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Delivering on the Promise of Customer-Centricity - Precima & US Foods at FMI Learning Lounge

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Retailers that satisfy the needs of customers will win in the market but too often customer-centricity fails to deliver on its promise. Precima client, US Foods, is a great example of an organization that has truly delivered on the promise of customer-centricity and they share a case study on customer-centricity in the attached presentation that was originally presented at FMI Connect 2016.

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Delivering on the Promise of Customer-Centricity - Precima & US Foods at FMI Learning Lounge

  1. 1. Delivering on the Promise of Customer-Centricity: A Case Study of Success from US Foods FMI Connect Learning Lounge – June 21st, 2016
  2. 2. Today’s presenters Graeme McVie VP & GM, Business Development Precima gmcvie@precima.com Chuck Sample VP, Insights and Analytics US Foods 3 CONFIDENTIAL
  3. 3. Today’s discussion topics Why are we even talking about customer- centricity? How did US Foods successfully deliver on the promise of customer-centricity? How do leading retailers successfully execute customer-centricity to win with customers? Market perspective Case Study Successful execution 01 02 03 4 CONFIDENTIAL
  4. 4. Why are we even talking about customer-centricity? 01 5 CONFIDENTIAL
  5. 5. Two years ago Walmart’s CEO said on a conference call to investors: Doug McMillon, CEO, “We’re making progress on building a more customer- centric organization, with a foundation of everyday low prices” 6 CONFIDENTIAL
  6. 6. In the summer of 2014 Walmart launched their Savings Catcher app that went national “If there were ever a no brainer in the world of retail, it would be the decision to create an app like this” 7 CONFIDENTIAL Aaron Strout, Journalist, Marketing Land
  7. 7. Now Walmart has axed Ad-matching at hundreds of stores to drive adoption of their App “Walmart is ending its in-store ad-matching program at hundreds of stores…to encourage more customers to join Walmart's app” 8 CONFIDENTIAL Hayley Peterson, Journalist, Business Insider
  8. 8. Customer-centricity and personalization are key focuses – Kroger Lauren Johnson, Journalist, Mobile Commerce Daily 9 CONFIDENTIAL “Kroger’s mobile strategy stands out with focus on loyalty, personalized coupons”
  9. 9. Customer-centricity and personalization are key focuses – Target Brian Cornell, CEO 10 CONFIDENTIAL “…all of the company’s efforts will be fueled by a guest-centric point of view, including updating the loyalty programs to include more personalized offers and a simple way to participate”
  10. 10. Customer-centricity and personalization are key focuses – Safeway Steve Burd, Former CEO, 11 CONFIDENTIAL “There’s going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people.”
  11. 11. Customer-centricity and personalization are key focuses – Whole Foods 12 CONFIDENTIAL Walter Robb, Co-CEO “Over the remainder of the year, we plan to continue our promotional strategy, including more personalized offers“
  12. 12. Other industries are shaping & setting new customer expectations for customer-centricity On-Demand PersonalizedMobile
  13. 13. Retailers believe a customer-centric strategy is key to success 0 5 10 15 20 25 30 35 40 Series 1 Series 2 % Manufacturers Retailers 14 CONFIDENTIAL Source: Precima Customer-Centricity Research Study 2015
  14. 14. Personalized offers are not a top factor when choosing where to shop but they are growing in importance 95% 94% 92% 83% 81% 55% Quality Variety Everyday low price In-store trade promotions Steep discounts Personalized offers 11% vs 2015 15 CONFIDENTIAL Source: Precima Grocery Promotional Research Study 2016 Product Quality Product Variety Everyday Low Prices In-Store Promotions Personalized Offers
  15. 15. Millennial generation rate personalized offers as more important than other generations 54% 70% 60% 47% 34% GEN Z MILLENNIALS GEN X BOOMERS PRE-BOOMERS Importance of Personalized Offers by Generation Gen Z Millennials Gen X Pre-Boomers Boomers Gen Z Millennials Gen X Boomers Pre- Boomers 16 CONFIDENTIAL Source: Precima Grocery Promotional Research Study 2016
  16. 16. What types of shoppers have found personalized promotions to be important? 17 CONFIDENTIAL Tech Enabled Younger Generations More likely to like offers through mobile app or SMS and like to pay via mobile More Loyal Millennials & Gen X like personalized promotions & expect retailers to become more personalized in future Source: Precima Grocery Promotional Research Study 2016 Are significantly more likely to spend more than 40% of their weekly grocery budget at their primary store
  17. 17. Retailers believe they’re being customer-centric, but half of shoppers aren’t feeling it • Senior management is strongly committed to customer-centricity • We consistently deliver personalized marketing offers • We leverage customer insights to develop strategies and plans • They don’t ask for my feedback after I shop • The personal data they collect does not benefit me • They don’t send me attractive offers based on my shopping 18 CONFIDENTIAL Source: Precima Customer-Centricity Research Study 2015
  18. 18. How did US Foods successfully deliver on the promise of customer-centricity? 02 19 CONFIDENTIAL
  19. 19. Powered by CookBook Vision
  20. 20. Who is US Foods? • 2nd largest foodservice distribution company in the U.S. • 300K customers; 120K independent & regional operators • $26+ billion in revenue • 58 distribution centers solely in the U.S. • 23K+ employees, 3K+ sales people • Post recession IR growth estimated at 4-6% • Margin pressured industry • Survived unsuccessful buyout from largest competitor (18 mos) • Went public last month: USFD 21
