Collaborative CRM Workshop. 03 Segmentation and Scorecard

Transcription

1 Collaborative CRM Workshop 03 Segmentation and Scorecard 1 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

2 Collaborative CRM Workshop Agenda Introduction to to Collaborative CRM Partner Alignment & Project Objectives Segmentation & Scorecard Strategy & Tactics Development What are the key challenges facing the industry in Europe What is Collaborative CRM How can Collaborative CRM improve the industry dynamics and performance What are the personal opportunities for certification How do you identify and engage with the right Partner for Collaborative CRM What are the key decisions to make before working collaboratively How do you establish objectives, target benefits and project plan Collaborative Segmentation How is it done How do you develop a pragmatic, valid Segmentation How do you establish goals which focus on the target Segment What are the strategic options and how do you choose them What are the Tactical options for delivering the Strategies Implementation & Measurement Project Scoping & Next Steps How do you plan effectively together to ensure the best implementation What are the key considerations for success What measurement criteria can you use Which real world initiatives will be progressed What are the barriers to progress and how can they be overcome What is the plan & next steps to make them happen 2 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

3 Collaborative CRM Workshop Introduction to to Collaborative CRM CRM Partner Alignment & Project Objectives Segmentation & Scorecard Strategy & Tactics Development Implementation & Measurement The objective of this section is: To learn the options and approach for developing a pragmatic COLLABORATIVE Segmentation To identify the PROVISIONAL Scorecard measures which can be used for Collaborative CRM At the end of this section you will be able to: Manage the segmentation process Develop a provisional Scorecard, to be validated during Strategy development Project Scoping & Next Next Steps Steps 3 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

4 The Value of Segmentation BENEFITS Better understanding of your customers than your competition Learn where new and/or better opportunities to penetrate the market Targeted communications delivering a higher ROI A higher customer retention rate ULTIMATE BENEFITS: Shopper Satisfaction Sales & Profit 4 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

5 What types of Segmentation can be done? Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield 5 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

6 What types of Segmentation can be done? Demographic Demographic One of the most straightforward bases for segmenting markets Demographic Basis Age Why Use it Buying behaviour can be closely related to age category Gender For certain categories gender is a clear differentiator Family Size Family remains an important social unit, which drives consumption Social Class/ Income head of household Geo-demographic Despite criticisms of this classification for being inadequate to describe consumer groups, it still maintains a discriminating power, for example Pensioners and Low income Combines a number of variables such as where a customer lives, with home ownership, size of family, and so on. Assumes demographic/socio economic characteristics of people can be correlated to the housing characteristics of a particular area. 6 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

7 What types of Segmentation can be done? Behavioural segmentation Takes customer Purchasing Behaviour as the starting point for segmentation Usage; Light Medium Heavy Behaviour Loyalty; Light Medium Heavy Benefit; What the purchaser wants from the product People buy the same product for different reasons, for example: cheap, branded, premium, an image, thickness, non-stick 7 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

8 What types of Segmentation can be done? Psychographics segmentation To describe the wide variations in behaviour and outlook of a sophisticated population. Cluster consumers into groups depending upon common interests and attitudes Determines the way they spend their time and money, Psychographic e.g.; Finer Foods Foodies who are time poor, money rich and choose everyday luxury items e.g.; Price Sensitive Cost conscious customers who tend to buy cheapest on display The Blue Book refers to this area as beliefs & value systems 8 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

9 What types of Segmentation can be done? Life Stage Segmentation A logical follow on from Psychographic Consumers pass through a series of quite distinct phases in their lives, each phase giving rise to different purchasing patterns and needs. Life Stage 9 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

10 What types of Segmentation can be done? Shopping Mission Segmentation Segmentation based on identified Shopping Trips, which are deemed to include certain behaviours and purchasing patterns Shopping Mission 10 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

11 What types of Segmentation can be done? GREENFIELD segments are modelled after the collection and analysis of multiple info - i.e. attitudinal segmentation Greenfield 11 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

