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Posts by Ken Fenyo

Ken is CEO of YOU Technology, a leading provider of digital coupons and promotions. Prior to joining YOU Technology, Ken was VP of Loyalty for Kroger, a $70B Fortune 25 grocery retailer with 2,500 stores and 45 million customers. While at Kroger, Ken led loyalty marketing, interactive marketing, pricing, and consumer insights and analytics. Earlier in his career, he started a venture-funded e-commerce technology provider and served as a senior consultant with McKinsey & Company and Prophet Brand Strategy, where his clients included Harrah’s Entertainment, Time Warner, Dell, and HP. Ken has degrees from Harvard Law School and Stanford University.

February 10th, 2011

Taking Shopper Marketing Digital

Brands are continuing to increase their investments in shopper marketing.  The opportunity to deliver these programs digitally is huge and largely untapped.  The question is which digital strategies can really drive sales and loyalty.

Manufacturers spend $35 billion a year on shopper marketing, according to Ad Age.  This figure has doubled over the past 5 years and is expected to expand at roughly 15 percent a year.  In a recent survey conducted by the Grocery Manufacturers Association (GMA) and Booz & Co., a majority of manufacturers ranked shopper marketing as their fastest growing area of advertising and promotions spending.  By reallocating spending to programs that are closer to the point of purchase, these manufacturers are seeking to better drive sales and develop deeper consumer relationships.

Digital shopper marketing, although a small percent of total spent on shopper marketing, is poised for rapid growth—driven in large part by changes in shopper behavior.   Shoppers are increasingly using the Web, mobile, and social networking to shop smarter.  According to the same GMA/Booz study, nearly two-thirds of shoppers engage in at least one digital deal activity for half or more of their shopping trips, including finding coupons and viewing online circulars.  And this figure is even higher for the nearly one-third of shoppers who actively use social media and own or plan to buy a smart phone.

With upwards of 70% of brand selections make in store, marketers have an unparalleled opportunity to use digital shopper marketing to reach shoppers and impact their purchase decisions.  Digital coupons and promotions in particular provide a rapidly growing platform to reach shoppers online, in store and on the go.  Here are a few ways CPGs and retailers can work together to drive sales and increase shopper loyalty:

  • Digital coupon sites and mobile apps.  Retailers are beginning to integrate digital coupons into their marketing mix.  Kroger is the clear leader in this space and today offers digital coupons online and through mobile apps for both the iPhone and Android phones.  Kroger is using digital coupons to provide a broad selection of CPG coupons and to promote its own private label products.  Simply creating a site with lots of digital coupons is fine.  However, it misses the larger opportunity to drive incremental sales by enhancing feature and in-store merchandising activity.  For example, late last year, Kroger and P&G used digital coupons to promote additional savings for items featured on the front page of the circular.  CPGs can use retailer digital coupon programs to support a range of shopper marketing programs, including launching new products, encouraging shoppers to try new brands or product categories, and supporting feature and display activity.  In addition, CPGs can follow the lead of P&G with its eSAVER site and use digital coupons to support their own CRM initiatives and partner with key retail accounts.
  • Digital merchandising events.   Retailers and CPGs should collaborate on digital merchandising events that extend and enhance the sales plan.  These events can include not only digital coupons but also digital games and sweepstakes and relevant content, such as recipes, that make it more fun for shoppers.  Kroger, for example, recently partnered with Kraft, Pepsi and other CPGs on a Game Day Great promotion that tied into its in-store Super Bowl merchandising.  The event included an instant win game (shoppers flipped a digital coin for the change to win free mac & cheese, ice cream, soda and other items), digital coupons for Kroger chicken wings and deli trays coupons, and recipes.  These events provide retailers and CPGs significant opportunities to collaborate across the promotional calendar to drive traffic and sales online and in the store.
  • Digital promotions. CPGs can create digital shopper marketing platforms to partner with one or more of their key retailers.  Campbell’s, for example, has partnered with several retailers on its eLabels for Education program, a digital version of its popular Labels for Education school donation program.   In addition, CPGs can create retailer-specific overlays to their national promotions to collaborate with key retail accounts while taking advantage of the existing marketing investments.  Mars, for example, leveraged its national M&Ms Vote for Savings promotion by providing exclusive digital coupon offers to one of its key retail accounts based on the shopper’s vote for her favorite color.

As digital shopper marketing takes off, CPGs and retailers need to tap digital coupons and promotions to drive traffic and sales today and develop the marketing and merchandising strategies to reach the “always on” shopper of the future.

