Sunday, January 8, 2012

Duplication - A four part series

   
Part Three: Application and analysis

Some of the recommendations I give here may be obvious, but simply put, there is basically only two applications and an endless amount of analysis.

1.       Breaking down the different parts (zoom in):

If you have access to demographic, geographic and psychographic information on top of the basic customer data, you are likely to have a gold mine in understanding differences in loyal customers and shared customers.  This can be instrumental in helping with product development, service, media and messaging strategies.  Using Exhibits 6 and 7 from Part Two as a reference point, we can examine what separates loyal customers (B and D) from shared customers (C) or even potential untapped customers (A). 

Painting a basic demographic picture can help decipher finding additional loyal customers or help outline strategies for converting shared customers into loyal customers, your competitor’s loyal customers into either shared or loyal customers of your own and current non shoppers. 

Geographic analysis of the parts can be just as valuable as the demographic analysis in helping to understand where you’re strongest or identifying areas for consideration in opening or even closing. 

The most valuable breakdown is likely to be a behavioral analysis (what’s sometimes referenced as psychographic).  You can look at the differences in shopping frequency, spending, products purchased, internet behavior, media behavior/usage, coupon usage, areas of interest (sports, music, events, activities, travel, etc.), and the list goes on.  The behavior list is only limited to what you have access to, but is likely the most valuable in message development, media placement, promotional planning and overall competitive strategies.  These same breakdowns can be used when examining your own customer base (duplication across products or services).  I can’t underscore the importance of behavioral analyses enough.  You may discover that a shared customer may only represent 10% of total consumers, but in what I’ve found in some instances, represent more than 50% of spending.  This kind of analysis can have a dramatic impact of strategic planning.

2.       Trending (zoom out):

Now that you have a foundation for conducting duplication analyses, track it over time.  It will help to identify shifts in loyalty and possible competitive threats.  See Exhibit 9 for an example of trending in duplication.

I’ve used the prior duplication example data for 2011.  As you can see in this example, between 2007 and 2011, Bull’s Eye was able to grow its loyal base and shared base of customers.  Then in 2012, Bull’s Eye was able to grow its loyal base by 76% percent, while the shared base declined 31%.  Since the untapped market and Wal-Co’s loyal based hardly changed, it’s likely that Bull’s Eye somehow converted a large contingent of shared shoppers into loyal shoppers (not what Wal-Co what’s to see).  Looking at volume trends and share trends will be important (see my sales vs. share post for more details: Sales vs. Share post).

Lastly, looking at the breakdowns over time will be important, especially when strategic objectives are established from the initial analysis in duplication.

In my last part in this series, I will show how you can look at 3-way and even 4-way duplication.