12 Examples What segmentation is this? Daily Twice Weekly Weekly Stop Start Now & Then Hardly Ever High Spend Premium Standard Potential Medium Spend Standard Potential Uncommitted Low Spend Potential Uncommitted Frequent Infrequent Rare Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield Copyright,dunnhumby 2002 x2 Copyright, dunnhumby Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

13 Examples What segmentation is this? Purchase Frequency Weekly Monthly Sporadic 20+ A Customer B Customer C Customer Spend per Purchase 10 to 20 5 to 10 B Customer C Customer C Customer D Customer D Customer Up to 5 D Customer All Others Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield x2 13 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

14 Examples What segmentation is this? Big families child 3-11 baby 0-2 > 65 OPPORTUNITIES MARGINALS UNLOSABLE FRIENDS Families 1/2 components Loyalty No. Shoppers & Turnover Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield 14 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

15 Examples What segmentation is this? Affluence Mainstream Family type meals Popular brands Kids products Finer Foods Foodies who are time poor, money rich and choose everyday luxury items Convenience People on the go who haven t time or inclination for scratch cooking Price Sensitive Cost conscious customers who tend to buy cheapest on display Healthy Organic shoppers, fruit and vegetables weight watchers etc Traditional Traditional housecraft with time to buy and prepare ingredients Upmarket Mid-market Cost conscious Age Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield Copyright, dunnhumby Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

16 Examples What segmentation is this? HEAVY USERS ACTIVE OF TOP PLB LOYALTY INTERDISCARD BRANDED PRODUCTS COMPLEMENTARY HIGH HOLDERS SPENDERSCATEGORY USERS THE BULL S EYE TARGET Demographic Behaviour Psychographic Life Stage Shopping Mission Greenfield 16 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

17 Segmentation types What s the right solution? Predictive modelling Database richness Buying Pattern segmentation Life Stage segmentation Psychographical/ attitudinal segmentation Understanding of the Shopper increases as you go up the scale! New Insights can be developed Sociodemographical segmentation Degree of analytical capability Source: Cap Gemini Ernst & Young 17 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

18 Segmentation types Strengths & Weaknesses Segmentation Type Demographic Behaviour Life Stage Psychographic Shopping Mission Greenfield STRENGTHS Simple to understand Measurable Accessible from many sources Usage is easy to measure Can be tracked and measured over time Actionable (within limitations) Can often be a clear link between life stage and purchasing/needs, i.e.; young families Can provide a definite segment which has clear needs making value proposition easier Provides valuable insights Descriptions can be rich and point to clear value propositions Immediate link to purchasing & CCRM environment Often clear relationship between Mission, needs and Categories bought Helps to focus directly on the issue at hand LIMITATIONS Not easy to link to behaviour People do not always behave to type! Shoppers use credits and debits Benefit based can be difficult to identify the Why?? Usage is not forward looking Data source needs to be representative Need to treat with caution not all pensioners watch TV all day! Not all people in life stage behave in same way are other drivers, such as income, attitude etc The research required can be expensive Interpretation of findings can be subjective, based on judgment requires consensus Can be challenging to action Information not readily available Can be costly to research Requires Quant and Qual mix Needs to retain it s relevance Specific segmentation may have short life cycle and limited use 18 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

19 Segmentation types What s the right solution? The most informative and added value Segmentation is often a combination! Behaviour Demographic Psychographic Life Stage Greenfield Shopping Mission A combination can give you the WHAT and the WHY!! 19 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

20 So How do you do it? An overall Process, not the finite detail on Segmentation Brief Experts / Review Data Select Segmentation Approach Measurable Measurable Substantial Substantial Different Different Accessible Accessible Develop the Segmentation Choose Segment Measurable Measurable Substantial Substantial Different Different Accessible Accessible 20 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