February 1st, 2011

Waist Not, Want Not

Obesity is a large and growing national problem.  Over the past few years, food manufacturers and retailers have been working on ways to reduce unhealthy ingredients in their products.  While it will take time and money to make food itself healthier, digital and social marketing technologies can help consumers make healthier food choices today.

In a move that garnered significant attention, Wal-Mart recently announced a new initiative to provide healthier food to its shoppers.  As part of its initiative, Wal-Mart set 5-year targets for reducing unhealthy salt, fat, and sugar in the packaged foods its sells.   Wal-Mart also said it plans to drop prices on fruits and vegetables to make them more affordable.  Although many large CPG companies have been working to make their products healthier, Wal-Mart’s size and scale will certainly bring more prominence to the issue.

The costs of obesity continue to grow.  According to recent research from McKinsey, the U.S. spends about $160 billion on obesity-related medical costs – a figure that has doubled over the last 10 years and could double again by 2018.  The direct costs are dwarfed by the indirect costs of obesity, which total $450 billion and include the $90 billion consumers spend annually on extra food.  Like it or not, food manufacturers and retailers are part of the obesity problem and must be part of the solution.

CPGs and retailers can provide enhanced health content and tools to help consumers make more informed choices regarding the food they eat.  Here are a few examples and ideas:

  • Meal planning.  One way to eat healthier is to cook at home.  Digital technologies can make it much easier to find recipes and coupons.  For example, General Mills recently launched an innovative meal-planning tool that allows consumers to find recipes, drag and drop them into a weekly meal plan, and then print the plan and a shopping list.
  • Food ratings and tools.  It can be hard to know if a food item is healthy for you by looking at its packaging.   Several new tools have been launched that provide product-level nutritional rating systems.  Fooducate, for example, provides a mobile app that allows shopper to scan a bar code, see the product’s health rating (based on a proprietary algorithm), and find healthier alternatives. Other systems already exist, some industry developed and some independent, including NuVal, Guiding Stars, and the just launched Nutrition Keys program.   One big opportunity for retailers is to integrate one or more of these nutritional ratings systems into online and mobile circulars, recipes, and coupons to provide better and easier to understand health information when shoppers need it most – when planning their trip or in the store making purchase decisions.
  • Personalized offers.  A number of brands and retailers already provide personalized offers based on shopping history.  One idea that could be powerful is to go behind what you buy and use a combination of health information and predictive modeling to recommend products you should buy and to provide targeted coupons or other incentives for purchasing them.  For example, if someone has hypertension, the tool could recommend snack foods that are low in salt and provide savings for the healthiest choices.

In light of the increasing costs of obesity, food manufacturers and retailers can make an impact both in longer term product formulas and shorter term initiatives that educate consumers in leading healthier lives.

January 26th, 2011

Men are Shoppers Too

Apparently Moms between the ages of 25 and 44 are not the only ones shopping for groceries.

According to a recent study by Yahoo reported in Ad Age, more than half of men aged 18-64 and 60% of Dads now identify themselves as the primary grocery shopper in their households.   Even if these figures are overstated that is still a lot of men doing the shopping (I am one of those dads who does the grocery shopping for his family).

Most CPGs and retailers tend to focus their advertising and promotions on Moms.  Not surprisingly, less than one-quarter of men feel CPG advertising speaks to them.  And, with over half of purchase decisions made in the store, marketers risk delivering the wrong message to the wrong shopper at the wrong time.

Digital marketing, and digital coupons in particular, provide a great opportunity to reach men with relevant offers.  Although women are heavier coupon users than men, men are much more likely than women to go online to coupon, retailer and brand websites than to clip coupons from the newspaper. In addition, the New York Times recently reported that one-third of people using digital coupon users don’t print or clip coupons and that these users skew younger and more male.   Because they can be easily delivered via the Internet, mobile phones and in-store devices, digital coupons provide brand and retail marketers with a powerful tool to communicate with men as they are planning their trips or in store making purchase decisions.

January 7th, 2011

Mobile couponing poised for growth

Mobile couponing is poised for strong growth in 2011 and beyond.

Mobile couponing provides a big opportunity for brands and retailers to reach consumers at the moment of truth when they are deciding what to buy.  Although mobile couponing remains a small part of the overall market, the numbers have been growing.   According to recent research analyzed by eMarketer, for example, 15% of consumers surveyed said they had redeemed a mobile coupon—a figure that while still small, has in fact doubled over the past year.

