Posts Tagged ‘dunnhumby’

Marshmallows & Chocolate + Big Data = The Best S’mores of Your Life

Friday, April 26th, 2013

Back in 2011, Tesco’s acquisition of BzzAgent left many scratching their heads. What business did a UK-based, global (non-US!) retailer have cozying up to a Boston-based social marketing firm? Maybe they were just trying to catch a wave of street cred…or maybe they just had a thing for bees?

Think about it like this: BzzAgent’s word of mouth marketing powerhouse is the marshmallow of retail. It’s sticky, delicious, and fulfilling. Everybody loves marshmallows. Tesco, on the other hand, owns a business called dunnhumby – a.k.a. the chocolate. It’s data and analytical capabilities are rich, addictive, jaw-dropping. Layer on open access to the rich datasets powering these companies, and what do you get? The best s’mores of your life, or…the dunnhumby Hack/Reduce hackathon (limited spots, so sign up only if you’re a developer/analyst!).

Gather ‘round the campfire to hear how its all gone down—less than two years after being acquired, BzzAgent is nearly fully integrated into dunnhumby, the big data and customer science outfit of parent company, Tesco. When word of mouth, the voice of the customer, meets actual shopper activities, the possibilities are endless. Already, the impact of tying together this data together has been nothing short of stupendous – now in its 11th year of business, BzzAgent grew nearly 50% last year alone.

While all this was brewing, Boston was building heat, quickly becoming a hub for innovation in big data and a hotspot for startup activity around retail and data innovation. Combine that with dunnhumby’s new integrated presence in the city, and you get ooey, gooey, goodness.

Retail? You think Boston’s a hub for retail startups?! Ya, sure. You betcha. On the innovation front, there are countless transformative models all around the region. Here’s a handful:

  • Aisle Buyer (sold to Intuit): Allow(ed) shoppers to skip checkout lines by paying with their credit card directly on their mobile phone
  • Alignable: (in stealth – and it’s awesome)
  • Card Star (acquired by Constant Contact): Puts all of your membership and rewards cards on a single free app
  • Green Tape:  Provides real time reviews for the in-store shopping experience.
  • Level Up:  Mobile payments for smaller retailers, with amazing analytics ta boot.
  • Locately: Analyzes local data to determine shopper activities
  • Plastiq:  Enables payments via credit card for very high ticket items
  • Privy: Connects online promotions to in-store activities
  • Promoboxx: Connects brands with multiple retailers for co-promotion programs.
  • SavingStar: Saves you money on your groceries without printing or clipping anything.
  • Swipely: Utilizes point of sale terminals to provide transaction analytics to retailers
  • Swirl: Hilmi Olzug’s outfit augments the in-store experience with personalized shopping delivered via mobile phone.
  • True Lens: Appends social data to customer lists to help retailers grow loyalty and improve ROI.
  • Unbound Commerce: Develops mobile commerce for retailers
  • (I’m sure I missed a ton – put in the comments, please!)

And the reason so many retail startups are calling Boston home? Well that gets back to big data. With the development of Hack/Reduce in Kendall Square, there’s a centralized location for hacking big data. And did I mention that MIT, Harvard, IBM, Google, Microsoft, Atlas, Bain Capital, Matrix Partners, Goodwin Proctor, and others are founding sponsors?

All of this is why dunnhumby has decided to throw an all-out, over-the-top, never-before-attempted, retailer hackathon at Hack/Reduce on May 11th, from 9 AM – 9 PM. We’ll provide an actual transaction data set (real customer purchases, anonymized) for analysis, manipulation, introspection, and all sorts of coding madness – with a goal of helping forecast the success of new product launches more effectively.

Winning teams get cold hard cash ($2,500 for first place winner) and there are all sorts of goodies to be had (not to mention food and all that).  But the real gold is the fact that you’ll be working side by side with dunnhumby executives and data scientists, getting exposure to their world and how they have created a Big Data and Customer Science juggernaut.