21 Briefing the Experts Brief Experts / Review Data The risk in briefing the Experts is over-complication Keep it simple; Establish Criteria for the Segmentation outcome, to ensure the Segments are VALID Use Business Questions to prevent going too wide and deep Leave the Data Mining speciality to the Specialists! 21 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

22 Brief Experts / Review Data So what is a valid Segment? A valid Segment should meet 4 Criteria; Measurable behaviour measures, value, growth potential Substantial maximum homogeneity value/volume/profit Different - clear differences between segments Want different benefits from the Offer So that the offer can be tailored Question what does the segment see as value Accessible can reach the segment(s) Through a specific media channel (store, banner, magazine, TV, internet, SMS) with a specific and cost effective communications message that leads to a response from the segment 22 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

23 Business Questions Examples Brief Experts / Review Data Business Question Who are the groups of similar shoppers? What are they purchasing? How are specific shoppers behaving in-store? Why are Shoppers buying the Products? How are consumers using the products? How much of each product is being sold? What are their attitudes & preferences to products? What does the Segment value that is unique? Loyalty card data Panel data Qualitative research Loyalty card data Panel data Qualitative research Retailer Loyalty Card database Qualitative research Market Research Panel Data Data Source POS store level data Scanning census data Joint/Sole Research Ad Hoc Research All Research!! TNS - GFK Dunnhumby Tesco TNS GFK Dunnhumby Tesco Company specific TNS GFK Example Retail Link Other Retail direct data Company specific Company specific What other data sources exist that you could use? 23 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

24 Brief Experts / Review Data What if you don t have loyalty card data? What can you do? Focus on the business question Focus on the cost benefit Illustrative Example How to answer the Business Question Who are the groups of similar shoppers? Approach Robust? Insight? Cost? Entry/ Exit interviews High Medium High 2. Qualitative groups Medium-Low High Medium 3. Public Surveys Medium Med-Low Low 24 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

25 It sounds complex! How is the data interpreted? Data Mining! Brief Experts / Review Data Business Questions Who are the Shoppers? Why are Shoppers buying? What are attitudes? Data To answer Questions Tools To manipulate Data Statistics To find correlations To find clusters The improvement in IT has enabled more sophisticated and easier segmentation analysis 25 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

26 How is the data interpreted - Data Mining! Brief Experts / Review Data Data Mining techniques are used to make sense of complex data and provide meaningful answers that can be actioned. Market Basket Analysis Identify relationships between variables i.e. diapers and baby food i.e.; Spend and Purchase Frequency Classification techniques Establish relationships between an object and it s behaviour i.e.; shopper store choice will depend on shopper characteristics, the trip, other needs Clustering techniques Group the observations to find correlations between purchases, store choice, other factors Forecasting After a relationship between 2 variables is established it is possible to forecast a change in 1 variable if the other moves first 26 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

27 Segmentation Golden Rule SIMPLIFICATION! Brief Experts / Review Data Keep the Segmentation as simple as possible Easy to understand Easy to action For example; Category-Retailer Segmentation High-Medium-Low Purchasers High 100% 80% To be developed HIGH VALUE for both Parties 60% Consumers Purchasing the Category 40% 20% 60% 70% To be developed 30% 0% Consumers Category Sales Segment Sales Low Consumers purchasing in the Retailer High 27 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

28 What is a valid Segment Brief Experts / Review Data A final Sense Check Segmentation should be contained Unrestrained segmentation can lead to unsustainable complexity i.e., range proliferation BUT.Listen to your experts, they can give you unbiased and often new perspectives on the insights Let the data talk! 28 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

29 Validating the Segmentation approach is a central part of the approach Which Segmentation Approach Should we use? Measurable Measurable Substantial Substantial Brief Experts / Review Data Select Segmentation Approach Different Different Accessible Accessible Develop the Segmentation Choose the Segment Measurable Measurable Substantial Substantial Different Different Accessible Accessible 29 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

