Throughout the past decade, Foresight ROI has been fortunate to collaborate with many of the industry’s top CPG shopper marketers. Measuring and then ultimately optimizing the performance of a CPGs shopper marketing investment has never been more important than it is right now. There is a sizable gap between those CPGs that frequently measure, learn, and then improve versus those that that have yet to attempt measurement. In fact, over the past few years, many of our CPG partners have leveraged our learnings to help them improve their shopper marketing ROIs by 30-50%. We estimate that there is a $100 billion profit opportunity in shopper marketing by making informed decisions using the results of effective ROI measurement.
For CPGs that fall into the yet to measure audience, but are ready to consider shopper marketing ROI measurement, here’s our perspective on some of the most frequently asked questions from CPGs starting on that journey.
Why is it important to measure shopper marketing?
As you will often hear our team say, what gets measured gets funded. Foresight ROI knows it’s important to measure the sales impact from shopper marketing for 3 important reasons:
- To justify spending in today’s zero-based budgeting environment.
o ROI measurement that is comparable to that of other investments like brand advertising and trade promotion helps shopper marketing teams prove the need for a fair share of the overall marketing budget.
- To optimize the budget allocation for maximum sales impact.
o Leverage expected ROIs in AOP to ensure your yearly marketing, brand, and customer objectives are being met and have the best opportunities to succeed.
- To create most impactful marketing programs by knowing what works.
o Knowing what will happen allows shopper marketers to craft the best plans. You can redirect the non-productive spending to programs that are successful and resonate with your customer.
Is it possible to measure the increase in sales caused by shopper marketing activities?
Yes, it is possible to measure the sales lift from shopper marketing tactics using a well-constructed econometric model specifically designed to measure shopper marketing. Through our years of experience, we’ve honed our methodology to accurately isolate the effects from each shopper marketing tactic from all other demand building effects like pricing, distribution, merchandising, brand advertising, competitive effects and external factors. The keys to accurate measurement are:
- Representing the shopper marketing activity in our models such that tactic reach is effectively tied to buying behaviors.
- Separating shopper marketing sales effects from trade promotion and other sales effects so as not to attribute these effects to shopper.
- Capturing integrated marketing synergies from shopper marketing to capture how merchandising and discount factors work with shopper to drive sales.
How can you measure shopper marketing?
We connect marketing actions to the profit impact using a specific analytic construct. We call the first stage the cost model, which quantifies and predicts how the marketing actions or spending converts to marketplace reach. Then we use our predictive model to estimate the sales lift from the marketing reach for each individual tactic with respect to all the other demand driving variables like brand advertising, seasonality, merchandising, distribution, competitive effects, commodity pricing, weather, the economy and others.
How has the measurement of shopper marketing evolved over the last few years?
As the amount of investments in shopper marketing have increased, the stakes have gotten higher, which has made measurement more critical. When your shopper marketing budget reaches a certain threshold, stakeholders begin noticing and asking what are we getting from this investment. In our experience, shopper marketing is going through the same scrutiny that other high investment vehicles encounter in any organization.
CPGs are now employing our specialized shopper marketing mix model measurement as the industry has learned that traditional marketing mix models do not measure the full impact of shopper marketing. These models are essential to isolating the true impact of shopper programming and its synergies with other vehicles, especially trade promotion. This is not only exhibited by the number of CPGs measuring shopper, but the frequency at which they measure – seeking to understand effectiveness in shorter intervals as they pursue improvement in their shopper investment strategy.
Foresight ROI is the leader in shopper marketing measurement, decision support, and software solutions for CPG companies and retailers. To learn more about our measurement, software or industry ROI benchmark solutions, contact us at: contact@ForesightROI.com