In many ways, the challenge has been that brands and retailers have not yet invested heavily in mobile couponing apps or text messaging programs.  That is starting to change.  Most prominently, Kroger has just launched mobile digital coupon apps for both iPhone and Android devices.  Shoppers can use these apps to view and download all the digital coupons available at Kroger’s website (Kroger averages over 100-150 offers a week from leading CPGs including P&G, General Mills, Unilever, Kraft, and Pepsi).  They can also view any coupons they have already downloaded, which will make it easier for shoppers to remember what offers they have on their card when they are in the store.

A few other retailers are also piloting programs to deliver mobile offers.  For example, Target launched a text-based mobile coupon program late last year.  As part of the program, Target sends exclusive coupons via text to shoppers who provide their mobile phone number.  In addition, Safeway is testing a coupon program with Foursquare and Pepsi that provides coupons based on mobile check-ins and other location-based activities.  (Both these programs have some potential drawbacks that might hold back redemptions.  Target requires multiple steps to redeem your coupons – assuming the scanner can read the QR code on your mobile phone.  And Safeway is using paper not digital coupons).

By rolling out a greater variety of mobile apps and text messaging programs, leading retailers and brands are beginning to drive what will be significant growth in mobile couponing over the next 12-18 months.

December 10th, 2010

Missing the Loyalty Boat Airplane

If there is a first rule of digital promotions it should be this: design them with your best customers in mind and work out from there.  Delta is currently running a promotion that shows the pitfalls of not following this maxim.

The Delta promotion provides free inflight Wi-Fi access for all fliers during the month of December.   In theory this would have been a great idea – assuming of course I had been able to get on the network on my last flight.

Apparently the onboard network can only support a limited number of users at one time.  As a result, I kept getting a message telling me:  “Much like the airplanes this holiday season, the Internet is full” and to try again later.  I tried again later, and later, and later, but still could not use the Wi-Fi.  A quick look around suggested that I wasn’t alone.  Many other passengers were getting the same message and we’re equally as frustrated.  Instead of enhancing my loyalty, Delta reduced it.

Loyalty marketers must maintain a laser-like focus on building long-term loyalty and share of wallet with their best customers.  In this case, Delta would have been better off targeting the offer to its most frequent fliers as a nice holiday thank you and to avoid overloading the network.   At a minimum, Delta should have reserved a certain number of slots for its Medallion members to make sure its best customers could take advantage of the promotion.  It is likely Delta underestimated the number of fliers who would participate and so didn’t realize it would lock out frequent fliers.  If so, this brings up a second point: a great idea for a promotion cannot make up for poor execution.  To avoid problems, marketers need to find partners with the experience and technology to not only make the promotion run smoothly but also to flag any hidden pitfalls that can derail a great idea.  The right execution will help you avoid making promises to your best customers you can’t keep.

December 7th, 2010

This time it’s personal

Despite the rapid changes in the media industry, brand and retail marketers still primarily rely on the same tools they used 10, 20, even 30 years ago such as TV ads and printed fliers.

Marketers need to change because consumers have changed.  Consumers increasingly expect, and even demand, relevant messages delivered how they want it, when they want it.  The old one-size-fits-all approach is no longer enough to grow sales and build loyalty.

To win in the future, brand and retail marketers must take advantage of the fundamental shift from mass to marketing that is more multi-channel, personalized, and collaborative.

  • Multi-channel.  By tapping new digital channels, brands and retailers have a unique opportunity to impact purchase decisions by reaching consumers online, in-store, and on the go.  Digital coupons are a particularly good vehicle to fuel multi-channel marketing programs.  With digital coupons, consumers automatically receive their savings at checkout without having to clip or print offers.  Kroger is an example of a retailer who is using digital coupons to create compelling multi-channel marketing programs.
  • Personalized.  Consumers consistently say that personalized discounts on products they already buy are the most important factor in deciding where to shop.  These results are consistent with our own findings: redemption rates and sales lift can increase exponentially when offers are personalized using consumer and basket data.
  • Collaborative.  One important recent trend has been the growth in shopper marketing.  At its root, shopper marketing allows brands and retailers to collaborate on promotions and other marketing programs based on insights into the consumer to drive incremental sales and loyalty to both the brands on the shelf and the store as a whole.  Tropicana, for example, has created a retailer-specific overlay to its national Juicy Rewards loyalty program that gives Kroger shoppers double points for buying participating products as well as exclusive digital coupons.