If you want to hack in person, sign up now or miss out.   Especially if you are working in one of the amazing retail startups in our region — this will be an eye-opening, retail-bending experience that won’t soon be forgotten.

See you there!

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Posted in Making BzzAgent Work, The Central Hive | 2 Comments »

Loyal Customers Are More Effective Advocates in Social Marketing

Thursday, June 21st, 2012

Our friend Matt Keylock at dunnhumby posted a summary of our latest research on the sales benefit of targeting known customers in advocacy marketing over at RetailWire.  Matt asks readers  “As social media continues to transform how brands and retailers engage with their customers, do you see advocacy becoming a more solid component of the marketing mix?” and  “What programs or activities have been effective at driving high-quality, meaningful advocacy in social media?” An interesting conversation is starting in the comments. Check it out and chime in.

Here’s his post.

The more authentic the endorsement, the more effective it is in increasing sales for your brand. New research I presented with our social marketing group, BzzAgent, at this year’s ARF Audience Measurement 7.0 Conference shows how important loyal customers are to the success of advocacy marketing programs. Our study found that targeting people based on their purchase behaviors — along with social influence scores and demographic profiles — drives higher levels of in-store sales than using social scoring or demographics alone. In fact, advocacy programs focusing on loyal customers increased sales by an average of eight percent. This is 19 percent higher than previous studies using demographic targeting.

But it appears the benefits don’t end there. These advocates have a more authentic and personal connection to the brand so it’s likely they will keep talking long after their involvement in a program ends. The shopper-targeted campaigns in our study saw sales lifts continue at levels averaging 50 percent of their peak as long as six months later.

Today, advocacy marketing is big business. While trust in traditional media has plummeted, trust in earned media has risen 18 percent since 2007. According to Nielsen, 92 percent of people today trust earned media, including recommendations of their friends and family, more than traditional media. One national retailer estimates that improving advocacy among their customers can be a $5.3 billion opportunity.

It seems obvious to focus on loyal customers for advocacy marketing, but most marketers are not doing so. Many don’t even know which of their customers are active in social networks. Their customers are anonymous online and the conversations they have about the brand aren’t connected to in-store purchase activities. Those with the potential to be persuasive advocates are not recognized or engaged in a personal way.

Instead, many marketers target based on demographic profiles (collected by surveys), the brand’s Facebook/Twitters followers or by scores measuring their social influence. These consumers may be social-savvy, but they don’t have a strong connection to the brand. Their advocacy can lack in-depth personal experience and be short-lived, limiting their influence on sales of the product.

Our study indicates strongly that targeting customers based on their purchase histories (collected by retailer loyalty card programs), makes a big difference in the quality of the advocacy created and, thereby, the impact it has at the cash register. It’s the difference between asking them what they like to buy and seeing what they’ve actually bought. The ultimate goal is finding those customers in the right demographic target, with a relevant purchasing history, who have active social media followings.

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Posted in Making BzzAgent Work | 1 Comment »

What’s it Mean to Put Customers First?

Monday, March 19th, 2012

This is a cross-post from iMediaConnection.

It’s easy to say that your marketing is customer-centric. Everyone does.  But do new messages or offers based on customer market trends and surveys really put the customer first?

True customer-first marketing requires a different approach. Matt Nitzberg, EVP of Communications and Media at dunhumby, discussed this at the Promotional Marketing Association’s GameChanger Conference in Chicago last week.  He said that marketing’s got a big problem right now. There’s just way too much of it coming at consumers and it’s pushing good customers away.  I know we’ve been talking about marketing overload for years, but Matt referenced a recent Wall Street Journal article that proves this isn’t just a cliché.

The article stated that the nation’s top 100 retailers sent an average of 177 emails to each of their subscribers last year. This is up 24% from 2010, and up a whopping 87% from 2007. Some of the most aggressive retail emailers, like Neiman Marcus, sent over 500 emails last year.  That’s 10 emails every single week. Multiply that by the number of other retailers you frequent and you have one crowded inbox.

