if convenience was the only deciding factor, that would never happen. How can you as a retailer understand the outside draw and take actions that influence shoppers into taking a “Detour” to your store?

Groceries, it is a recurring chore that I, as a family father of three sons, need to complete all too often (with 6 gallons of milk and similar amount of yogurt each week, they tend to reoccur often). I usually go to Publix because it’s convenient and has a great assortment. But lately I find myself wanting to go the long way, looking for another store. I frequent Costco more and more, visit Aldi and Walmart even though they are much further away. I take a detour, go the extra mile to shop at a different location. Why do I take a Detour?

The understanding of why your shoppers take detours is one of the golden key‘s to increase visitation, and sales!

Are your shoppers really your most valuable asset?

The retailer is still essentially a merchant who makes money from the supplier through its services: store, shelves, shoppers and displays. And advertising revenue from suppliers is still the No 1 profit driver for the retailer. While many retailers talk about shoppers being their most valuable asset, many treat them as a necessary evil to be made reasonably satisfied when they frequent the store.

In the words of Herb Sorenson, “Why are retailers not paying more attention to the shopper? They are not paid to! One trillion dollars are paid to supermarkets (from suppliers) to manage their stores in a certain way.”

This is a business model that has been cultivated, refined and profitable for over 100 years, so it’s easy to see that it’s hard for the retailer to change.

Focus entirely on your No 1 asset

But the truth is that it is the shopper that empties the shelves, no matter if the shelves are physical or digital. And here is the big surprise, to the suppliers you are just a channel – as good as any other channel. This is something retailers are acutely aware of in the last 10 years with the rise of new channels such as Amazon.

So, what to do? Every retailer needs to put the shopper in the center of everything they do, if they are to survive. That means changing the way the retailer sees its shoppers, their No 1 current and future asset.

If you want to increase sales, there are essentially 3 ways to do it:

Make existing customers buy more – increase basket size
Make existing customers frequent your store more often – increase loyalty
Increase number of customer – attract new shoppers

Looking at this list, all 3 are in the hands of the shopper. We are avid promotors of customer experience and loyalty, it is one of the best ways to be a profitable and successful business. But even if you are a star at customer experience and loyalty, you also need to attract new shoppers. This blog post focus on the last lever – attracting new shoppers.

Attract more Shoppers

For a business to survive, they must continually build and increase traffic to the point of sale at least enough to match natural attrition.

Simple in theory, but with the rapidly shrinking brick and mortar market, easier said than done. This is about leveraging all that you already have:

Sales data
Behavioral data
Shopper insights

and combining them in a meaningful way. One such application area is shopper choice, i.e. why the shopper chose one store over another, and how that influence your business.

Location, location, location, right? It is immensely important. There is no arguing that the location is one of the deciding factors for a Brick and Mortar success or failure, but is that the whole story?

Yes, it is important to find the optimal store locations for a target group, housing, travel patterns, traffic, parking, competitors etc. But when the store is established, location analytics are irrelevant, right? I mean, why does it matter in the short term?

Location = only 1 of 4 drivers

If location is everything, how can a new IKEA store suddenly redefine what is prime commercial real estate in a market? The answer is quite simple. Shoppers like the IKEA experience and travel quite extensively to get to an IKEA store, and this is true for many different brands and stores. How is it that some customers are willing to go the extra mile to a store that is less convenient, and how can your stores become that “detour magnet”.

Models have long been used to model geography, sociodemographic data, travel patterns and competition using complex algorithms to understand how to place and position stores. But are they giving you the full picture?

For the shopper, only 4 major drivers exist for choosing which store to visit:

Value/Price
Convenience
Experience
Assortment

Examining this list, it is clear that location is not everything, just one of four decision criteria. In fact, convenience in form of a great location, can sometimes cost substantially more than the actual gains. It is therefore imperative for the retailer to understand how and why these choices are made.

Introducing “Detour” – learn from the shopper and grow your business

What is convenient? Well, it’s all in the mind of the shopper. What might be convenient for one shopper might not be for another.

Nepa has developed a Detour concept that leverages existing data flows in the shopper centric concept of subjective convenience, i.e. let the shopper define what is convenient and learn from that.

We use sophisticated data models based on purchase behavior, geolocation data, competitor sets and add the layer of shopper subjectivity to understand how the shoppers’ definition of convenience impacts each unique store.

Nepa Detour determines what drives the shopper to take the long way and how that can be nurtured, developed and expanded to grow your business.

4 cornerstones to drive sales growth

Detour is built on Nepa’s Consumer Science platform™. The platform brings to bear the true potential of data science to unleash consumer research’s full power. The detour application merges multiple data sources with shopper insights to deliver bottom-line results.

