Winners Losers Leaders Laggards. This might be a good name for a John le Carre novel, but it's analyst-speak for identifying leading (or lagging) retailers. What are the differences between retail leaders and retail laggards, and what are the vital statistics that set leading marketers apart from the crowd? According to a recent white paper from the IBM Center For Applied Insights, today's abundance of customer data is a priceless resource; and armed with advanced technology (like Pricing Intelligence Solutions) and other scientific approaches to harness this big data, retailers can detect patterns, make new associations, and acquire a deeper understanding of customers as individuals, ergo, become known as retail winners.
One set of criteria for retail winners, noted by IBM, is that businesses armed with forward-thinking marketing organizations have three-year revenue Compound Annual Growth Rate (CAGR) more than 40 percent higher than that of other companies, and their gross profit is growing at a rate double that of their peers.
RSR Research says it judges retailers by year-over-year comparable store sales improvements. Assuming industry average comparable store sales growth of three percent, RSR defines those with sales above this hurdle as “Winners,” those at this sales growth rate as “average,” and those below this sales growth rate as “laggards” or “also-rans.”
To understand the impact of winning management on business outcomes, IBM surveyed 362 marketing professionals from around the world across more than fifteen industries linking those responses to publicly available financial information to identify possible correlation between marketing sophistication and financial performance.
Retail Winners, says IBM:
1. Perform better;
2. Are able to grow profit faster than revenue (suggesting they're able to maintain high margins and sell more products at full price instead of relying on discounts);
3. Demonstrate high marketing sophistication;
4. Demonstrate high financial performance;
5. Excel at engaging individual customers systematically;
6. Have the insights and organization influence to invest marketing resources to better coordinate the customer experience across their enterprise;
More Specifically, Winning Retailers:
7. Demonstrate tangible returns on marketing spend.
8. Stand out because they place greater emphasis on measurement, tracking results and linking them to individual efforts.
9. Show greater efficiency in their use of marketing budgets.
10. Can show ROI on investments (which helps retailers to invest more intelligently).
11. Are positioned to guide marketing technology decisions and shape the customer experience across business functions.
12. Can focus on driving strategic growth and shaping the business strategy versus simply managing the mechanics of marketing.
13. Have (and use) the ability to gather, analyze and use hard data to discuss marketing effectiveness and make fact-based investment decisions.
14. Establish a system of engagement that can help drive quantifiable outcomes.
15. Deploy innovative technology and processes to automate, deliver, guide and accurately measure the impact of marketing actions across all channels.
16. Employ a more analytical and cooperative approach.
17. Make line-of-business peers part of the process, thus, they can provide valuable input and are involved with the whole process.
Being able to demonstrate results helps marketers build credibility and the financial justification and can enlist the support of other business functions in knitting together a common view of the customer across different points of interaction.
Retail Winners tap into the power of integrated, multichannel campaigns, and the system allows leading marketers to drive customer value at every interaction -- online, offline, ibound and outbound, across all channels.
According to the IBM white paper, the use of Pricing intelligence solutions like Pricing Rules, helped Spanish Company, Telefonica, deliver a 35 percent increase in the number of customers in just three months, by using techniques such as "next best offer" marketing).
Bottom Line For Your Bottom Line:
Winners think differently, plan differently, and respond differently. Winners are quicker to incorporate location data and embrace new marketing models such as social/local group buying and creating engaging apps that run on sites like Facebook. Leaders innovate. Others merely follow trends! Laggards fail to re-invent themselves when it becomes obvious their existing business model is no longer working.
Retail success has to do with a retailer's ability to invest effectively, making results-based allocation decisions that maximize the return on marketing spend.
Are you an innovative retail winner-leader or a lagging loser?