Matt’s reaction was, “if they can communicate that often and feel it is worth it, they have some very wealthy customers”. Or, he said “they are just burning them out”.  That’s exactly what’s happening for most marketers. Email open rates have dropped 34% (from 19% to 12.5%) and click rates have dropped 28% (from 3.9% to 2.8%) since 2007.

The WSJ article says there’s too much email.  Matt says that may be true, but the root problem is really a lack of relevance. Marketers aren’t using customer data to make their marketing more meaningful to each customer.  Offers are pushing products that the company wants to sell, not what might be most appropriate for the buyer. Every generic and irrelevant email screams “I don’t know what you want”. It’s insulting to your best customers and it drives them to unsubscribe. Then you’ve lost the ability to market to them again. It’s a high price to pay… probably higher than most realize.

dunnhumby has found that a brand’s best customers, those in the top tier of annual spending activity, are worth 18-20 times more than the customers in the brand’s lowest tier, those buying just a couple times a year.  But most marketers spend all their time and energy trying to get the lowest tier to buy more while marketing to their best customers like strangers.

This doesn’t happen in a customer first marketing approach. Good customers are the focus, so consistently more relevant messages make them happier and coming back to the brand more often. Getting there requires an entirely different approach to marketing. In the following chart, Matt compares a customer centric approach to the traditional brand centric style:

Here’s proof it works. Matt explained that dunnhumby’s open rates are 4 times the industry average, click rates are 5 times average, and they are riving double-digit increase in conversion and redemption rates.

Social marketing is the same thing. Your best customers love to talk about you and many would jump at the chance to participate in an advocacy program.  What’s more customer centric than a personal conversation about a product between a passionate loyal customer and their friends or online followers?

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Digital Media’s Influence on CPG Sales

Wednesday, February 8th, 2012

A new study dunnhumby with Accenture and ComScore shows how important a brand’s online presence is to in-store sales.  They found that when consumers visit a brand’s website to learn about products, offers and relevant content, they are much better customers.

Shoppers who have visited a brand’s website spend 37% more money with the brand and 53% more in the category than non-visitors. The following chart shows how website visitors compare against non-visitors in these key shopping behaviors. Non-visitors are represented by an index of 100.

  • Monthly brand spending – Websites are a very powerful influence. Visitors spend 37% more with the brand in the retail store. The study found that the length of time visitors spend on the site is was the key determinant of their likelihood to purchase the brand in the store. What makes a website effective?  The most important factor is fresh content that is updated frequently. Content that provides reasons to buy the brand, product ratings and user generated content are all effective at increasing time spent on the site.
  • Category spend – Website visitors are educated in the category and likely to make many purchases in the category with multiple brands.  These consumers spend 53% more money in the category.
  • Brand units – Since they spending more money, it makes sense that they are filling their shopping cart with 48% more products.
  • Category price per unit – It’s interesting to note that these are savvy shoppers. They pay slightly less per unit than non-website visitors. They know where to look for discounts, and the web is a great place to find offers.

There is obviously great untapped potential here.

“The  research highlights the significant yet underutilized potential of brand websites and digital communications as key drivers for building customer loyalty and preference for CPG brands.”

“Since website visitors have higher affinity to the brand and the overall product category, there is an opportunity for brand marketers to drive loyalty through personalizing the website experience, catering to the preferences of their best customers.”   – John LaRocca, Vice President, Strategic Partnerships at dunnhumbyUSA

 

While this study isn’t specific to social media, it points to the quality of a brand’s presence across the entire internet.Most brand websites feature their Facebook and Twitter sites prominently. A few of the brand websites, like Skittles.com and Snickers.com, seem to exist just to pull people into their Facebook pages.  It’s a great approach. Instead of just linking people to a Wall or offer page, they deliver a high-impact brand experience on the website and give customers reasons to dig deeper into the activities and conversation on Facebook.

