1. 1© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare THE FMCG CHURN MARKETER: TO DARE OR NOT TO DARE? GfK Belgium – Koenraad Dierick Presentation Created for the Febelmar congress 2015

2. 2© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare The loyal consumer is becoming a myth Question is: do you dare or will you fall? Churn ↑= Opportunity for Partnership ↑ 2 2 Sales vs. Churn paradox 3 3 ROY ≠ ROI 4 4 1 1 Loyal consumer = a myth FMCG churn management = Ѻ Action 5 5 5 things to remember from this presentation

3. 3© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Churn is happening within FMCG markets, the loyal consumer is becoming a myth. 1

4. 4© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Decreasing levels of loyalty and therefore increasing levels of churn Decreasing loyalty top300 brands

5. 5© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare What is missing here?

6. 6© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Opportunity for churn management based on partnership between retailers, manufacturers, and agencies 2

7. 7© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Integration of Insights Big data as basis for improved churn management RetailAgenciesManufacturers None or limited CRM systems Only know what happens in their stores and not for all buyers. Full overview on limited groups

8. 8© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Some immediate pitfalls were identified

9. 9© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Threesomes are always daring Different Objectives | Needs | Habits | Not always prepared to share…

10. 10© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Sales might be going up whilst the most valuable buyers are already leaving your brand SALES VS CHURN PARADOX 3

11. 11© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare SALES VS CHURN PARADOX To reckon, predict and avoid churn, video’s are needed instead of pictures. You may call it smart data, instead of Big data 201120122013 € 24.583.000 € 26.654.000 € 19.017.000 % % % % % % % % % % Yearly Sales Value Buyer typology Non buyers Light buyers Medium buyers Heavy buyers Note that the actual brand and years might differ from this example

12. 12© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Managers reflex: “But I can organize promotions, improve distribution and invest in media, that will save us.” Promo Media Price

13. 13© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Managers reflex > € 400.000.000 > € 1.500.000.000 Media Investments Promotional Investments Total Media investments for largest FMCG brands in 2012 Total Promotion investments for largest FMCG brands in 2012

14. 14© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare % of change explained by: PROMOTIONS MEDIA EXPENDITURES CATEGORY BEHAVIOR HH CIRCUMSTANCE PRICE CHANGES RETAILER RELATIONSHIPS 201120122013 € 24.583.000 € 26.654.000 € 19.017.000 % % % % % % % % % % Yearly Sales Value Buyer typology Non buyers Light buyers Medium buyers Heavy buyers Note that the actual brand and years might differ from this example Some of the traditional manager tools were actually causing the churn instead of solving it!

15. 15© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Will this person buy Rexona again soon? That is €42 of Rexona products for only €12 Example sent in by GfK panel member

16. 16© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare ROY is real, ROI is rare VS.

17. 17© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Managers reflex: “So now we can save everybody?” No, sorry! CRM

18. 18© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Churn potential 0% 100% Point of no return / too expensive to keep Not at risk Aggressively defend Test for future potential / Divest Divest / Choose to lose Managers had to dare to identify their most valuable buyers and understand their churn potential …. Customer Life Time Value Monitor evolution Focus area!

19. 19© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare 19 Media  Overall Media, TV, Print, Online Affinity  TV: Channels, Time Frames, Genres, Broadcasts  Print: Genres, Titles  Online: Services, Domains, Mobile Demographics  Gender and Age  Household Size  Life Stages, Life Cycles  Social Class  Income Relevant Set  Category and Cross Category  Channels, Accounts  Segments, Brands, Products, Variants  Promotion, Brand, Premium, Private Label Relevance Attitudes, Beliefs, Values  Nutrition, Convenience, Sustainability  Shopping Behavior & Preferences  Beauty Care & Appearance  Leisure time, Hobbies  Personal Attitudes Direct targeting opportunity via retailer loyalty card … That is were the partnership became important again

20. 20© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Managers reflex: “So we do a DM and we’re done?” No, sorry! DM

21. 21© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare 5 FMCG churn management requires continuous effort

22. 22© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare FMCG Churn management requires continuous effort 22 Understanding the drivers and evolution of churn behavior Historical understanding Continuous tracking At the level of the individual consumer REAL LIFE | LONGITUDINAL | CONTINUOUS | CONSUMER | BEHAVIOR | MAPPING Across channels Across categories KPI evolution Taking into account promotions Impact of mobile and online Impact of advertising Taking into account other sales drivers (e.g. consumer confidence) AND TAKING ACTION ON IT!

23. 23© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Still not convinced?...... Question is: do you dare or will you fall? Still not convinced?

24. 24© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare Still not convinced? 201120122013 € 26.654.000 € 19.017.000 Yearly Sales Value € 24.583.000 2014 € 21.317.000 In 2014, the brand recovered, but they are still working on their way back to the top To be continued…

25. 25© GfK 2015 Febelmar Congress: the FMCG Churn Marketer : to dare or not to dare THANK YOU FOR NOT CHURNING AWAY Koenraad Dierick GfK Belgium