Auto Service World
Feature   July 13, 2016   by Steve Pawlett

Five Key Tools That Will Boost Sales

Anticipating customer needs is a difficult challenge for any retailer. For jobbers managing a warehouse of auto parts, having every part for every job is impossible, but if you learn to utilize the wide array of analytical tools that are available, you will certainly have a positive impact on your bottom line.
While much has been written on the subject of retail analytics, a recent white paper on the subject offers a clear approach to help maximize the effectiveness of marketing programs with the intent of attracting and retaining customers. The paper, “Analytics Toolkit for Retailers” by Synchrony Financial, is useful for several industries, including automotive.
According to the paper, the first step in the process is to understand that customers have multiple channels to go to and devices to use when looking to purchase goods or services. But the purpose is not just to reach customers; it is to truly interact with them. That true interaction means getting consumers to respond, favourably or unfavourably. The point is that as a marketer, you need to know what is on your customers’ minds so you can adjust your marketing accordingly.
Analytic tools can help a company clarify who its customers are, how those customers interact with its brand, and what their buying habits are so marketing resources and budgets can be focused for the biggest impact.
In addition to a differentiated, compelling offer, targeting also plays a significant role in campaign performance. It is critical to measure which customers or segments are more likely to generate incremental sales and which offers are most attractive to a particular audience. By optimizing customer targeting strategies, companies can ensure they are marketing the most relevant offers, services, and value to customers and thus maximize their return on marketing investment. Since markets often change over time, it’s important to periodically reevaluate the target groups to make sure they are still relevant.

1. Predictive modelling
Modelling is a key analytical strategy
used in successful marketing campaigns.
In essence, predictive modelling is an attempt to predict a campaign’s results based on relevant past data. This tool can reveal how changes in customer behaviour or marketing strategy can influence shopping patterns, campaign performance, sales, and profitability.
Predictive modelling can be leveraged to:
• Acquire new customers
• Predict the profitability of a customer
• Identify which customers are likely to leave the
• Predict who is likely to spend more or
less in the following year
• Determine the next likely purchase
• Measure which offers result in higher
• Develop a lifetime value score for the
customer (LTV)
Another method is back-testing, which is conducted after a campaign is completed to evaluate the results that would have been achieved had a certain model been selected. This model can then challenge the existing strategy in a live test in order to acquire new insights and determine future strategies.

2. Contact Management
You need to track and refine the number of customer interactions for optimal impact.
Many companies engage their customers through multiple communication channels in order to build brand awareness, drive customer loyalty, and increase sales. All types of communications – including general brand messaging, personalized offers, events, and notification of sales, or clearance items – should be tracked to determine the number of times each customer is being contacted through each media channel. This information provides insight into the optimal number of touches by customer or segment, and helps identify those channels and offer preferences that drive engagement the most. An effective contact management strategy helps companies avoid file fatigue, ensure messaging remains fresh, and reduces clutter in the customer’s eyes. A successful contact management system starts with the right infrastructure – a key component being a solicitation history table that keeps track of every communication and campaign. This helps to determine:
• Number of touch points per customer
and channel
• Timing of each communication
• Types of communications/offers
targeted to each customer
• Purchasing channels used
• Campaign and offer response rates
• Customer service inquiries
This critical information can be leveraged to drive your marketing strategy by measuring which campaigns and communications are most effective for each customer/segment, and to determine where and how each retailer should prioritize marketing dollars.
How do we maximize sales without overwhelming the customer?
Often, if a marketing campaign is successful, the immediate reaction is to do more of it. For example, if a free email coupon offer is successful, should we repeat the offer six times in the next two months? Not necessarily. In fact, studies show that increasing marketing touch points does not always translate into increasing success. There is an inflection point, after which increased communications come with diminishing returns. The key then is to determine the maximum number of marketing touch points needed to achieve the highest sales and ROI, while minimizing the number of opt-outs.

3. Channel Optimization
Contact and engage customers in their preferred channel.
A key step in channel optimization is identifying which channel(s) the customer prefers. Consumers interact with retailers in multiple ways, including:
• In-store shopping and browsing
• Online: research, browse and buy
• Open and click-through emails
• Mobile/digital: apps, text messages, and
mobile wallet
• Direct mail and catalogues
• Call or visit customer service
• Loyalty programs – points accumulation
and coupon redemption, in-store-only
or digital
Besides optimizing the frequency of customer contacts, optimizing the types and numbers of interaction channels will also improve your marketing results.
Data show that customers who shop multiple channels yield significantly higher sales. In fact, these omni-channel shoppers have been shown to account for nearly twice the sales as in-store-only customers.

4. Segmentation
Understand each unique audience segment for customized communication.
Understanding customers’ shopping habits allows companies to better reach them and enjoy greater marketing success and profitability. Knowing customers’ shopping behaviours, such as if a customer shops on discount or clearance only, generates a higher number of returns, shops exclusively online, never responds to marketing campaigns, or makes purchases in a single category, all contribute to understanding the customer to allow for more effective engagement.
These factors should be analyzed to acquire a single view of the customer in order to improve personalization, deliver higher response rates, and influence the timing and types of offers.
Obtaining this information and mapping it back to individual customer channel and touch point preferences helps improve marketing effectiveness and ROI. Determining the right communication channel is a key component of CRM strategy. Analyzing which channels customers prefer helps retailers learn to optimize their marketing dollars. For example, if a customer never responds to direct mail, those dollars can be allocated elsewhere and their channel preferences can be tagged and used for future communications and offers.

5. Media Mix Modelling
Optimize results by adjusting the media mix.
Media mix modelling analyzes marketing spend per channel and its impact on sales, allowing jobbers to measure the incremental sales attributed to specific marketing efforts. It also determines the level of sales that would have been achieved without marketing, providing an accurate representation of return on marketing investment. By seeing how their marketing mix affects sales and ROI, companies are able to refine their strategy or channel mix as needed. The process of media mix modelling also uncovers “sensitivities” that show the level of sales increase or decrease along with different levels of investment. This allows companies to vary their marketing budget by market in order to maximize sales and ROI as well as establish a baseline measure so a company can analyze its marketing performance over time.
The development and implementation of a strong analytics toolkit helps maximize the effectiveness of marketing programs. It begins with setting up the right measurement strategy in order to uncover incremental gains for all marketing initiatives. The right structure captures solicitation history and uses traceable data to tie back to the drivers of customer behaviour.
An additional focus on media mix optimization will provide insight and enable retailers to adjust their marketing spend across all channels in order to maximize sales and ROI while staying within budget. Measurement is a critical component in marketing, and should be deployed across all campaigns to influence strategy and drive improved results. The implementation of effective analytic tools is often the difference between marketing campaign success and failure. An organization can either create these tools in-house, or hire a competent, experienced company to implement the tools and provide advice. nJN