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Increasing In-store Shopper Marketing ROI with Measurement

Rick Abens, Founder & CEO

In-store marketing has historically had measurement challenges, leaving marketers guessing what works.  Compliance audits have been inconsistent at best.  Even with good compliance measurement, there is ambiguity on location in the store or whether the merchandising unit, sign, or coupons were installed according to the standards.  

Dan Sabanosh from Great Northern Instore and I set out to get answers for marketers.  We presented our findings at the recent P2PI Forum for Merchandising Executives.  Below is a summary of the content we shared. 

  1. Situation: In-store Shopper Marketing needs a useful and standardized process so marketers can compare performance to other marketing activities and learn what works for direction on improvements.
  2. Solution: Benchmark both cost and the lift rates to learn what works and why it worked in order to learn and improve your ROI.
    • An ROI metric for in-store marketing that is comparable to other marketing activities tells you how well the marketing activities did producing sales and profit increases relative to your alternatives.
    • Even without reliable compliance measurement, a standardized predictive model can be used to measure sales and profit lift.
    • Measure both lift and cost for best guidance on what worked. You can get a better ROI either by getting a higher lift or a lower cost on the marketing.  By looking at both of these metrics you can better assess and forecast ROI.  When you are trying to forecast the sales lift and ROI for a program and choosing tactics, you usually know or can guess at the cost of the marketing reach.  Then use a sales lift model to forecast the sales lift and resulting ROI.
    • The cost of the in-store marketing tactics can be measured with cost per 1000 shoppers reached (CPM) so that you can compare the cost with other tactics or other events.   However, not all reach is equal because some tactics have higher conversion to sales than others.  This conversion can be measured with sales lift per 1000 shoppers reached.  Separating these two metrics as drivers of ROI will help you assess what worked, help you make choices that will improve your results and provide more accurate forecasts.  For example, let's say that you have the choice between two tactics where the costs are different by 20%.  The cost alone is not enough information for you to make the right choice.  A measure of conversion that you can predict is needed to fully assess your choice.  If the higher cost tactic has a higher conversion by 20% or more, then that would be your better choice for the best financial return.
    • Another way to use these two metrics together is to evaluate how much you are willing to pay for a tactic.  In the example above, if you knew that the alternative tactic would give you a 25% better lift, then you would be willing to pay 25% more than the other.  This can make your choices easier and more successful.
  3. Benefit: You can increase your returns and make more confident decisions by measuring and predicting both the cost and lift rates of shopper marketing.  Many CPG companies are using this measurement process and these metrics to learn and improve ROI by 10% or more.

    For more information on:

          Great Northern Instore click here

          Forum of Merchandising Executives click here

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