Retailers: With all the noise, how can you know what's actually working?
You’re a retailer, and it’s a Tuesday. You’ve got 17 marketing campaigns running instead of the usual 12. It also happens to be in the middle of summer holidays, but it’s unusually rainy for the season. Taking all of that information into account, what kind of sales and transaction performance should you expect? And are you doing better or worse than that?
What most retailers wouldn’t give for a clear-cut, data-driven answer to those two questions! There tend to be a lot of ‘I reckon’s when it comes to judging the impact of different variables on sales performance, especially for retailers juggling a complex web of brands, stores and campaigns.
These speculations might provide enough peace of mind to help you sleep at night, but when it comes to making promotional and operational decisions, relying on speculation can lead to more questions than answers. Especially when it comes to knowing what action to take, or when to panic.
Are you relying on 'I reckon' at your company?
Maybe you aren’t - maybe you do use your data to create some averages around which to base your definition of success. But if you’ve got dozens of stores of different sizes and demographics and you average the impact of a promotion or other variable across them, the result will be wrong (on all counts). Not every day is average, and an average day at one store is not the same as another.
In order to actually understand how different variables (e.g. store size, campaign type, weather, season or location) impact retail performance, you need more than a simple calculation - what you need is a robust and reliable baseline to compare results against. It needs to be comprehensive across many different situations and take meaningful variations into account, otherwise it won’t provide an accurate benchmark for you moving forward.
Having a baseline like this is integral to deeply understand what’s working and what isn’t, but many retailers don’t even know where to begin because it seems implausibly difficult to achieve.
So how can you get an accurate sales baseline?
Believe it or not, you can understand what expected performance on a specific day at a specific store running specific campaigns should be. Datamine does this with our proprietary ‘Big Wave’ process that uses historical situations and variables to create a baseline that can look at a specific situation – both to determine what should have happened, and how important different factors are to the result. Sometimes we are tracking and modelling thousands of metrics a day across different stores and metrics.
This solution can be used to move the needle on your results in a number of different areas:
- Marketing: Big Wave is particularly useful for large retailers that run many campaigns simultaneously and don’t know what the impact of each promotion actually is - being able to isolate the effects of different campaigns allows them to put money in the best place
- Operations: Big Wave also helps organisations understand (from a logistics point of view) how different variable combinations can affect potential events, such as expected sales, the volume of calls or number of expected faults in a network
- Market share: when used in conjunction with the lens of market share information, a Big Wave model is even more powerful – a decrease in sales might look negative at the outset, but if your market share is going up, there is less cause for panic
CASE STUDY: ENTERTAINMENT INDUSTRY
Challenge: An entertainment client had over 20 campaigns running at any one time and wanted to optimise marketing spend. However, because they weren’t sure which campaigns were working and which weren’t, they were hesitant to stop running any of them.
Solution: Datamine built a series of explanatory models that used historical data to isolate the impact of particular campaigns, highlighting a small number of promotions that were seeing the most success.
Result: This information gave the client the confidence to move investment into the things that were actually working, improving their overall marketing ROI.
wHAT ARE YOU WAITING FOR?
If averages and ‘I reckon’s aren’t enough anymore, we’d be happy to talk to you about potential solutions in a free phone consultation - Visit our contact us page and we will be in-touch.