For many commerce marketing organizations, breaking the cycle of budget allocations across retailers is an extremely difficult exercise. But in the data-driven world of omnichannel retailing, it’s no longer practical to continue divvying up the spend based simply on the size or aggressive demands of key accounts — especially since some of those key accounts may not be as critical to success as they once were.
Shopper behavior is changing dramatically, the retail landscape is shifting in response, and commerce marketers have an increasingly vast array of opportunities at their disposal. Yet they still only have a finite amount of money to spend and, therefore, need to be investing for growth rather than just calendarizing past practices or satisfying longstanding relationships.
How can I optimize my commerce marketing budget across retailers to maximize growth?
Using our proprietary Marilyn® martech platform, we help clients answer this question through a process involving two foundational steps: We first develop a Retailer Investment Strategy that identifies the partners best suited for driving brand growth. And then we conduct an Opportunity Sizing that identifies the shopper behavior changes that can optimize that growth at each retailer.
The Retailer Investment Strategy begins with a quantitative analysis of brand and category performance at each retailer. We then undertake a qualitative study by surveying the client’s shopper and sales teams to understand key attributes about the retailer that can impact the ability to effectively execute commerce marketing. Why? Because the quantitative data doesn’t always provide the full picture about the retailer and the relationship.
Using the findings from these two analyses, we reprioritize the client’s key retailers into four groups:
- “Grow” means there is opportunity for growth with this retailer, but it will require a larger investment.
- “Maintain” are the valuable strategic partners that consistently drive solid volume, even if there might not be much room for additional growth.
- “Uphold” are less strategically valuable accounts that also offer little growth potential and therefore only rate enough investment to conduct some tactical programming during the year.
- “No Support” are retailers that simply don’t offer enough upside to earn any commerce marketing dollars.
We then bring some “humanity” into the process by working with our client to determine how much of the proposed framework is feasible, what should be implemented right away, or what might be better done in stages. We make whatever manual adjustments as needed before deciding what percentage of the budget should be devoted to each of the groups, and then to each of the retailers.
The Opportunity Sizing comes next. Using both POS and panel data, we determine which shopper behaviors can be changed at each retailer to drive the most growth: getting the competitor’s buyers to switch, or habitual switchers to be more loyal, or the brand’s buyers to purchase more, or maybe value buyers to trade up.
And again, we inject some humanity into the equation by working with our client to identify target conversion levels for each behavior and which behavior change might best achieve brand objectives. We feel it’s important to make this determination first, because each of these behaviors requires a completely different communication strategy. Too often, we see commerce marketers trying to go down too many paths at once.
In one recent example, working through this process with a client identified $53 million in potential growth that otherwise wouldn’t have been on the table.
The industry’s first agile marketing platform, Marilyn® lets marketers manage, understand, predict, shape and enhance the shopper experience in ways previously unimaginable. The Marilyn® platform helps clients optimize performance by providing a single source of truth for all omnichannel marketing activity, ROI analysis and attribution, and scenario planning. To learn more, contact ,[email protected].