The Detour solution is a business development tool tailored to drive growth to your point of sales. The Detour application will provide you with powerful analytics and will help you understand the competitive landscape both in perceptions and sales. This understanding will provide you with insights into which specific departments you should focus on, either to improve or to communicate, to leverage your competitive strengths.

The four cornerstones of the Nepa Detour solution:

Think local. Each store has a unique set of local factors influencing shopper store choice.
Use multidimensional data. Use behavioral, geographical and sales data to understand behavioral patterns and how they influence each of your stores.
Inside the shoppers’ mind. No amount of behavioral data can alone bring understanding of the choice process of the shopper, you need him or her for that, and you know what – it is different for different shoppers!
Be inspired by data. The local store manager is best positioned to use the knowledge from the Detour application optimally. So, we developed Detour deliverables with him or her in mind – to inspire them in ways that promote action.

Nepa Detour analytics – download our product sheet

Want to know more? Download our product sheet or contact me or your Nepa account manager to discuss how to get more shoppers to take a “Detour” to your stores.

By the way, the reason for my own personal “detouring” that I mentioned in the beginning of this post is:

Even though Publix has a great assortment, their prices are just too high compared to the value that I feel they provide. Especially in the Dairy category.
If the customer experience would have been great at Publix, my Detours would likely be fewer.
Publix doesn’t provide me with incentives to be a loyal customer. I know they have some sort of rewards program, but none has ever been offered or explained to me. That means Publix doesn’t have a clue that I am removing more and more of my business from their stores. This might be the greatest threat to their existence, not knowing what might hit them!

Erik Enecker
Chief Product Officer at Nepa USA & COO Global Product at Nepa

Blog Posts

Local is the New Global – Using Customer Feedback to grow

November 17, 2017

Sam Richardson

Customer feedback is the data resource for monumental growth. Enjoy the interview in theaboutpages.com page 14-16 of Ken Peterson, Managing Director, Nepa USA by Régine Smith, Director of Marketing, SurveyGizmo.

The Big Data and Analytics sub-sector is experiencing rapid growth, growing at a blistering pace. The aggregate amount of data available to retailers doubles every two years. Acquiring the insights that retailers need to find, target and retain their ideal customers used to be a problem. Now, marketers are tasked with sifting through the enormous amount of data. Big Data is just that, and the sheer amount makes it difficult not only to discern what’s valuable, but to discover what information might be missing or lost in the shuffle. Nepa is a relative newcomer to the Denver market. The company is a the pioneer of Consumer Science and help create companies with a data-driven and consumer oriented decision making – at all levels in a company. Today, we speak to Ken Peterson Managing Director US at Nepa, and get his input on the Big Data and the impact local retailers will soon see.

RS – Can you tell our readers a little about your organization?

KP – Nepa is one of the world’s leading provider of data-driven consumer insights, which has previously worked with retailers like H&M, Carlsberg, and Spotify. Today, Nepa has emerged as one of Europe’s fastest growing companies and is pioneering new approaches to combining customer feedback, panel data and online consumer behavior with point of sale information. We’re the leader in turning customer-focused “big data” into actionable insights that can have an immediate impact on a company’s bottom line.

RS – Big data and analytics have climbed to the top of the corporate agenda. What are the most exciting developments you have seen in the data insights industry?

KP – You can’t invest thousands upon thousands and millions in real estate anymore. It’s now all about transportation and logistics, which is gonna be tricky because I think it’s transportation companies that are going to make a large amount of money off of the idea that local is the new global. If you want a pair of faded jeans and you can only find it one place that fit you just perfectly. Now you can get it anywhere in the world, and you can even get it shipped overnight while you’re traveling to a foreign location. It’s not a surprise to see a company like Amazon investing in warehouse in Denver because that’s now a distribution channel. It’s not about having physical locations; it’s about having a distribution system. So, a lot of what’s going to happen in retail is how you get it to people. It’s very different than what we did five years ago.

RS – Are these the types of changes you would like to see?

KP – It’s just gonna continue to evolve that way. So that the last thing people will have to think about on a day to day basis is: “Do I need to stop at this store?” If you think of where Starbucks started, and how long it took for them to achieve monumental growth. Now, a local company can grow quickly & globally because of all the resources that are available, and the biggest resource of it all is data. We’re going to start seeing a lot of niche businesses, needs-based industries, just blow up and expand because they now have the resources and the data to grow on a global level.

RS – What role do you see your organization playing in the future?