The survey was conducted over a 6 month period by dunnhumby, Accenture and ComScore.  ComScore tracked the online activities of a million web users in the US (with permission of course) and the data was matched against dunnhumby’s in-store shopping data. Accenture looked at websites of CPG brands to evaluate the common components of the most successful websites.

Get your copy from dunnhumby here.

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dunnhumby Study Proves Offline Sales Impact of Digital Media

Tuesday, October 11th, 2011

Our friends at dunnhumby released the findings of a great study today. They prove the importance of digital media promotions to in-store purchases of CPG companies.

Working with Comscore, dunnhumby linked a permission-based panel of a million internet users to their anonymous loyalty card in-store purchase data. This was done so no identifiable personal data was disclosed. They compared the in-store purchases of households exposed to online promotions to those not exposed to it. The results show how important digital media is to CPG marketing:

Exposure to digital media promotions lifts in-store sales 21%

Households exposed to online promotions for the products bought a median of 21% more CPG products in retail stores. 5 of every 6 campaigns measured generated a sales lift, and 40% of them had a lift that exceeded 30%.

Targeting consumers based on buying data lifts in-store sales 42%

The sales lift doubled when targeting based on in-store purchase data was added to the mix. A new Microsoft tool called CPG Online Effect provided targeting algorithms based on anonymous dunnhumby buying data and Comscore web browsing data.

“Based on these results, the power of purchase-based ad targeting is clear. By delivering a relevant and persuasive message to the appropriate consumer segment, brand buying at retail stores can be increased substantially. It’s clear that the level of accuracy in reaching a brand’s consumer target that is possible with the Internet can drive ROI several times higher than what can be obtained using traditional media channels.”  Guy Fulgoni, CEO, Comscore

This study is based on exposure to online ads.  BzzAgent is now using this same in-store purchase data to target something even more influential – active brand advocates.  Combining loyalty card purchase history with social media savvy customers may be the biggest growth opportunity for marketers today. These “Social Shoppers” have a deep connection to your brand and they rely heavily on social  media to discuss products and recommendations with a big audience of followers.  Download our latest ebook “From Loyalty to Advocacy: Driving Sales with Social Shoppers“ to drive sales results like these using the most persuasive voices around your brand.

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Getting to Know dunnhumby

Monday, May 30th, 2011

Dunnhumby is a classic success story. The company was formed by a husband and wife team – Edwina Dunn and Clive Humby – in West London back in 1989. Working out of their kitchen, they set up shop providing data mining services for marketers.

Clive was speaking at a conference when he met a Tesco marketing executive looking to start a new loyalty card. A trial of the program soon followed. When the team presented the findings of the program, the first response from the board chairman was: “What scares me about this is that you know more about my customers after three months than I know after 30 years.”

This is what dunnhumby does. They crunch data from credit-card transactions and customer loyalty programs to reveal insights about customers. This data helps companies know who might jump at a sale or who might change stores is a product is discontinued. Here’s a short video on the dunnhumby process:

Dunnhumby has built a global business helping companies get to know and treat their customers better than anyone else. The company now employs over 1,500 people in 30 offices around world. They are a fixture on the UK’s Sunday Times Best 100 Companies to Work For list.  Their Cincinnati, OH office has been an employee favorite so many times, it’s in the area’s Best Places to Work Hall of Fame.

CEO Simon Hay spoke with Research Magazine last week about the buying BzzAgent.  Here’s his take on why this is a perfect marriage:

We see consumers being influenced more by other consumers, and more information being generated and passed around through Facebook, Twitter, Foursquare and those sorts of things. These are places where consumers are spending time. If they’re spending time, they’re spending money, and if they’re spending money, there’s transactional data, and that’s the ultimate interest for us. We want to create transactions and we see social media playing an increasing role in doing so.