The digital marketing space is growing rapidly as leading brands and retailers demonstrate the value they can create with multi-channel, relevant, and collaborative programs.  As Allen Johnson, AMR Research Director, recently put it: “The intersection of consumer, brand, channel, and technology isn’t just possible, but imminent.  It’s a space that is rich with opportunity and one in which we think companies should invest to reach a fundamentally changed consumer.”

November 14th, 2010

Making sure the store is right

Kroger has realized what too many loyalty marketers miss – a good loyalty program can’t overcome a poor customer experience.  If the store isn’t right, meaning the underlying product and service doesn’t resonate with consumers…forget about trying to build loyalty.

A recent interview with Dave Dillon, CEO of grocery giant Kroger, underscores this point. Kroger has some of the best consumer data insight capabilities in retail through its partnership with Dunnhumby. While Dillon said the data is a good starting point, it “only tells you so much”.

There is no substitute to getting in front of your consumers and understanding what is important to them and how you can help make their lives easier.  Dillon and other senior Kroger executives spend significant time walking their stores and meeting with shoppers.  They also do “shop-alongs” and visit shoppers in their homes.  This approach helps them to see firsthand what products they buy and how they use them.  The feedback, combined with data from dunnhumby, has led to changes in staffing, training, marketing, merchandising, and technology to create better assortment and product information, more helpful customer service, faster check out times, and cleaner stores.

So, take a page from the playbook of one of the best retailers in the U.S.  A good loyalty program has to start a strong customer experience.  Getting this experience right is a continuous process and, as Dillon demonstrates, requires organizational focus that starts at the top.

November 10th, 2010

The rise of social couponing

Everyone it seems wants to tap into the sizzle of Groupon.  Barely two years old, Groupon marries social media, group buying, and couponing to provide consumers with deep discounts primarily on local products and services.

According to a recent article in Ad Age, a wide range of other companies, including leading retailers and CPGs, are creating their own Groupon-like coupon programs.   Wal-Mart, for example, recently launched a Facebook app called Crowdsaver that gave consumers 18% off a $500 plasma TV once the offer got 5,000 “Likes” (which it did in less than 24 hours).  On the brand side, ConAgra Healthy Choice posted a Facebook coupon that increased in value as more people liked it (from 75 cents off to $1.50 off to buy-one-get-one).

But social couponing does have some significant challenges.  In particular, it has been criticized for mostly attracting cherry pickers.  What’s more, marketers don’t want people to just like an offer – they want the offer to drive incremental sales.  Group buying (or liking) may be a gimmick but it appears to be a powerful one for getting people to share offers with their friends and encourage them to act.

Social couponing programs provide an important new opportunity for brand and retailers to:

  • Reach younger consumers, many of whom don’t read newspapers or clip coupons
  • Increase trial by using the power of “word-of-mouth” to get consumers to recommend a product to people they know—instantly providing more credibility.
  • Deliver more relevant offers by letting consumers themselves send offers to friends they know either buy the brand or might like the brand.
  • Reduce costs by using viral marketing instead of having to spend on paid media, FSIs or other mass marketing programs.

To get the most out of social media, we would recommend that brands and retailers:

  • Test . . . but make sure you learn.   Unlike traditional marketing, social media is very difficult to choreograph or control.  Marketers should find ways to test either on their own or through other sites but manage risk by setting limits on the number of coupons they make available (ConAgra did just this with its Healthy Choice social coupon).  In addition, brands and retailers should map consumers who respond to social coupons with their own data to see what types of offers and programs engage loyal consumers vs. cherry pickers.
  • Go digital.  Digital coupons are a natural fit with social media.  In the Healthy Choice example, ConAgra mailed the coupon to people who liked the offer, meaning consumers had to wait 3-4 weeks to get their savings.  By loading the coupon directly to a shopper or loyalty card, consumers can get their savings instantly whether they are online, in the store or on–the-go.
  • Go beyond coupons.  Social media can add significant energy to existing promotional programs.  We have long used a teaming feature with promotions we run with leading CPG companies and retailers that allows friends, for example, to pool the points they earn from purchasing participating products to maximize school donations.

Social couponing is a promising new tool for marketers.  Though embryonic, it will be worth watching how the market develops over the next 12-18 months and how big a role it can play in driving sales for brands and retailers.

November 2nd, 2010

Growing CPG loyalty one product at a time

CPG companies have a large opportunity to drive sales by encouraging their existing consumers to spend more, either by buying more of their current brands or by purchasing from new brands or categories.