KP – I feel very fortunate in finding Nepa at the time that I found them, because I was working in the customer service industry for years; measuring customer satisfaction. What’s great about Nepa, is that we bring the power of a data science team of 300 people, to an individual organization and we help them ‘think’ globally.

RS – What’s the value of obtaining social data that is publicly available versus data that could be privately obtained?

KP – There’s always first party, second party and third-party data. We know what’s selling well and know what’s not selling well, and define that as a first-party data. Second-party data is some of the things that are obtained through a direct relationship with the customer. Then there’s the third-party data, which is collected through an external source. The biggest sources right now are customer experience feedback, behavior surveys, and social media, which I call sort of the unfiltered, true customer feedback. For the first twenty years, we asked: “Would you recommend?” Now with social media, our small voice can be heard by thousands of people. It’s amazing the response that we get for that experience when you post the complaints around Twitter. Social Media becomes a big part of the customer experience because people tell you how they felt about one interaction versus how they feel about the relationship as a whole. Social media is going to play a huge role. I’ve seen it already.

KP – Earlier this year Nepa was selected by Facebook as a partner firm in Facebook’s Marketing Mix Modeling Program. Nepa is one of very few that have access to more granular data from the world’s biggest social media network. This data helps us better identify and understand big differences in individual behaviors, geographical regions and different types of advertising. Together with first and second party data, we bring even more precise recommendations to our clients on how to manage their retail businesses more efficiently.

RS – With the surge of “fake news”, how do you see this impacting your ability to capture feedback?

KP – Customer feedback surveys are important. They’ll never disappear. I’ve been hearing for 18 years that customer surveys are going to disappear, but they won’t. Social media does have an impact. People respond to it. Customer experience is not just one transaction; it’s an accumulation. Its starts before a customer even leaves the house. Customer experience is the entire path. Part of that is the feedback mechanism which may be social media; in which customers can choose to praise a retailer or criticize them unfairly. You have to respond to it because people see it.

RS – I’m curious to see how far the idea of customizable user experiences will go. It’s a fascinating time to be part of this evolution.

KP – We are becoming so connected. I read something two days ago about a large retailer who won’t just deliver your groceries to your house, but will bring them in and put them away on the shelves for you.

RS – How has the move to Denver impacted your organization?

KP – The biggest impact is that it allows me to be central. Having a small group of people who are geographically dispersed, I can get to anywhere pretty quickly. But one of the greatest benefits is that there are so many burgeoning retail businesses here. Whether it’s a durable goods retailer, a consumer goods retailer or even a restaurant, there are so many businesses that are either starting in Colorado or growing in Colorado; we’re able to connect with them closely, quickly and easily. We’re at the heart of where retail is going to grow. It’s no longer going to grow in LA or NY. It’ll be here in Colorado.

About Ken Peterson

With a background in Mathematics and Operations Research, I have a passion for finding ways that companies can be more profitable through truly actionable insights in data. I have more than two decades of experience in the marketing research, retail and transportation industries with a recent focus on Big Data Business Insights, SaaS deployments and Consultation. This ties in with my long history of P&L responsibility and detailed understanding of improving business operations.

At Nepa, I am privileged to help our clients in retail, hospitality, technology, travel, sports and media better understand how to make use of the vast quantities of data that is now available.

PS. Why not download our eBook to learn how leading CX programs are integrating sales data, location data and other operational metrics to make CX insights more actionable at every level of the organization! DS

Ken Peterson, Managing Director, Nepa USA

Blog Posts

Data Everywhere – Insights Not Found

November 1, 2017

Sam Richardson

Why should we be looking at insights to inform our decisions? The simple answer, money.

It’s that time of year again and I’m receiving campaign mailers for local elections for two towns. I don’t live in either one. While I’m honored that they think my “vote is important”, I can’t vote in either election. An easy check against public records would save each of these campaigns more than $1,000 – where budgets are often not much larger than that.

Instead, over the last couple weeks, I’ve accumulated over 50 campaign mailers – even at a low end cost of $2 each, that could reach – in my neighborhood of 400 homes (none of which can vote in either election, but are receiving these mailers) – a cost of $40,000, none of which will have any positive influence in the outcome. Matching against a list that costs about $50 would have saved these campaigns precious funds that could have been better used for their targeted audience.

Are you working to improve the right KPI?

Think about the amount of time, effort and money spent at your company looking to improve customer experience. Often these budgets can reach into seven digits, not including the man power spent on the efforts – but:

Are you reaching the wrong people?
Are you working to improve the wrong KPI?
Do you spend all your time fixing individual complaints coming from your data, but not driving strategy from insights?

