Major CPGs Partner with Food Lion
To Optimize Shopper Card Data
By John Karolefski
Major CPG manufacturers are partnering with Food Lion in a new program that involves sharing and optimizing data obtained through the chain’s frequent shopper cards.
The vendor collaboration program aims to maximize and optimize the data by more thorough analysis and a coordinated approach to targeted marketing.
“We want to leverage our database in partnership with our vendors in a data sharing and optimization way, while totally respecting the privacy that we value so greatly around that data,” said Carol Herndon, Executive Vice President of Accounting & Analysis, Chief Accounting Officer and Information Technology for the supermarket chain operating in the southeast.
About 8 million households actively use the chain’s MVP loyalty card. Through the program, Food Lion offers discounts on some 2,400 items each week and sends coupons and product promotions directly to shoppers’ homes.
According to company officials, marketing data collected from MVP Card transactions helps Food Lion know more about and better serve its customers. By tracking their shopping preferences, the retailer can manage more efficiently the product selection and quantity of items in its stores to ensure that the items shoppers want most
are available.
The marketing data, officials added, also enables Food Lion to target coupons and promotions based on customer needs and preferences. For example, MVP customers who make regular purchases of dog food receive coupons for dog food and other pet products. MVP customers who begin purchasing diapers receive coupons for diapers and other baby products.
According to Herndon, the vendor collaboration program is part of the way Food Lion is improving its relationship with shoppers. One goal is to enhance targeted offers to customers and build the supporting technology. Overall, the idea is to be more customized in an effort to drive item count and sales.
“The CPG companies have mounds of data on consumer buying habits and purchasing trends,” said Herndon. “To be able to merge all of that information in a collaborative way is a very powerful. Not just summarizing the data, but understanding what it says and what it doesn’t say and having collective insights around that data. It absolutely supports the work that we’re been doing around segmentation and clustering.”
At first, the program is open only to major vendors which collectively account for 80% of the volume at Food Lion. Ultimately, it will be open to all vendors.
“The challenging thing for us is that once you get beyond {major CPGs}, you have thousands of vendors that are not necessarily prepared from a technology perspective. We want to be sure not to avoid or ignore those folks. We have to be sure we modify our approach to vendor collaboration to allow them to participate.”
Whether the vendors are large or small, Food Lion will apply metrics against the program to measure its progress. “We’ll be very deliberate in identifying expectations in that regard,” she said, “coming up with metrics and measurements against which to judge our performance and using that to help modify, expand and accelerate the program going forward.”
With its loyalty marketing programs, Food Lion takes great care to protect the privacy of its shoppers. The company does not sell, rent or lease customer information. All card data, including names, addresses, telephone numbers, e-mail addresses and other identifiable information, is secured. Customers who do not wish to provide such information can still obtain an MVP Card and take advantage of the additional discounts. However, they do not receive coupon mailings and other offers.
APRIL 2008
What If You Could Search
Consumers’ Shopping Baskets?
By Al Heller
If a gap exists between what shoppers say they buy in surveys and what they actually purchase, how can consumer packaged goods companies uncover the truth?
The answer is central to brand success, as CPG explore numerous ways to message loyalty consumers with relevant content beyond mass media, on cell phones, websites, blogs, social networks in stores and more.
“Consumers expect businesses to respond to their tastes, preferences and timing. As they tell us, everything should be about me,” said Todd Morris, senior vice president-business development, Catalina Marketing, in a recent webcast he hosted with Neal Ryan, executive director-advertising, called, What If You Could ‘Search’ Your Consumers’ Shopping Basket?
“If you don’t observe their behavior, if you don’t know their preferences and tastes, how can you customize your content or
your marketing to meet that and respond to this ‘me’ generation?” Morris asked?
“Understanding this behavior is core to actually making [a brand] part of the ‘me’ generation and searching…to reach smaller subsets of households, provide relevant subject matter to the right audience, and ultimately improve ROI,” he added. “To accurately target, you need high-quality information.”
Morris is talking about the data-based equivalent of prying (“Oh, you say you’re on a diet? What are those cupcakes doing in your basket?”) without the embarrassment factor.
To that end, Catalina spent two years examining 250 million shopping baskets weekly from 130 million separate shopper identifications. “Shopping baskets don’t lie. It’s what you do, not what you say, that matters,” said Morris.
With this view, he claimed, CPG can see the full mix of what people buy in food, drug and mass today and over time, and determine who is profitable or not, how much they spend on a brand, who’s defecting from a brand, and predict who might be soon.
What Catalina found might send CPG scurrying to prepare for market share battles. Fewer than three in ten (29.6%) consumers remained loyal to Sprite brand beverage from year 1 to year 2. A quarter (25.9%) became switchers, not loyal to any brand. Another 14.8% became loyal to competitors, and 29.7% left the brand entirely.
This behavior-based or search-level advertising can find people who stay loyal on their own, and model them out. Basket search can predict people who will defect. The marketing campaign can change based on observed behavior that’s searched, he added.
CPGs also need to know what percentage of brand volume is actually reached by their traditional demographic media target. An analysis of three different client brands found a jarring separation between the media target and the actual target, one as high as 88%.
Meanwhile, Ryan spoke of other ways basket search could advance CPG sales: Say the enhanced soft drink Diet Coke Plus could target precisely and meaningfully by overlaying who buys diet carbonated soft drinks with who buy vitamins, or Progresso low-sodium soups could target consumers who buy soup and certain health products.
“Target the right audience with unique messages and relevant content, and they’re more likely to act on it,” he said.