30 Select Segmentation Approach Which Segmentation Approach Should we use? Select Select Segmentation Segmentation Approach Approach First step is to decide whether the Segmentation options are able to provide answers to the QUANTITATIVE Business Questions; MEASURABLE SUBSTANTIAL APPROACH SELECTION Segmentation Options - Enter Yes/No if Business Question can be answered Option 1: (type) Option 2: (type) Option 3: (type) Option 4: (type) 2.1a MEASURABLE Penetration Frequency Weight of Purchase Other Other Yes Yes Yes No No No Yes Yes Yes Yes Yes Yes 2.1b SUBSTANTIAL Value Volume Profit Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Yes Simply enter Yes or No and evaluate the best segmentation approach, based on it s ability to provide detailed answers to the Business Questions 30 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

31 Select Segmentation Approach Which Segmentation Approach Should we use? Select Select Segmentation Segmentation Approach Approach Repeat the same steps for the QUALIITATIVE Business Questions; i.e.; Yes or No?? DIFFERENT ACCESSIBLE APPROACH SELECTION Segmentation Options - Enter Yes/No if Business Question can be answered Option 1: (type) Option 2: (type) Option 3: (type) Option 4: (type) 2.1c DIFFERENT What are they purchasing? How are they behaving in-store? Why are Shoppers buying the Products? Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes What are their attitudes and preferences towards products? No Yes Yes Yes What does the Segment value that is The Business UNIQUE? No Yes Yes Yes Other BUSINESS QUESTIONS 2.1d ACCESSIBLE How can they be reached? How much would it cost? Questions used for the Brief! Yes Yes No Yes Yes Yes No Yes 2.1e APPROACH SELECTED Yes/No Yes/No Yes/No Yes/No 31 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

32 Example Segmentation Approach Affluence Mainstream Family type meals Popular brands Kids products Finer Foods Foodies who are time poor, money rich and choose everyday luxury items Convenience People on the go who haven t time or inclination for scratch cooking Price Sensitive Cost conscious customers who tend to buy cheapest on display Healthy Organic shoppers, fruit and vegetables weight watchers etc Traditional Traditional housecraft with time to buy and prepare ingredients Upmarket Mid-market Cost conscious Age 32 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

33 Once the Segmentation approach has been selected, the next step is to Choose the Target Segment(s) Brief Experts / Review Data Select Segmentation Approach Measurable Measurable Substantial Substantial Different Different Accessible Accessible Develop the Segmentation Choose the Segment Measurable Measurable Substantial Substantial Different Different Accessible Accessible 33 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

34 Choose the Target Segment(s) Choose the Choose the Segment Segment Enter the detailed data for each Segment Answer the questions and evaluate each Segment against the QUANTITATIVE criteria; MEASURABLE SUBSTANTIAL 34 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

35 Choose the Target Segment(s) Choose the Choose the Segment Segment Next, assess the Segments against the QUALITATIVE criteria; DIFFERENT ACCESSIBLE SEGMENT SELECTION 2.2c DIFFERENT What are they purchasing? How are they behaving in-store? Why are Shoppers buying the Products? What are their attitudes and preferences towards products? What does the Segment value that is UNIQUE? ALIGNMENT TO BRAND(S) Segmentation Options - Answer Business Questions Option 1: (segment name) Option 2: (segment name) Option 3: (segment name) Option 4: (segment name) The Business Questions used for the Brief! ALIGNMENT TO RETAILER 2.2d ACCESSIBLE How can they be reached? How much would it cost? 2.2e APPROACH SELECTED Yes/No Yes/No Yes/No Yes/No Selected Segment? Summary of Why chosen? Summary of Decision 35 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

36 Choose the Target Segment(s) Choose the Choose the Segment Segment Next, assess the Segments against the QUALITATIVE criteria; DIFFERENT ACCESSIBLE 36 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