Shine a fact-light on data

Our businesses succeed when we have revenue and make a profit. While we can look at other measures that help drive our business towards that success, our efforts in improving them should not take away from the goals of the business. We gather transaction data, basket data, customer information and loyalty data – but all too often they aren’t brought together and understood – and therefore you can´t reveal decision-worthy insights.

Do you have examples where companies gather data, but they are not using insights – and not utilizing the opportunities of generating financial outcomes?

Comment and let me know about your stories. You can also download our CX IQ eBook to learn more about using data to gain insights.

Ken Peterson
Managing Director of Nepa USA

Blog Posts

Modelling marketing strategy to sell more pizza

October 30, 2017

Karen Chandler

The time when “trust your gut” was a decisive factor in developing marketing plans is over. With 30 consecutive months of growth and sales up by 18% on a YTM basis, the Finnish pizza franchise Kotipizza has proved that recurrent and detailed review of marketing efforts and media investments provides clear answers to what creates continued success in sales.

New marketing opportunities within MMM

Marketing mix modelling or MMM is a systematic way to identify the strengths and weaknesses of marketing programs. MMM addresses key issues within your media mix, such as offline, digital and social media, as well as price, promotions and other factors. MMM also examines external influences including competitive actions, seasonality, economic conditions and brand awareness in order to understand how these factors impact your sales performance.

“In an MMM analysis, you get continuous recommendations on changes to a marketing plan. This way you can better meet business goals of improved revenue, sales and profit, and even brand building. We can also forecast and monitor the impact of newly executed marketing plans so as to assess progress and continually improve revenue and ROI”, says Martin Ekenbäck, Product Director at Nepa.

Recipe for success in continued marketing ROI

Often companies don’t know which analytics are available and how granular data can be obtained and analyzed. Without this knowledge, it’s easy to just adjust last year’s strategy and budget a bit, and hope for the best. Even though you might get positive sales ROI, you don’t know why you succeeded. Kotipizza didn’t want to risk leaving money on the table that they didn’t have to.

“Just like everywhere else in our company, in marketing we have to substantiate our budgets and show evidence of success. That’s the main reason why we have incorporated MMM into our decision-making. Although we already exceeded the average growth in the Finnish fast food market, we wanted to make sure that our media mix and campaign structure were effective and provided us with the analytics for continued growth”, says Johanna Kuosmanen, Strategist at Kotipizza.

Look at the relevant sales drivers

Marketing mix modelling combines data from sales and historical marketing to measure ROI on sales. The analysis aims to explain, and in some cases also predict, sales volume and market share depending on inputs from marketing. It’s also important to look at other sales drivers such as competition, seasonality, brand awareness and brand loyalty to get the complete picture.

Take your business model into account

Kotipizza’s marketing mix modelling has revealed that it’s possible to increase budget and still remain within positive ROI, which is not always the case. Kotipizza has a fixed marketing budget that is determined by how the franchising business is doing (certain % of sales). The only way to get a bigger marketing budget is to make the franchisees’ business grow, increasing their total sales. To manage market conditions and get full impact in their marketing, Kotipizza adjusts the marketing budget on a monthly basis. This way the company always stays in control and rarely suffers from any big surprises.

When Kotipizza realized what MMM really meant for their decision-making, they implemented concrete changes in strategy:

New campaign tactics and timing. Before, TV campaigns were designed to cover one weekend and more weekdays. Now, they cover two weekends. Pizza sells best on Fridays, Saturdays and Sundays, not Mondays.

Coupon campaigns were added. More and shorter coupon campaigns work better than fewer and heavier coupon campaigns per year. Individual coupon campaign effects generated an increase up to +30%.
TV and digital became primary media as the MMM had proven ROI capabilities in both. You can use both online and offline marketing to drive attitudes and actions. Online advertising is very effective in lifting quantity metrics, yet television ads boost engagement metrics of page views and positive social media conversations.
Increase in marketing budget will still achieve positive ROI, even though the franchising business model doesn’t budge on this.

Kotipizza now boasts 30 consecutive months of growth and their sales are up by 18% in a YTM period. As the marketing budget has grown following increased sales, the company’s seen the impact of “more marketing spend, more sales” tactic: a positive ROI.

5 proven steps to strengthen your marketing ROI

As a method, MMM will substantially improve your marketing decisions and the return on marketing investments. Handled correctly, it provides scientific means of understanding what drives sales and how much ROI each component of the marketing mix generates. It will also offer smart guidance in developing and refining your marketing plans and budgets.

