© dunnhumby 2009 | confidential 1 Clive Humby Chairman, dunnhumby

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© dunnhumby 2009 | confidential

Clive HumbyChairman, dunnhumby

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Agenda

Understanding the consumer through data

Some lessons from the retail world– Better Promotions

– Better NPD

– Meeting emerging consumer needs

Challenges

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who are we?

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Influencing 500 million consumers globally

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Consumer is “data savvy”… are you?

● Used to relevance every time they go online– Amazon, eBay etc … all driven by what you have done before

– iTunes, WE8, Napster… know my favourite music etc.

– Facebook, YouTube… driven by my profile and preferences

● Supermarkets are becoming much more relevant both in-store and on-line

● Telephony, Banks and Insurers are beginning to get it

● Are you? What will be the price if you are not?

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Customer “Loyalty”… a few myths

Sticking a “customer is king” poster on the office wall doesn’t work…

Are we talking about improving customer service or driving down customer service costs?

… They aren’t the same thing

Now you’ve made it clear to the customer you have all this data on them

… Have you changed your behaviours?

Do customers want a relationship with you?… I don’t think so, with a few exceptions

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more information

more choices

exercising choice gets quicker and easier

if you want to protect and enhance your brand value

your offer must be relevant and valued

Customers don’t get stolen … they walk

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TescoClubcard

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Loyalty card & EPOS data enables retailers to know customers & tailor the offer according to needs

Customer DataCustomer

InsightCustomer

Management

Long Term Customer

Loyaltyenables... to drive... to grow...

●Customer segmentation– Lifestyles

– Shopping Habits

– Promotional Behaviour

– Demographics

●Communication strategy

– Retention

– Growth

– Win-back / prospecting

● Business strategy– Price – Promotions – Assortment – Availability

●Increased customer Lifetime value

– Sales growth

The process…

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How do we achieve Relevance? Firstly, what you buy

● What are the key attributes of the products you choose?– Green– Price Point; Cheapest on Display, Mainstream, Premium– On Promotion– Ease of preparation– Pack size– Designed for kids, adults– Always choose the same brand or cherry pick promotions– Ingredients– Brand– Healthy…..

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How do we achieve Relevance? Secondly, how and when you buy

● What are your favourite channels– Loyal to one store or shop multiple formats– Share of Wallet/ basket size– Fill-up with petrol on the same visit– Use dot.com

● When you buy– Mid week versus weekends– Time of day– One big shop or many smaller visits

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How do we achieve Relevance? Thirdly, your reaction to offers

● Promotional Behaviour– Cherry-pick this week’s offers or do a full shop– Switch brands based on offers– Trade-up when on promotion

● Clubcard Offers– Redemption of coupons delivered– Use of Clubcard Bonus at till– Green Clubcard points

● Clubs– Babyclub, Wine Club, Healthy Eating, Food Club

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Making product data powerful = Product DNA

Value Chips, 3.6 kg

Customer DNA of this product

Big Box (+) / Small Box (-) 1Healthy 0Prepacked (+) / Loose (-) 0Fresh (+) / Longlife (-) -1Convenience 0Cooking from Scratch 0Branded (+) / Tesco Own Label (-) -1Kids 0Value 1On Promotion 0Finest 0Foreign 0Green 0High (+) / Low (-) Price -1Vegetarian 0Meat 0Adventurous 0Traditional 0Low Calorie (+) / High Calorie (-) -1….

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Lifestyles are built from a customer’s “DNA” profile

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-1

0

1

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3

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A “Time Poor Food Rich” customer

Miss Jones’s DNA Profile25,000 products are used to

create a customer’ DNA

We have a DNA profile for every single customer

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Mainstream Family type mealsPopular brandsKids products

Finer Foods “ Foodies who are time

poor, money rich and choose everyday

luxury items”

Price Sensitive Cost conscious customers who tend to buy cheapest

on display

Traditional “ Traditional households

with time to buy and prepare ingredients”

Upmarket

Mid Market

Cost conscious

Convenience “People on the go who haven’t time or inclination

for scratch cooking”

Healthy “Organic shoppers, fruit and vegetablesweight watchers etc”

Lifestyles Customers are segmented according to what they buy

“You are what you eat”. This gives us an indication of what motivates customers when they shop.

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Segmentation allows us to build this picture for 15m customers

LifestageApplication form, what they buy

Shopping HabitsShare of shopping, Recency & frequency

LifestylesMotivations behind shopping behaviour

“You are what you eat”

Primary ChannelPreferred format (Supermarket, Express, On-line, Petrol)

Brand AdvocacyParticipation in extensions (Tesco.com, TPF, Baby Club, Wine club)

Promotional PromiscuityCherry picking deals, bulk buying to larder fill

ProfitabilityBrand choice, packaging preference, weight of purchase

This is how our customers behave.

Attitudes Drivers of Behaviour

Behaviours Transactions Profit

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why do we do it?

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What are the key levers for a retailer?

● Right mix of good prices & great promotions

● Right range of products on the shelf

● Successful New Product Developments

● Good service in the store

● Relevant personal offers and rewards

● Reacting to changing customer needs

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increased facings of low end products at price sensitive stores

Sales increase +16% Units increase +48%

Optimised merchandising in cleaning products

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Winning House Brand New Product Development

540 new lines, designed to win against Aldi / Lidl / Netto

Results

Between 3% (beauty) and 11% (Household) penetration of weekly users

Typical customer buys 2.1 “discounter” items per week

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Driving communications

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Reality Baskets advertising focus is onwhat customers actually buy rather than cheap items with low uptake.

“Real baskets” advertising

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Retailers today … in store

In Store TV

Floor Stickers

Trolley Talkers

Coupons @ Till

SamplingIn store & car park

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Retailers today… at home

Loyalty

Themed Mailings

Clubs

Magazine

Coupons @ Till

Web & Internet

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Retailers today… e-channels

Web & Internet Online Communities

Mobile

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Retailers will be able to know consumers & interact in a much more relevant way

E-Cash / Payment vehicles

Helping me live my life

Smart Trolley

Offers direct to phone

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Summary

● We are in an age of in-depth insights & targeted communication to consumers– Real time, accurate, actionable, responsive

● Consumers get “data”– They understand the loyalty “contract”… you get to understand me, I get relevant offers and

incentives

– They see relevant messages from their supermarket, Amazon, eBay etc.

– Are you being relevant to them?

● What are you doing to be more relevant?– Can you collect data on your customers?

– Can you differentiate the service as a result to mutual benefit?

– Do you use the data and show its value?

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Challenge for you

● What are the key levers that drive your customers needs?

● Can you collect and harness relevant, timely data to improve customer service, financial returns and make yourself more relevant to your customers?

● How does this work in a market where demand exceeds supply?

● What are the consequences of customers being disengaged because you are not relevant to their lives?

Documents

© dunnhumby 2009 | confidential 1 Clive Humby Chairman, dunnhumby