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Answers to Your FAQs on Shopper Marketing ROI

Matt Wheeler, SVP Sales & Marketing

 

Today there are CPGs which regularly measure, learn, and then improve shopper financial results – and those that do not.  For those in the latter category, Foresight ROI can help. We collaborate with many of the industry’s top shopper marketers to measure and then optimize their investment. Here are some of the questions we most frequently hear:

 

Is it possible to measure the increase in sales caused by shopper marketing at the tactical level?

Yes.  It requires expertise in managing un-audited data and it requires a well-designed mix model, but it can be done. Foresight ROI has these qualifications, and that’s how we isolate the impact of our clients’ shopper marketing.  Here are just two examples of the many critical aspects we’ve learned:

  • We must have rules in our analyses to correctly separate shopper marketing impacts from trade, especially when they run simultaneously.
  • We must be able to separate out the impacts of incremental merchandising driven by shopper marketing programs.

 

Why is it important to measure shopper marketing?

It is important to measure the sales impact from shopper marketing for three main reasons:

  1. To justify spending in today’s zero-based environment. Foresight ROI shopper measurements are comparable to measurements in place for brand and trade; this helps shopper marketers earn their fair share of investment dollars.
  2. To optimize investments by retailer, by brand, by tactic. Foresight clients know the ROI for each decision they face.
  3. To know what works. Foresight ROI helps shopper marketers craft their best plans, based upon marketplace impact.

U.S. shopper marketers invest approximately $600 billion dollars per year. We estimate that this same investment could generate an extra $100 billion in profit – simply by making ROI-based decisions.

 

How does Foresight ROI measure shopper marketing?

We calculate lift rates and sales volume for each shopper tactic and aggregate it into events, retailers and brands.  We express lift rate as a percentage of reach (in the case of advertising) or redemptions (coupons). We have also calculated - or otherwise introduced - the effects of volume drivers like media and trade to ensure accuracy and to help our clients compare Foresight to other sources.

Our primary analytical method is time series non-linear regression, AKA mix modeling. We have customized our analyses for shopper marketing.  We ensure quality through a variety of tests, including MAPE (Mean Absolute Percentage Error), Turning Point, and Durbin-Watson. We also ensure quality through a variety of benchmark comparisons, often using our Tactical Response Groups (TRGs) as the norms.

 

How does Foresight ROI separate shopper marketing effects from trade promotion effects?

It takes a specialized model where the shopper marketing tactic reach is represented in the way that it converts to purchases. When this happens, the model can work well by assigning the volume lift to the real driver. The model must also capture the integration synergies between shopper marketing and trade promotions. Outside of Foresight ROI, we know of no other mix modeling firm with these abilities.

 

How has the measurement of shopper marketing evolved during the last decade?

As the amount of investment in shopper marketing has increased, the stakes have gotten higher, which has made measurement more important. Shopper marketing is now going through the same scrutiny as other historically larger marketing disciplines.

CPGs are now employing specialized shopper measurement as they learn that traditional mix models do not work. Only with a specialized shopper analysis, from Foresight ROI, can shopper marketers understand tactical level ROI and the interplay with trade promotion. We are also witnessing an increased frequency of measurement as shopper marketers learn to measure and improve in faster cycles.

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