Here’s what Johanna Kuosmanen recommends you do if you’re not satisfied with your marketing results:

Build a data-driven marketing ecosystem inhouse.
Define clear and relevant business KPIs – what can we influence with our marketing and media strategy?
Analyze results per media, both online and offline.
Analyze and decide the right metrics related to the relevant KPIs. Remember that marketing investments should translate into both sales and brand awareness.
Use MMM analysis to find an optimal media mix for planning purposes. This will also help you to figure out which media deals suit you.

Milla Westerlund
Account Manager, Nepa Finland

Blog Posts

Measure what really matters – Facebook perspective

October 23, 2017

Sam Richardson

The nature of the consumer journeys are getting more complex to understand and new digital advertising products will completely change the role of what traditionally have been seen as the possibilities of digital advertising. This puts high pressure on having reliable measurement solutions focusing on what really matters.

As a global Facebook partner, Nepa recently had the good fortune to attend the Facebook Global Partner Summit in San Francisco. The summit included teams from Facebook, Instagram and Messenger sharing product roadmaps, opportunities for growth and talk about key trends and insights. It was all presented in two days of sessions and discussions on topics related to ad tech and measurement.

As I was taking part of a variety of perspectives within the areas of these topics, it became even more obvious to me that the landscape of marketing measurement is changing rapidly.

In line with this point – my view of the key themes seen in most measurement related sessions were:

The ideal measurement solution comes back to business outcomes
While there are several proxies of impact out there today, the best evaluation of a campaign performance still always comes back to actual business impact – i.e. sales. Reach, no of viewers, in screen etc. might be good approximations of how to optimize your marketing in detail, but it is always important to tie back to the one and only thing that matters.
Don´t miss your opportunities
Approaches known for focusing on the holistic perspective, such as Marketing Mix Modeling, will be a key ingredient to make sure to not miss any opportunities as media effectiveness changes rapidly and new ad products come to the market at fast pace.
People based measurement is more important than ever
The consumer journey becomes more complex, including both online and offline touchpoints mixed together in a nonlinear buying process. Separate silos of offline data and online data will not help to identify the full pattern only seen in single source data. To understand the consumers and the roles of different touchpoints you need tools such as Path to Purchase to cover the full purchase process, from the first to the last interaction.

Marketing Optimization applications should put the client’s money where it matters, not least within digital, where today’s marketing spend is accelerating.

3 steps to marketing effectiveness
Together with our clients, we always develop detailed plans based on these 3 business needs:

How to define customer journeys.
How to make solid decisions on content and media spending.
How to track performance, short- and long-term.

For further information about what we as a global Facebook partner could do for your marketing effectiveness, please contact me.

Andreas Nordfors
Product Director at Nepa

Blog Posts

The impact of advertising must always be questioned

August 10, 2017

Sam Richardson

Online advertising is no exception. As P&G Co wants every dollar to add value for their consumers or their stakeholders, they just cut more than $100 million in digital marketing spend in a quarter. They report seeing little impact on their business.

P&G’s move to cut its digital ad spend is a bold one, but it clearly shows that the company have focused on driving sales. This is the top objective for its advertising strategy.

Use the right data, in the right way

Advertisers of today are working in an incredibly data-rich environment. They have a vast range of measurements at their hands. Click-through rates, exposure, reach, engagement are only some of them. It can be easy to lose focus from the ultimate goal of the advertising, to drive sales.

However, this unprecedented access to data makes it possible to, more accurately than ever, measure return on marketing investment (ROMI). But this requires more than the sheer access to data. It demands a thorough analysis framework, taking into account media investments in all channels – digital as well as traditional above the line – and sales data. Ideally, this analysis also incorporates slower-shifting brand effects, to avoid the pitfall of focussing only on short term and call to action marketing.

Granularity of online data allows for identifying return on investment for each specific online channel.

This is vital, since effectiveness varies dramatically between types of online marketing. It´s depending among other things on the product category, the creative content and the target audiences. P&G’s decision to cut 100 million in online spend is dramatic. If well grounded in analysis identifying specific online channel’s inefficiency, we welcome the boldness.

4 steps to measuring advertising effectiveness online and offline

Here is a Nepa best practice list for measuring advertising effectiveness:

Keep your eyes on the ball. If incremental sales is your ultimate goal, this is your KPI, the goal variable your model aims at.
Cross-channel analysis. We compare Digital and traditional media instead of measuring separately.
Remember brand effects. A ROMI analysis is incomplete when it only takes into account sales that is generated within a week.
Content matters. Nepa’s analyses repeatedly show how the return on media investments differ dramatically depending on the quality of the creative – quantified and incorporated in the model.

Please don’t hesitate to get in touch with me, if you’d like to learn more about how we at Nepa meet these challenges.

Kalle Backlund
Head of Analytics at Nepa UK