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Reach | Influence |
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December 21, 2015 Issue |
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The Most Powerful Name In Corporate News and Information |
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Marketing Analytics Enabling Retailers to Drive more Sales through Loyalty Programs and Digital Coupons |
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CEO
Reach | Influence
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – December 21, 2015
CEOCFO: Mr. Green, would you tell us about Reach Influence? Mr. Green: Twenty years ago or so, Kroger, the largest national grocery chain, started using both consumer and purchase data to help move more product in their stores. That strategy has helped them accomplish unbelievable growth over the last twenty years. The smaller grocers, on the other hand, lack the data scientists, mathematicians, direct marketing and merchandizing specialists needed to compete on that level. We fill that need for them and help drive more customer engagement, sales, and of course profits through marketing and merchandising programs.
CEOCFO: How do you do it? Mr. Green: It starts with a technology connection to the cash registers so every day we are pulling the raw transaction data. On behalf of our clients, we analyze the data to understand what people are buying and perhaps more important what they are not buying. We then create the tailored programs to give each of their shoppers a personalized experience that engenders loyalty with increased trips and larger baskets.
CEOCFO: Is it that you are able to provide technology cheaper these days so that stores that are not giants can take advantage, or have you figured out a way to extract the data more easily? Mr. Green: Both! A decade ago it was only the largest point-of-sale software companies like NCR that were able to unpack the raw data, and the cost of entry in technology kept most out of the space. Today, in contrast, the technology is fraction of the cost and it has become a much more open landscape in the software world, which have enabled it to hit the smaller chains’ price points.
CEOCFO: Are you providing raw data, are you suggesting solutions, are you offering or helping to implement programs; what is the range of influence? Mr. Green: It is all of it. The best value we can offer to middle-market grocers is to drive the process from soup to nuts. That means we and provide the raw data if they’d like, but we can also bring forward the best programs for their store and market, and we can actually execute those programs on their behalf.
CEOCFO: If a retailer has
implemented some of what you know, does it matter how friendly they are in
the store?
CEOCFO: Would you give us an example of some of the ideas that a store can use to increase traffic? Mr. Green: I will tell you where things were three years ago in the industry and how they are now. We had a multi-store client in Ohio. They were wonderful people and great operators. In order to get people to spend more with them, they used a trade-up offer. Shoppers were asked to spend $35 and in return they received $5 off at the cash register. We went to this owner since we were new to them and asked them on what they were basing the $35 and the $5. It was intuition; they took a look at their actual ticket size which was about $35. We told the owner we should do some math now that we have the data and we could see how many of their shoppers were spending $35.
It turned out that over 70% of the people were spending $35 or more, so that is $5 that he was giving them as what was a perceived incentive but was actually just $3. What we did was grouped different clusters of shoppers around their average spend and we tried to drag people up with incentive based on where they fell so that the people that were spending $12, we would get them to $20 and the people that were $35, could we get them to $50. We started tiering that incentive program and all of a sudden we are driving incremental sales into that retailer. The one thing that people will always say in those kinds of programs is that you could be pulling forward sales that someone else would otherwise buy that next week or that next shopping trip. As you start to train people to buy more products in particular stores, that is where you get overall long-term benefits for those retailers.
CEOCFO: When you are analyzing a $35 spend, does it not matter what they are buying and can you account for the larger margins on certain products? Mr. Green: The stores with whom we have our closest relationships using our deepest product offering, they will give us margin data and we will look at some data and ask where they want to drive traffic; someone is shopping in the meat department but not the deli department and the deli happens to be high margin. It is not a fully automated solution where you just hit play and all of a sudden, your promotions go out. It is working with the retailers to understand. We want people to buy certain products and we will use certain products as a loss leader as an invitation to come into the store and buy other things. It is 60% technology, but there is a big service component working with our groups.
CEOCFO: Are you able to help retailers with things such as making the traffic flow easier, opening a new line, or employee scheduling? Mr. Green: We use the data and the information to better understand general flows over time. We know that one of our retailers in Connecticut, from 4.00 to 7:00 pm is the most profitable shoppers largely coming to grab meat, deli, as well as prepared foods. What we saw in the data over time is that the meat sales were going down. What was happening was they sent the butcher home at 2:00 pm, because he came in at 3:00 am. The shoppers ended up getting a Walmart-like experience with prepackaged meats and not the experience that you would hope, which is a high-touch, let me help you make a decision. We encouraged this owner and advised him to at least put in a butcher back in the store, so that you are differentiating. We can look at longer- term trends but the short term operational is outside of our scope of expertise.