37 Choose the Target Segment(s) Finalisation Choose the Choose the Segment Segment Select the Target Segment based on the answers to the Business Questions Review THE CCRM Working Proposal to check for alignment or new opportunities VERSION 2? 37 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

38 Segmentation Outcome Brief Experts / Brief Experts / Review Data Review Data VERSION 2 Select Segmentation Approach Measurable Measurable Substantial Substantial Different Different Accessible Accessible Develop the Develop the Segmentation Segmentation Choose the Segment Measurable Measurable Substantial Substantial Different Different Accessible Accessible 38 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

39 What is a valid Segment? Ultimately, the segment should be viable; The Value proposition must be economically viable Collaboration Analysis HIGH VALUE for both Parties HIGH VALUE for both Parties Financial Benefits from a Segment Greater than HIGH VALUE for both Parties Total Costs Communication/ marketing Product 39 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

40 What is a valid Segment?! CHECK STEP! What if the segment isn t viable? What do you do next? What are the risks of continuing with a segment that is unviable? 40 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

41 Workshop Segmentation 03 The purpose of this workshop is to choose a Target Segment to focus on. Assume that you have chosen the segmentation approach it is a Psychographic/Demographic Segmentation In your pack you have information on: The potential Segments that you could choose Information on the segment s quantitative measures Information on the segment s qualitative measures Complete the Segment Selection Grid 1. Which segment will you choose and why? Quantitative reasons Qualitative reasons ALIGNMENT TO RETAILER AND BRAND!! 2. Sense check this choice against your draft Working Proposal What are the issues, if any? 3. Refine your Working Proposal to produce draft 2 with more detail Please write your feedback on the flip charts 41 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

42 Workshop Segmentation 03 The segments you have chosen to analyse are: Family Treat Families who buy desserts regularly, and in large amounts, as a treat after family meals Stylish Singles Younger adults, buying desserts as a special occasion purchase, like premium products Male Snackers Males who buy and eat on impulse to satisfy hunger Upmarket Speciality Older adults, buying special desserts for specific occasions (birthday, dinner party) 42 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

43 Workshop Segmentation 03 Segment Selection Grid Segment Choice Why? Quantitative Reasons Qualitative Reasons Alignment to Brand (H/M/L) Alignment to Retailer (H,M,L) Sense Check Versus Working Proposal Refinements To Working Proposal H/M/L = High/Medium/Low 43 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

44 Workshop Segmentation 03 Segment Quantitative Criteria 44 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

45 Workshop Segmentation 03 Segment Qualitative Criteria 45 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

46 Workshop Segmentation 03 Update Your Working Proposal 46 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

47 Key Lesson Number 1! A valid Segment should meet 4 Criteria; Measurable behaviour measures, value, growth potential Substantial maximum homogeneity value/volume/profit Different - clear differences between segments Want different benefits from the Offer So that the offer can be tailored Question what does the segment see as value Accessible can reach the segment(s) Through a specific media channel (store, banner, magazine, TV, internet, SMS) with a specific and cost effective communications message that leads to a response from the segment 47 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

48 Key Lesson Number 2! Ultimately, the segment must be viable; The Value proposition must be economically viable Collaboration Analysis HIGH VALUE for both Parties HIGH VALUE for both Parties Financial Benefits from a Segment Greater than HIGH VALUE for both Parties Total Costs Communication/ marketing Product 48 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

49 Collaborative CRM Workshop Introduction to to Collaborative CRM Partner Alignment & Project Objectives Segmentation & Scorecard Strategy & Tactics Development Implementation & Measurement The objective of this section is: To learn the options and approach for developing a pragmatic COLLABORATIVE Segmentation To identify the PROVISIONAL Scorecard measures which can be used for Collaborative CRM At the end of this section you will be able to Undertake effective Segmentation Develop a provisional Scorecard, to be validated during Strategy development Project Scoping & Next Steps 49 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

