Bart Van Roost
Head of Analytics Department
Increased marketing efficiency through selectivity
Promotional coupons tailored to each household
Can every single household receive promotional coupons that closely match their preferences? That was the question that retailer Colruyt asked itself when developing its new marketing strategy. SAS helped turn this idea into reality. Thanks to its predictive power, SAS is able to forecast which promotional items are most likely to result in purchases by each individual household. Initial results show an increase in the use of coupons, as well as a higher average spending by each household.
The Colruyt Group is active in both food and non-food retailing. The company operates 217 stores and employs 14,700 people. It ships approximately 18,000 m3 of goods every day. Currently, 1.6 million households possess a Colruyt Extra loyalty card. Every two weeks, these cardholders receive an envelope with a number of promotional coupons which they can redeem in Colruyt stores.
Selective marketing has greatly increased the success of our promotional campaigns.
Bart Van Roost
Our promotional folders now only contain 30 coupons, but the number of coupons redeemed has grown considerably.
Karel De Wilde
Team Leader Analytics
Communicate with each household individually
"Today, households get a vast amount of information in their mailbox from a variety of retailers. This makes it difficult to grab their attention and reach customers with our message," observes Bart Van Roost, Head of Colruyt's Analytics Department. "In this context of over communication, we began searching for a way to make sure that customers look at our leaflet every two weeks."
"We concluded that the best way to achieve this would be for each household to only receive promotional coupons for products that they are interested in," adds Karel De Wilde, Team Leader Analytics at Colruyt. "If a customer goes through a folder only to find out that there are no products of interest, they will feel that we have wasted their time. And as a result, they tend not to bother opening our promotional envelopes in the future." But how can the company make sure that each household gets the most appropriate coupons? Colruyt worked on an idea that goes beyond segmentation, as Van Roost explains: "What we had in mind was nothing less than selective marketing. In other words, marketing on an individual basis."
With 1.6 million cardholding customers and 11,000 products on offer, this implies managing and exploiting a huge amount of data. "We obviously required a powerful application with advanced analytical capabilities. After conducting two proof-of-concept trials, we were convinced that SAS has the robustness to handle this vast amount of information."
Calculating purchasing probabilities
SAS is able to calculate purchasing probabilities based on past customer behavior, as well as on household and demographic information stored in the Colruyt database. Based on these probabilities, it selects 30 promotional coupons that each household is likely to use. These coupons are chosen from among the 400 products that are on offer during each promotional period.
"The SAS software not only knows how to cope with extremely large amounts of data, it can also make an enormous number of calculations in a relatively short runtime," says De Wilde. "In addition, SAS exploits data intelligently."
"Another strength of SAS is that it takes marketing restrictions and rules into account," adds Van Roost. For example, each household will only receive up to eight promotions within the same product category. This is to avoid any household receiving only promotional coupons for drinks, cosmetics, or any other particular product category.
Fewer promotional coupons, higher return
"The first results have been extremely positive," enthuses Van Roost. "This selective marketing approach enables us to send smaller promotional leaflets to each household. This has resulted in a positive environmental and financial impact. It has saved 665 million pages of paper a year as well as the associated printing and mailing costs. Whereas customers used to receive coupons for all 400 products during a promotion, they now only receive 30, but these are of greater interest to them. A larger number of households now use our promotional coupons. This increased use of coupons has also resulted in a larger average amount of money spent in our stores by cardholders. Equally important, it indicates a clear increase in customer loyalty."
Improve efficiency of promotions through individual marketing
- More cost-effective marketing: households only receive promotions related to products they are interested in. This stimulates more coupon use.
- Increased spending per capita: the average amount spent in store rises for customers using these coupons.
- Significant cost savings: this new marketing approach saves 665 million pages of paper a year.