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Ok, so that happened (or…BzzAgent’s been acquired)

Monday, May 23rd, 2011

Nearly a decade ago, I started a little business called BzzAgent.  The idea was simple: if we provided real consumers with great brand experiences, they would share their authentic opinions with others.  And if they did, those brands would see a tremendous amount of value.  Because – and I’m not telling you anything new here – as people we value recommendations and opinions from real consumers more than anything a marketer could ever tell us.

As luck would have it, this wasn’t such a shabby idea.  Sure, early on we had our fair share of challenges like getting thrown out of a-shall-not-be-named top ad agency’s office (we were deemed, “blasphemous”)  to overcoming the perception that engaging real consumers wasn’t “tearing apart the fabric of the very last thread of decency the world had” (from one piece of fan mail).  In the end, clients realized they needed authentic consumers more than anything; and consumers realized they loved being marketing with instead of being marketed at.

Enter 2011.  We’ve helped more than 2,000 products get launched for more than 300 clients.  We’re profitable and growing.  Our form of marketing has become sophisticated, incredibly valued and – in a social age – absolutely necessary.  And, today, the company is announcing it is being acquired by dunnhumby, a division of Tesco, PLC (yes, the $140 billion supermarket chain / retailer).

We couldn’t be happier about this.  I mean, we’re talking serious backflips, caterwauls and jumping jacks.   This will allow us to take the BzzAgent platform to the next level in 3 ways:

  • Scale: 800,000 awesome (yeah, you guys are awesome) BzzAgents is significant, but dunnhumby has access to over 200 million shoppers worldwide. Our scale for social marketing programs is now unmatched.
  • Targeting: Agents provide us up to 250 data points to help us identify the right ones for campaigns.  Shortly (with opt in, of course) we’ll begin engaging campaign participants based on actual purchase activity.
  • Measurement: Today, we lead in the industry in social marketing measurement via Marketing Mix Modeling and Matched Market Tests.  We’ll now have transaction records to track the ROI of BzzCampaigns all the way through in-store purchase.

Look, I could talk all day about how great this is.  But the real story is what it takes to get a company from the kernel of an idea all the way through to sale.  A few things come to mind:

  • Persistence. You gotta keep your dream alive.  I can’t tell you how many doors were shut in our face in the first year.
  • Passionate People. When we started, we didn’t have super-experienced executives to make the business sing.  But we had believers.  People who were dedicated.  Could see a changed world.  Had something to stand up for.  You need this to get an idea to come to life.
  • Some Scratch, but Not Too Much Too Early. We didn’t have a ton of money to begin with and it helped us really focus on building something that could create value.  When the time was right, we capitalized the business with angel investors and venture capitalists, but the fact that we had almost no money early was one reason we’re here today.
  • Investors, Not Financiers. This is really important.  Pick your investors wisely.  You don’t want people with money.  You want people who know how to invest, and know how to help businesses grow.  All money isn’t created equally.
  • Rowboat Paddles. They say running a company is like being in a rowboat in the middle of the ocean.  I’d add to that your rowboat is always leaking and you may find yourself in 15 foot swells.  You have to live through the bad days along with the good.
  • Honesty and Transparency. Companies get crushed by miscommunication and secrets and rumors.  Early on we set a path of being insanely open with our staff and the world (see blog posts back in 2004 about this stuff) which squashed all that nasty stuff that breaks apart teams.
  • Loyalty. I can’t say enough about this: Loyalty is the currency of great business relationships.  A few folks have worked alongside me for many years (and many companies), and while roles change and strategy shifts, I could always rely on these people to remember the dream.  You have to inspire loyalty, but you have to give it back.

With all of this, and a great idea, you can build a great company.  So, what now?  Well, we keep building.  I’m not going anywhere – I’ll remain CEO of BzzAgent will be joining dunnhumby’s executive group – and our team is remaining intact.  The next stage of BzzAgent is going to be incredibly exciting, and we’re looking forward to applying all of our learnings to making this phase of BzzAgent even more successful than the last one…

Dave Balter

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