Driving sales with a little help from consumer data

News headlines wail of financial meltdown and sinking house prices, while mortgage lenders’ checks would put an MI5 operation to shame. But, funnily enough, when you look around you, you see people in the shops. And they’re buying things. There’s no question that shoppers are tightening their belts but they’re still spending money. Budget restrictions naturally impact on consumer expenditure and, unsurprisingly, luxury goods are often the first for the chop. Retail Consortium figures suggest that such purchases have already fallen as people reshuffle their priorities. Consumers are also more acutely aware of where they are spending and how much it all costs. It’s hard to imagine therefore that this won’t have an effect on the magazine market in the long term. If only we could read consumers’ minds and find out what their priorities are... Well, in today’s uncertain climate, consumer data could well turn out to be the newstrade’s Holy Grail.

Traditionally, magazine distributors - and publishers for that matter - analyse their sales using information gathered through day to day transactions and invoices. These facts and figures come from wholesalers and retailers and give a good understanding of where, when and how many magazines have been sold.

The current magazine market remains challenging with declining sales in the face of escalating production costs. It’s clear that a new approach must be made, so distributors and publishers are asking what can be done to buck this unwelcome trend. Are they missing a trick, they ask themselves, as the final touches are added to retail plans and strategies for the year ahead, and would being better informed about their customers make a difference?

Consumer Data – Could It Be Magic?

The tried and tested ‘basket analysis’ approach shows what products have been purchased along with a chosen magazine in store. This offers a teasing glimpse of buying behaviour, however you can still be left guessing as to who your customer actually is.

Consumer data reveals a plethora of personal demographic and income information as well as details on lifestage and location. There are many varied sources, but, thankfully, this huge array of information is standard across many of the providers, allowing comparison across the different channels. The two main types of data consist of ‘claimed behaviour’, which is extracted during an interview, while ‘shopping behaviour’ is recorded at the till point when a loyalty card is used.

Some research-based consultancies go even further, offering ‘moment of truth’ consumer insight where people are interviewed before, during and after their shopping experience. In addition to gathering information to build a customer profile, researchers quiz the shoppers about their trip and what items they did or didn’t buy - and why.

Sceptics believe that these interviews are not as accurate as behavioural data, such as information captured by reward card schemes for Boots, Sainsbury’s, Tesco and the like. The truth is that there are benefits from both types of data, whether they’re used in isolation or - more importantly - in conjunction with each other. As Steve Cripwell, marketing director for COMAG, says: "In a highly volatile sector such as magazines, where a significant proportion of sales are driven by impulse purchase, understanding the ‘customer journey’ is vital." To a great extent, this means joining up pieces of information from different sources: from understanding those factors that drive a customer into a store in the first place, to their behaviour in front of the shelf and the factors that influence purchase, or not, to the actual purchase itself and the details of the actual spend and the characteristics of the customer.

As well as getting to know your customer, it’s important to identify what drives them into the retailer in the first place and discover which promotions they prefer. Loyalty cards offer detailed insight into actual shopping behaviour, however interviews record the reasoning behind it.

Knowing Me, Knowing You

If there is one certainty about consumer data, it is that there is an awful lot of it. It could be overwhelming to suddenly have access to all this new data, so different from that traditionally used in your business. The insight can be fascinating, but it’s important to avoid getting distracted by the minutiae. A shopper may well purchase a magazine along with air freshener and pickled eggs, but is that really going to drive a promotional strategy? Retail level data sets the scene, showing how many copies are being sold and where. Meanwhile consumer data clarifies who is buying, what else they are buying, how often they are buying and, importantly, who is not buying.

Using the same level of information for your own magazines and your competitors’ is vital. Audit Bureau of Circulations (ABC) sales and electronic point of sale (EPoS) data enable monitoring, but it’s worth considering how your competitor titles were identified and, indeed, when you last determined this. Intriguingly, it may turn out that your main competitor is not even in the same sector as your own and may be a title that you hadn’t even considered.

One of the key advantages of consumer data is the opportunity to analyse your own customers and those of your competitors in several different ways. Customer segmentation has always been seen as one of the most important marketing tools when done correctly. Using segmentation allows publishers, as well as retailers, to target groups effectively and allocate marketing resources to best effect. Conventionally, consumer groups are identified based on demographics such as age, sex and social grade. Consumer data allows you to filter even further by using criteria such as average spend, frequency of purchase and items purchased.

Stand by Me

Customer loyalty is important to all consumer magazines, as a steady base sale is essential to maintaining revenue levels. It’s easy to assume that a large proportion of sales are coming from faithful readers, but is that really the case? Loyalty card data provides some of the answers. Demonstrating at sector, brand or title level, you can find out who is buying and if they have made repeat purchases and what share of sale is coming from new customers. This information can support editorial and advertorial strategy as well as circulation and also enables you to compare just how devoted your readers are compared to your competitors’.

Let Me Entertain You

Crudely, a promotion’s effectiveness is calculated by comparing its cost against additional sales produced. More detailed analysis can reveal information on where new customers have come from and subsequent levels of retention, gauging the extent to which the promotion stole market share from competitors or attracted new consumers into the sector, thereby growing the market.

Interviews obtain even more details on the attractiveness of promotions, depending on where people are shopping at the time. Exploring the success rate by retail group and shopping category highlights the venue and type of activity most likely to attract your target customer; another method of effectively allocating promotional spend.

All Together Now

Consumer data has been used by many of the major retailers across most FMCG sectors for some years, guiding everything from pricing, promotional strategy and new product development to product ranges and store layout. As Catherine Flitton, buying manager for news and magazines, Tesco, says: "One of our core values is that no one tries harder for customers. Through the use of dunnhumby data, we can better understand what it is that excites our customers and thus we can provide more relevant products and promotions. This in turn delivers both customer satisfaction and sales growth, two key objectives for any retailer."

By using the same data, distributors and publishers can begin to see common themes that retailers have capitalised on for so long. The benefits of increased understanding and transparency throughout the supply chain are clear: stronger working relationships, improved performance and increased confidence in implementing circulation and promotional strategy. This is also what Steve Easton, wholesale director at COMAG, believes: "We have a collaborative relationship with wholesalers and work closely with them to ensure we are aligned with the advice we give publishers and retailers. Consumer data helps dispel myths and ensure that quality advice is passed on."

Simply the Best

As mentioned before, it can be overwhelming to suddenly have access to consumer data. Many of us remember when we first accessed retailer level data, be it outlet level supply and sales data or EPoS, and the number of questions that generated. But could you really imagine doing your job now without it? Consumer data can provide an edge, so it’s not surprising that a growing number of retailers are taking a greater interest. The revelations from consumer data help to shape selective marketing strategies aimed at specific shoppers. In other words, you can target customers whose purchasing habits closely fit your model of ‘the perfect customer’. Fewer marketing messages sent to highly targeted recipients saves time and money, while achieving a much better return on investment. We know who our readers are, where they are and what they like. Let the wooing commence.