Retail client seeking to maintain strong business performance

Challenge

The client was a leading US department store chain. At a time when the US economy was slowing and mergers were creating larger and better financed competitors, this company was seeking to maintain strong business performance, including improvements in marketing efficiency. The client traditionally spread their $100MM - $150MM marketing budget across a fairly broad mix of vehicles: newspapers, magazines, radio, in-store events, online, and targeted email.

Solution

Using weekly, store-level POS combined with marketing activity data from media agencies, service bureaus, and other partners, Marketing Analytics delivered sales response models that identified the incremental sales contribution of all marketing drivers. Brick & mortar and web sales were modeled separately to enable measurement of cross-channel media effectiveness, a key project objective for the client.  

The models found that sales due to marketing increased 12% over the prior year. Notably, digital media and e-mail contributed half of total marketing-driven sales. These two drivers also achieved the greatest efficiency on a $ incremental revenue per $ spend basis. The models also demonstrated that online media had a halo effect on physical store sales and that traditional media generated lift in online sales. At the same time, though traditional broadcast marketing vehicles yielded lower short term ROI, return was still positive.

Our recommendation to the client was to continue their overall shift from traditional media into digital while investing sufficiently in selective, high-end direct (glossy mail pieces, catalogs) and in-store events to reward best customers. Results were presented to the board from which they received positive reactions and support for implementation.