Analytics Team Leader
Fewer coupons, more sales
Belgium grocer Colruyt uses predictive analytics to tailor promotions, boost customer spending
What if every household received promotional coupons that closely matched what it actually wanted to buy? That was Belgium grocer Colruyt’s goal. Using predictive analytics, the company is sending fewer coupons, while increasing household spending.
A larger percent of households now use our promotional coupons, and the increase resulted in a larger average spent in our stores by cardholders. Equally important, it indicates a clear increase in customer loyalty.
The Colruyt Group operates 217 stores. It sends its 1.6 million loyalty cardholders promotional coupons every other week. But Belgian mailboxes are stuffed with promotions from other retailers. “This makes it difficult to grab their attention and reach customers with our message,” explains Bart Van Roost, Analytics Department Head. “We began searching for a way to make sure that customers look at our leaflet.”
“If customers go through a folder only to find out that there are no products of interest, they feel we have wasted their time,” says Bruno Dirkx, Analytics Team Leader. The concern: Customers won’t bother to open future promotional envelopes. While segmenting customers is a partial answer to this problem, Colruyt wanted to go beyond that. “What we had in mind was nothing less than selective marketing – marketing on an individual basis,” says Van Roost.
But how do you customize the coupon selection for 1.6 million cardholding customers? Especially considering the stores carry 11,000 products and put 400 of them on promotion every other week. “We obviously required a powerful application with advanced analytical capabilities,” Van Roost says. After conducting two proof-of-concept trials, the company chose SAS to give it the capabilities needed to be that “customer-ready business.”
Calculating purchasing probabilities
With SAS® Enterprise Miner™, Colruyt is able to calculate purchasing probabilities based on past customer behavior, as well as on household and demographic information stored in its database. Of the 400 products on promotion during a given two-week period, each household receives four pages of coupons specifically tailored to it, down from 32 pages previously.
Dirkx says that speed is critical to the program’s success, as is the ease in setting up rules so, for instance, households don’t receive more than eight promotions within the same product category.
Fewer promotional coupons, higher return
Along with higher per-household spending, the retailer is saving a lot of money on paper. “We’ve saved 665 million pages of paper a year, as well as the associated printing and mailing costs,” Dirkx says. “A larger percent of households now use our promotional coupons, and the increase resulted in a larger average spent in our stores by cardholders. Equally important, it indicates a clear increase in customer loyalty.”
Increase promotion effectiveness with customized offers.
- More cost-effective marketing: Households only receive promotions related to products they are interested in, thereby stimulating 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.