Mass Marketing Or Tailored to Your Tribe? How to Grow Your Brand in the Era of Data-Driven Retail

Mass Marketing or Tailored to Your Tribe? How to Grow Your Brand in the Era of Data-Driven Retail

Guillaume Bacuvier, CEO, dunnhumby Apichat Saligupta, VP Customer Development, Unilever

Delighting customers at scale 4.8bn personalised offers Proven performance & results 6-8% growth in visit frequency Extensive heritage and experience working with retailers and brands 70+ retailers and 1,000+ brands Immediate impacts Value return within 6 months

Leading Global FMCG Companies Leading Consumer Brands • 25+ years experience • Global best practice & learning shared across our partners • 50+ software only clients • A pool of flexible resource. Over 500 analysts

Proliferation Uncertainty of channels to around consumer communicate spending

Retailer Retailers pressure on Data-driven decreasing promotions & v decisions ranges private label

Decrease Proliferation in brand of channels to loyalty purchase

Mass marketing? Innovation? Digital? Direct to Promotions? consumer?

Best route to growth is mass marketing to reach Growth only comes from as many as possible acquiring new shoppers

Once buying, there is no need to activate existing Long term shoppers with marketing Brand Loyalty is dead anyway!

• 7 categories: Bread, Bottled Water, Breakfast Cereal, Chocolate, Baked Beans, Nappies and Washing-up Liquids • 800,000 shoppers (UK) • 200M transactions • 1 and 5 years of sales

The average percentage of brand sales by category, generated by the top 20% of shoppers across 1 year and 5 years.

The percentage of sales, generated by the top 20% of shoppers across 1 year and 5 years, by market share. (This covers the top 5 brands in each category studied, in decreasing order of size by market share.)

• Top 20% of shoppers were typically responsible for 70-80% of brand sales • Market share rank important. More pronounced for smaller brands • Some differences by category, but a similar pattern observed.

• 7 categories: Bread, Bottled Water, Breakfast Cereal, Chocolate, Baked Beans, Nappies and Washing-up Liquids • 1.5M shoppers (UK) • 344M transactions • Sales trend over 4 year period (measuring like-for-like sales across 2 consecutive 2 year periods)

120% Brand sales growth – measuring LFL sales 2014-15 vs 2016-17

100%

80%

60%

40%

20%

-20%

-40% Bottled Water

62% £3,800,000 101%

£3,300,000 84% £2,800,000 60%

£2,300,000 84% 60% £1,800,000 65% 84% 40%

£1,300,000 116% 35% 80% £800,000 29%

£300,000

-£200,000 Beans 1 Beans 2 Bread 1 Bread 2 Bread 3 Cereal 1 Chocolate 1 Chocolate 2 Nappies 1 Water 1 Water 2 Water 3 Water 5 Retained Top 20% Shoppers Other Retained Shoppers Switching Shoppers (new & lapsed)

£0

-£500,000

-£1,000,000 62% 89% -£1,500,000

-£2,000,000

-£2,500,000

-£3,000,000

-£3,500,000

-£4,000,000

-£4,500,000 80% -£5,000,000 Chocolate 3 Chocolate 4 Water 4 Retained Top 20% shoppers Other Retained Shoppers Switching Shoppers (new & lapsed) 19 © 2018 dunnhumby / All rights reserved / Confidential Some brands’ top 20% of shoppers were responsible for almost half the growth

£3,800,000

£3,300,000

£2,800,000

£2,300,000

£1,800,000

£1,300,000

£800,000 42% 45% 28% 33% 32% 42% 13% 67% £300,000 47% 19% 38% 12% 5%

Beans 1 Beans 2 Bread 1 Bread 2 Bread 3 Cereal 1 Chocolate 1 Chocolate 2 Nappies 1 Water 1 Water 2 Water 3 Water 5 -£200,000 Retained Top 20% Shoppers Other Retained Shoppers Switching Shoppers (new & lapsed)

• 73% of Brand sales growth came from retained shoppers • Top 20% of shoppers represent almost 50% of growth for some brands • Even for brands in decline, their top 20% shoppers are providing greatest value • Attributes common to top 20% of a Brand’s shoppers can be identified through data science techniques

• 7 categories: Bread, Bottled Water, Breakfast Cereal, Chocolate, Baked Beans, Nappies and Washing-up Liquids • 1.5M shoppers (UK) • 344M transactions • Sales trend over 4 year period (2 consecutive 2 year periods) AND • All packaged goods categories • 0.9M shoppers (France) • 180 brands • 3 year period

Retention of Brand Shoppers from 2014 to 2018

Beans 2 Beans 1 Washing Up Liquid 1 Water 1 Water 3 Water 5 Cereal 3 Bread 4 Water 2 Chocolate 2 Chocolate 3 Chocolate 1 Bread 1 Chocolate 4 Nappies 1 Bread 2 Bread 3 Cereal 2 Cereal 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Top 20% Shoppers Retained as top 20% Shoppers Retained

Retention Rate 59% 55% 56% 51% 48% 46% 43%

Packaged Beverages Dairy Fresh Frozen Household Beauty goods

# Brands 51 20 37 19 4 14 37

26 Average retention rate for shoppers across 180 brands in these categories in 2017, compared to 2016 (France) © 2018 dunnhumby / All rights reserved / Confidential Where targeting is making a difference Case study: When brands target existing buyers, they drive sales – UK beer