50 What is a scorecard? A scorecard is used to establish; Specific business goals for the initiative Alignment between Manufacturer and Retailer on what is important Key Inputs Retailer and Manufacturer performance measures 50 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

51 Characteristics of a Good Scorecard Balanced Architecture It measures more than one area; Shopper Behaviour, Share, Financial results, Process Both Retailer AND Supplier perspective Focused on both short and long term. Timely, understandable and actionable measures Measures are reported to help make good decisions Measures are easy to understand and track the effect of strategy/tactics A management and evaluation tool Designed to measure, evaluate and manage the Collaborative CRM initiative, not necessarily the people involved 51 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

52 Characteristics of Good KPI s SMART S Specific M Measurable A Agreed Realistic R T Timed Define objective in clear and unambiguous way Make sure there is no misunderstanding Think which means what? can it be written in any more detail? Objective has numerical success criteria Criteria can be easily measured to evaluate success/failure Think could someone argue subjectively that the objective wasn t reached? Joint action can be taken to achieve objective Think Is everybody supporting this? Is objective achievable in a realistic time frame? Is objective achievable with realistic amount of effort and cost? Think Can we really achieve this or are we asking too much? The objective has a timeframe on it. If the timeframe is not achieved the objective has failed Think When do we need to do this by? 52 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

53 Scorecard Options Measures Shopper Behaviour (Purchase) STANDARD Penetration Buying Frequency Buying Rate Loyalty (Share of stomach) Retail Visit Frequency Shopper Conversion ADVANCED Satisfaction Measures Brand Affinity Index Financial Share of Market (Retailer, Category, Brand) CCRM Effectiveness Value/Volume - Retail Sales ( /Units) Gross Profit Margin Gross Profit Retailer Share of ACV Retailer Share of Category Brand Share Redemption Rate Retention Return on CCRM Investment Net Profit Activity Based Costing (ABC) Image Cost per Contact Business Process Costs ACV = All Commodity Volume Image refers to qualitative research findings on shopper preferences 53 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

54 Develop the Joint PROVISIONAL Measures from the CCRM Working Proposal document VERSION 2 Provisional Scorecard ONE Scorecard per Segment ONE Behaviour Change per Segment 54 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

55 Scorecard Targets answer some fundamental questions! What Behaviour will we change? What will it be worth? 55 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

56 What if the Scorecard Measures and Targets are low?! CHECK STEP! What if the size of the prize is too low? What do you do next? What are the risks of continuing with scorecard targets that deliver lower performance than many other options? 56 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

57 Collaborative CRM Workshop Introduction to to Collaborative CRM Partner Alignment & Project Objectives Segmentation & Scorecard Strategy & Tactics Development Implementation & Measurement The objective of this section was: To learn the options and approach for developing a pragmatic COLLABORATIVE Segmentation To identify the PROVISIONAL Scorecard measures which can be used for Collaborative CRM At the end of this section you are able to: Manage the segmentation process Develop a provisional Scorecard, to be validated during Strategy development Project Scoping & Next Steps 57 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

58 Collaborative CRM Costs v Benefits Where do they occur and what are the implications? Partner Alignment & Partner Alignment & Project Objectives Project Objectives Segmentation & Scorecard Segmentation & Scorecard Strategy & Tactics Strategy & Tactics Development Development ~0% Implementation & Implementation & Measurement Measurement Costs Benefits Costs build throughout the process but there is no real business benefit until the end of the process! Check to ensure plans deliver against scorecard objectives at every stage use the budget planner to estimate costs v benefits Budget Planner 58 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005

59 Collaborative CRM The Million Euro Shopper Question! Ultimately, will our Collaborative CRM plans result in a positive, loyalty building experience for the Shopper? Positive, loyalty building experience from a brand perspective? Positive, loyalty building experience from a retailer perspective? 59 Collaborative CRM Segmentation & Scorecard Copyright ECR Europe All rights reserved. Version 7.0 June 2005