  21. 21. 22
  22. 22. 23 CookBook is the Engine Behind our Customer-Centric Vision CookBook powers customer-centric, actionable insights through predictive Analytics These insights allow us to deepen customer relationships and provide the most relevant solutions to help grow their business. We put the customer at the center of everything we do
  23. 23. 24 Insights reflect that no two of our customers are quite the same Customer-item level insights are continually updated to account for recent changes in customer behavior Up to three years of past behavior is used to determine purchasing, promotion and pricing patterns CookBook is the Engine Behind our Customer-Centric Vision
  24. 24. Transforming the Business of Foodservice 25 We can simultaneously tailor the service model and deepen the customer relationship to: • Increase margin • Increase penetration • Increase net account growth • Reduce total cost to serve • Increase our return on investment While increasing net promoter score—the critical indicator of our customer-centric strategy 25
  25. 25. 26 Original Business Case Strategic Objectives An integrated suite of tools will support future category management organization Pricing Intelli- gence Assort. Optimi- zation 1:1 Marketing & Promos •KVI pricing to increase customer penetration •Non-KVI pricing to achieve margin targets •Improved SKU productivity •Increase sales from new product innovation •Target offers aimed at acquisition, lift or retention •Better promotion item selection
  26. 26. 27 CookBook Realized My Kitchen CookBook for CMs Sales Planning Powered by CookBook CookBook for Vendors •Insights and workflows to foster category strategy decisions & accelerate category performance (Win @) •Unique price recommendations to maximize sales & profits •Tailored content (messaging & offers) that drive customer loyalty • Insights into vendor & category performance to inform strategies & investments • Align resources against prioritized customers • Identify at-risk customers • Product penetration opportunity recos CookBook has evolved to further power capabilities across Merchandising & Sales Pricing Powered by CookBook
  27. 27. 28 CookBook is creating the next generation of insights, expanding into new business areas CookBook Locally Managed Business CookBook for CMs CookBook for Vendors My Kitchen Chef’StoreVAS Promos Digital Contract Business
  29. 29. 30 When fully deployed, CookBook will create more value across all stages of the customer lifecycle Current Customer Lost CustomerProspect Prospect Prioritization Prospect Pricing Acquisition Campaign Prospect Product Recos Pricing Onboarding Price Stabilization Loyalty Campaigns Category Penetration Campaigns Predict Churn Retention Campaign Win Back Campaign Win Back Loss Acquisition Legend In Market 2016 In Market CUSTOMERVALUE
  30. 30. 31 CookBook Governance was essential to success • Workstream/ project/initiative-level activities & decisions • Enterprise level escalation point for major decisions • Program level escalation point & decision-making team Steering Committee • Cross-program level escalation point & decision-making team Consolidation/Escalation StrategicDirection/Prioritization/ Decisions Operating Committees Workstream Teams ICE PMO PL ICE Working Level Executive Leadership Program Leadership Business Leadership: Exec sponsor BI Center of Excellence BI Governance Data Governance
  31. 31. Lessons learned… 1 Have a business model to draw from Have multiple executive stakeholder accountability2 Commit to a true partnership: Analytics & IT3 Brand your work: make it approachable4 Involve the business actively5 Don’t let perfection become the enemy of good6 Invest in change management7 Be efficient in your design8 32
  32. 32. 33
  33. 33. How do leading retailers successfully execute customer- centricity to win with customers? 03 34 CONFIDENTIAL
  34. 34. Customer-Centric Retailing is best delivered through integrated customer-centric strategy and plans 35 CONFIDENTIAL Enterprise Customer Strategy • Identify Growth Opportunities by Customer, Category, Store •Category Strategy •Price, Promo, Assort •Innovation • Loyalty • Personalized Marketing • Targeted Mass •In-Store Experience •Employee Enablement •Real-Estate Planning Marketing Merchandising Operations Integrated Customer Plans Vendor Collaboration & Alignment
  35. 35. Total store, customer-centric pricing delivers balanced set of results 36 CONFIDENTIAL
  36. 36. 37 CONFIDENTIAL
  37. 37. Customer-Centricity should be leveraged throughout the organization and across to trading partners Vendor Collaboration Merchandising Customer Marketing Loyalty Programs 1-1.5X 2-3X 4-6X 5-8XROI 38 CONFIDENTIAL
  38. 38. The retailers that best satisfy the needs of customers will win Understand customer needs on a granular, timely & frequent basis Consistently execute Actions that best satisfy customer needs 1 2 39 CONFIDENTIAL
  39. 39. Takeaways Leading grocers are investing heavily in it Shoppers want it & demand for it is increasing Deploy across the organization Extend efforts to trading partners Starts with exec. support & org. commitment Requires change management Needs scalable data and analytical platform Customer- centricity matters It’s possible to deliver on the promise It has to be executed right 40 CONFIDENTIAL 01 02 03
  40. 40. Delivering on the Promise of Customer-Centricity: A Case Study of Success from US Foods FMI Connect Learning Lounge – June 21st, 2016 Graeme McVie, VP&GM Business Development | gmcvie@precima.com