Objective Action Campaign overview Driving sales of Beer Brand Target: Existing & Lapsed brand buyers, Heavy lager category buyers

Key results

Existing Brand buyers Mid and Higher exposure 346K +16% drove the uplift Up Market segments +10% drove more sales households brand sales (68% contribution) responded best Category uplift per exposed reached uplift sales uplift

Objective Action Supporting increased sales of a range Targeting: Existing & Lapsed Campaign overview of cereals for a major brand Brand buyers as well as Cereal Drive brand penetration and headroom category buyers from existing shoppers

Key results

+4,000 incremental 377K +9.5% +9% shoppers 49% 10% households brand sales Featured product +1,500 incremental sales uplift contribution increase in reached uplift sales uplift shoppers purchased from Young Families units sold 3+ times

Packaged Goods Beauty

Retention + 9pts Retention + 9pts

Loss of shoppers Loss of shoppers - 6pts - 5pts to competition to competition

Coupon redemption 12% Coupon redemption 9%

Sales uplift 25% Sales uplift 21%

Source: Results after 3 reward coupon campaigns, 2017 France.

• Relevance is key. By knowing your loyal shopper profiles and behaviours you can target similar people who have high propensity to grow their spend with the brand • Personalisation makes both acquisition and retention more effective • Focus on a strong attack and defence strategy – the loyalty and acquisition with a personalised approach • Modelling the behaviour of your existing shoppers using their attributes creates the option for a more targeted and efficient growth strategy

• Research highlights the importance of understanding shopper segments. Brands need to keep talking to their existing shoppers or risk losing them • Don’t miss the opportunity of headroom for growth with existing shoppers • Brand preference and differentiation may be more prevalent in smaller and ‘niche’ brands, yet the impact existing shoppers can have on overall sales and growth is significant for many brands

Measuring long-term shopper values is a key approach

Shopper life-time value Shopper acquisition Time to payback Return on (SLV) cost (SAC) (TTPB) Shopper (ROS) What is the lifetime value How much do you need to What is the break-even What is the Return of 1 additional shopper spend to acquire 1 additional point where campaign cost on Shopper to brand? you have? shopper? can be recovered in sales?

35 © 2018 dunnhumby / All rights reserved / Confidential From all existing Breeze shoppers, we drill down to understand Breeze’s loyal shoppers which helped us design a campaign with personalized offers and instore media

Targeted offers

Majority of Breeze In-store media loyals are in the Up Market segment

Shoppers no longer shop Win Back in retailer this year

Lapsed shoppers Shoppers no longer shop Win Back in category but still in retailer

Shoppers still shop in category Win Back but not buying Breeze

Biggest spend contribution

Shoppers grew their Breeze Retain sales from last year Existing shoppers Breeze Shoppers declined their Stretch Breeze sales from last year shoppers this year Shoppers only buy from Maximize Breeze in category Laundry Shoppers New shoppers Shoppers buy from other Stretch brands too in category

Business objective To secure brand share among existing shoppers

Campaign objectives To ensure Breeze existing shoppers continue buying Breeze and also drive their basket and loyalty

• Launch in-store media in selected stores based Actions on Breeze loyal shopper profile • Launch the targeted offer among Breeze existing shoppers

Breeze campaign results by channel

Brand Conversion Rate – Brand sales uplift % of shoppers buying brand during the campaign Mailing & In-store 55% Mailing 96% & In-store a Mailing Only Mailing 30% 41% Only 1.3x In-store Only In-store 19% 6% Only

No Contact 17%

…created 1.3x greater sales uplift than mailing alone

…generated a Lifetime Value that resulted in a Return on Shopper of 2.8 (well above average spend of ‘additional shoppers’)

• Developing a greater understanding of our existing shoppers is helping us create more effective marketing campaigns – for retention and acquisition • A data-driven approach to mass marketing is allowing us to target and measure • Using a clever mix of personalized and mass is driving better results

• With top 20% of shoppers so important for overall brand sales, it’s important to understand and engage this shopper segment • A marketing strategy balancing acquisition and retention is key • With 60-70% of brand growth coming from existing shoppers, targeting this segment should be considered as part of a growth strategy • Modelling behaviours of existing shoppers can provide attributes which identify those most likely to become shoppers of your brand • Mass marketing still has a place in the marketing mix, but to limit churn and cultivate growth, investment should be rebalanced towards targeted approaches

43 © 2018 dunnhumby / All rights reserved / Confidential Thank you dunnhumby is the global leader in Customer Data Science, empowering businesses everywhere to compete and thrive in the modern data-driven economy. We always put the Customer First. Our mission: to enable businesses to grow and reimagine themselves by becoming advocates and champions for their Customers.

With deep heritage and expertise in retail — one of the world’s most competitive markets, with a deluge of multidimensional data — dunnhumby today enables businesses all over the world, across industries, to be Customer First.

The dunnhumby Customer Science Platform is our unique mix of technology, software and consulting, enabling businesses to increase revenue and profits by delivering exceptional experiences for their Customers – in-store, offline and online. dunnhumby employs over 2,000 experts in offices throughout Europe, Asia, Africa, and the Americas working for transformative, iconic brands such as Tesco, Coca-Cola, Meijer, Procter & Gamble, and L'Oréal.

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