February 21, 2012

Retail Alignment

For those who have a retail channel, you don't have much data to tell you if Judy, Jennifer, or Jasmine are shopping retail stores.

You do, however, have data that tells you which direct-channel customers are shopping your stores.

So, segment your direct-channel customer base ... I like to look at 12-month buyers, but include all purchase history, weighted by recency of course.  Once I have everybody coded (Judy, Jennifer, Jasmine), I split this audience by direct-channel only and retail+direct-channel.

Here's an example:

Direct-Only Channel Buyers
  • Judy = 28%.
  • Jennifer = 22%.
  • Jasmine = 50%.
Direct Channel Buyers with 1+ Retail Purchase, Last 12 Months
  • Judy = 24%.
  • Jennifer = 24%.
  • Jasmine = 52%.
This is a very common outcome when a retail brand elects to "integrate" the direct channel with the rest of the business.  It's common to have more "Judy" style customers in the direct-only side of the business, these are often rural shoppers without access to retail.

When channels are not in alignment, you'll see differences that are more substantial:
Direct-Only Channel Buyers
  • Judy = 44%.
  • Jennifer = 31%.
  • Jasmine = 25%.
Direct Channel Buyers with 1+ Retail Purchase, Last 12 Months
  • Judy = 25%.
  • Jennifer = 35%.
  • Jasmine = 40%.
In this situation, Management can elect to better "integrate" channels.  Or, Management can realize that different customers are shopping for different reasons, and capitalize on this opportunity.

If you are trying hard to align channels, then your efforts will bear fruit when the composition of Judy, Jennifer and Jasmine are similar for direct-only and direct+retail customers.

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