CEOCFO: Do many of your customers work with you on an ongoing basis? Mr. Green: We have had very little turnover in our customer base. I think that is a testament to two things. One is if we are doing our job right and because we have a report card and a scoring mechanism where you can tell if it is working or not. We are held to a standard and we share that standard back with the retailer. We are playing day-in and day-out to help them grow their business and we feel we are a partner in that. We give them a report card and that keeps the wheel spinning. Secondly, our culture is one that if things are not working, let us dive in and understand what you are trying to achieve as a business owner. Let us try to understand how we can use our expertise and our tools to help you grow that business. Because we have been successful doing that, we have had low turnover.
CEOCFO: Do you help with the design of ads and positioning and fliers? Mr. Green: We do help with that. Our primary means of communication is email, direct to shoppers on behalf of retailers. We use email primarily because the distribution is inexpensive and the efficacy and open rates are still such that you can influence a shopper’s behavior with email. We are pulling many different levers before an email is created but the hope is that we reach the shopper, we understand their buying patterns and we understand what they want. We then create a mechanism to communicate and influence their behavior. That has been an effective way to do it. We are moving into other forms of communication like text but email is the primary one. Where we are getting some real traction is that the print circular that you may be accustom to sitting at the front of grocery store, serves the lowest common denominator is a 1 to many kind of tool, email and direct communication, you can customize one to one and that is a more effective and cheaper way to market and advertise.
CEOCFO: Would you tell us about being in downtown Detroit? Mr. Green: I grew up in Detroit. I left and was a naval officer for a while and then spent some time in New York. I was in Tribeca for a while and then San Francisco. In 2009, I had something tugging at me to come back to my home. I convinced my wife to leave San Francisco and through a fortunate number of events we have moved on to the center of Detroit and part of this ongoing venture private equity movement that is going on. It has been unbelievable over the last five years to watch the transformation in Detroit happen. It was not as fun a place to be in 2010 and now young people and coffee shops. I tease with my buddies in San Francisco that I waited fifteen minutes to buy a $20 salad the other day so we are starting to become a real city. The fact that we have a salad shop gets you going and the fact that we are waiting and paying a king’s ransom really puts us on the map.
CEOCFO: What is the competitive landscape look like in your arena? Mr. Green: I would say it is competitive and growing more competitive. What has happened is the cost of technology and cost to implement in small and medium businesses of clients is going down. It gives people an opportunity to come into the marketplace. The other phenomenon is using either apps in direct to consumer, in coupons and promotion, it is on the rise. It is easier, cheaper, and faster for companies to go direct to consumer, try to build their own network and then get promotions in the hands of those shoppers. Those are the two competitive threats we face. In my opinion, over the next eighteen or twenty-four months, it is a little bit of a land grab in who can serve the most retailers and build out a network such that product manufacturers will be interested in talking to groups like mine to get promotions in the hands of the shoppers that we have in our database.
CEOCFO: How are you reaching out to potential customers and how would people find you in an internet search? Mr. Green: A retailer would search loyalty programs, digital coupons. What primarily would happen in our world is that these independently owned and operated stores get their groceries from a wholesaler. The wholesalers not only provide groceries but they also provide services, anything from taxes and finance to access to programs like ours. We spend a lot of time with this wholesale community helping them understand how we can make their promotion business a little better. There are about forty distribution houses in the United States that cover the vast majority of the independent grocers. The grocer first would probably call their wholesaler or do a Google search around loyalty providers.
CEOCFO: What has changed in your approach over time - what have you learned? Mr. Green: It sound trite to say but helping people build their businesses with your expertise creates an offering. We spend a great deal of time understanding how the grocery industry works today and how to try not to change the industry with a new software, technology or new way of doing things but to come alongside an existing business process and use technology and digital as another way to connect with the shopper. Over the last two to three years, that is where our biggest learning has been. We are not trying to change anything; we are just trying to use a different way to communicate with the shopper. That is where we have caught a little bit of tail wind from people saying oh ok, you are not trying to change the way I do things but just add to the way that I communicate with my shoppers.
CEOCFO: Why choose Reach Influence? Mr. Green: We have been able to amass all the tools, technologies, and people and have knitted it together in a seamless way for retailers. The product is a very good product. I think the biggest reason you come with Reach Influence is that we believe wholeheartedly in partnering and helping use what we know to help you grow your business. That partnership is something that we pride ourselves on, not just pushing a product across the table and wishing someone luck but being in the trenches with them fighting the fight. |
“Our clients know your name, your favorite brands, and cuts of meat, and they likely sponsor your kid’s local soccer team. We bring those same themes to digital loyalty programs to differentiate our retailers from the national chains.” - Eric Green
Reach | Influence
Eric Green 313-454-1494
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Eric
Green