P&G in particular is focusing on share of wallet to improve US sales growth.  In a recent Wall Street Journal article, Melanie Healy, the new head of P&G’s North American market, said, “Our whole organization is focused on how we get more P&G households to carry more P&G products.”

According to the article, P&G has launched at least two core programs to capture these extra sales.  Last year, P&G started its “Just One More” program which includes a strategy of targeting its best customers, in particular the 8% of North American households that, on average, use 10-11 P&G products.  P&G is bundling related products, issuing coupon books, and adding bonus products in its packaging to move its existing customers up the loyalty ladder (so that more of its households buy at 10-11 level) and getting its best customers to buy 11-12 products instead of 10-11.  With P&G’s scale, these moves could be worth $2-6 billion in incremental revenue annually.

More recently, P&G kicked off a “Have You Tried This” campaign to get its customer to try more of P&G’s new products.   The campaign features 18 new products and includes a consumer website with reviews and product information and an upcoming coupon booklet with more than $113 in discounts.

CPG companies have not traditionally done much with loyalty programs, preferring instead to use mass media such as TV ads and coupons in the Sunday newspapers.  Digital technologies, however, have made it easier for CPG companies to build deeper relationships with their consumers at a cost and with a reach that was impossible even a few years ago.   As a result, brand marketers are beginning to find out what leading loyalty marketers have known for years: you can often drive more sales by better targeting the customers you already have then spending to acquire a new customer.

Based on an analysis of best-in-class loyalty programs and our own experience, we believe there are three key factors to creating long-term consumer loyalty. A winning program must:

  • Deliver the right rewards and incentives for loyal behavior.  My Coke Rewards, P&G’s Gifts to Grow, and Stonyfield’s myStonyfield rewards programs are good examples of loyalty programs that reward consumers for buying more items and engaging with the brand.  Increasingly, loyalty initiatives must tap social media to broaden reach and enhance word of mouth.
  • Provide deep insights into consumer behavior. Use the data captured – including demographic data, attitudinal data from surveys, purchase data from codes on pack or electronic proofs of purchase , coupon behavior, and other factors – to identify and better understand target customer segments.
  • Personalize the consumer experience.  Tap the data captured to deliver relevant offers and content to consumers to get consumers to buy more of the brands they already buy and to try new brands and products across the portfolio.

Critically, CPGs must build loyalty directly with consumers AND through key retail customers to engage consumers across all potential touchpoints, including at the “moment of truth” – when consumers are shopping for products, and making buying decisions.

As P&G is showing, the world of brand marketing is rapidly changing and the winning CPG companies long-term will be the ones that put in place the technology and programs to continuously build deeper relationships with their consumers.

October 28th, 2010

Marketing to the Mobile Consumer

Mobile technology is a dream come true for marketers.  They can now send the right offer to the right consumer, at just the right moment – the point of decision.  Industry research notes that mobile marketing promotions typically earn responses in the 5-20% range, and often higher, especially when the offers are personalized using purchase data.  Today we (YOU Technology) announced the rollout of new mobile solutions for both brand CPGs and retailers that outlines some of the ways to reach the new mobile consumer.

So, how do you put mobile to work for you?  Here are a few important things we’ve learned working with customers.

1) Start simple. You may not need to start with developing a smartphone app.  Use text to start.  You’ll be able to reach a lot more customers (today), and it will allow you to get the basics down before spending a lot.

2) Think Coupons. Two out of three consumers say that coupon offers are the most effective way to reach them.  With paperless coupons shoppers can find and download offers directly to their loyalty card and automatically receive their savings at checkout.  No clipping.  No barcode scanning.

3) Mobile promotions are the same.  And different. As with most digital media, the rules for creating mobile promotions are mostly the same—relevancy, be engaging, and capture contact, preference, and behavioral data to fuel CRM initiatives.  But mobile can offer a range of new capabilities such as location-based service can time offer delivery perfectly at the decision point.

4) Consumer insight remains key. Remember that the greatest power of mobile promotion is the ability to reach people who have expressed an interest.  Basing offers on past purchase behavior is an ideal strategy, and this means integrating mobile marketing with your loyalty and CRM program.

5) Collaborate to enhance. For retailers and CPG companies, the real upside is in collaborative programs that combine loyalty data and insights, and reach consumers via multiple digital channels to build sales and loyalty for both sides.

Keep these principles in mind when you consider mobile marketing.  Your customers will thank you with more register rings.

View YOU Technology Mobile Couponing Webinar Replay

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