Preventing Defection

A major multi-format US grocery retailer leveraged Sagarmatha’s Pinnacle Data Marketing services to micro-target valuable households and prevent customer defection during chain-wide store renovations

The Business
The Challenge
The Solution
The Benefits

A multi-format US grocery retailer with over 1000 stores was remodeling and renovating a large number of stores. Many of the locations, which were inaccessible during the renovations, were in highly-competitive markets. The retailer was in danger of losing loyal customers to local competition.

The results of mass-market advertising within a specific geography proved suboptimal. Moreover, the retailer needed the flexibility of responding quickly to offers made by competitors who were trying to poach customers during the renovations.

With a limited budget, the retailer needed to make sure that every dollar counted. A well thought-out campaign strategy was created, with the goals of:

  • Determining the most valuable households to be targeted (high spenders with strong likelihood of defection)
  • Cost-effectively optimizing communications with these households over a range of channels
  • Monitoring campaign effects over time, and adjusting on-the-fly by adding or adapting offers in response to market circumstances.

The retailer had been running successful high-frequency targeted campaigns with Sagarmatha, and had the confidence in the company’s ability to handle the complexities of ad hoc campaigns that required deep domain expertise and exceptional attention to detail.

The retailer partnered with Sagarmatha, leveraging the Pinnacle Data Marketing suite to define and develop the elements necessary for a successful campaign, including household selection, offer pool selection, targeting, live and post-campaign monitoring and analysis.

In addition, Pinnacle Data Marketing helped the retailer maximize campaign ROI by determining the most efficient channel/s for communication with each household: direct mail, email, POS printers, in-store kiosks, or SMS. Additionally, the retailer used Pinnacle Data Marketingto predict the optimal level of coupon issuances and expected redemptions per household and per channel. This allowed more effective budget management and ROI optimization – eliminating, for example, expensive direct mailings to households that responded effectively to email.

Individual targeted households were tracked over the course of the campaign period and afterwards. At each of the nearby retailer locations, to which these households had been incentivized to visit (rather than defecting to competitors), their total spending levels were measured.

The Sagarmatha-crafted campaign measurably helped the retailer maintain its most valuable shoppers throughout the renovation. Without deviating from originally-defined budget constraints, the retailer:

  • Effectively targeted 5000 of its most valuable households with personalized offers via five separate channels
  • Prevented defection during the renovation period (as compared to a non-targeted control group)
  • Maintained loyalty among its most valuable household once the store had reopened (as compared to a control group that were not targeted)

Based on the success of the initial campaign, the retailer decided to continue with additional store renovation campaigns. Moreover, additional ad hoc campaigns were designed in conjunction with Sagarmatha to bolster sales at individual stores under temporary competitive pressure.

WHAT THEY’RE SAYING

“With Sagarmatha’s help, we were able to minimize customer attrition during store renovation, while still keeping costs in check. Sagarmatha’s tailored campaigns helped us maintain our hard-fought market position, giving us a strong jumping-off position for our future success.”

Director, CRM

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