Business Situation
A leading omnichannel retailer in the QSR/Retail sector faced significant challenges in optimizing their marketing strategies. Key challenges included quantifying the effectiveness of various marketing channels, understanding the impact of loyalty programs on sales and customer retention, and attributing sales to long-term brand equity vs. short-term campaigns. Additionally, the client lacked clarity on cross-channel synergies, which hindered efficient budget allocation and ROI optimization.
SGA Approach
- Gathered historical data on sales, marketing expenses, customer acquisition costs, and loyalty program metrics
- Combined internal data with external factors like seasonality, holidays, and macroeconomic indicators for a holistic analysis
- Quantified each marketing channel’s contribution to sales using regression models with Adstock transformations to account for carryover effects
- Modeled cross-channel synergies (e.g., TV ads driving online traffic) using interaction terms in the regression model
- Segmented customers into loyalty members and non-members to measure incremental revenue through purchase frequency, average order value (AOV), and customer lifetime value (CLTV)
- Built a Power BI-based tool to simulate budget reallocations across channels, enabling ‘what-if’ scenario testing for optimal marketing spend allocation
Key Takeaways
- Strategic budget reallocation increased marketing efficiency, resulting in a 14% improvement in ROI.
- Insights into loyalty program effectiveness led to a 20% increase in revenue from loyalty members.
- TV ads were found to drive significant online search traffic, enabling better coordination between traditional and digital campaigns.