Ebiquity Spain’s Director of Marketing Performance Optimization, Javier Illana, shows why it pays dividends to start client relationships in a considered fashion.
Conventional wisdom says the best clients are those with the biggest budgets. With clients who offer an RFP worth hundreds of thousands of euros, you win big, and you’re well remunerated from day one. That’s the theory. Experience suggests conventional wisdom is wrong. Business that is big ticket from the get-go heads in one direction only – and that’s down, salami-sliced by procurement and mistrusted by the CMO because it feels like an out-of-control investment that needs reining in.
Our direct experience of working with family-owned, family-run businesses – where small-scale projects demonstrate value – shows that an incremental approach can generate equally big but much more sustainable client relationships. Trust is built gradually, and we demonstrate value piecemeal across more brands and categories than if we asked for everything at once. By showing initial restraint, we’re more likely to be rewarded better in the future. We know it’s true in personal relationships, and it’s true of business too.
A case in point is Calidad Pascual, the family-owned dairy foods and drinks business, founded in Madrid in 1969, and today in more than 60 markets.
We started our partnership with them in 2011. At that time, their marketing performance optimization (MPO) consultants provided more heat than light. They didn’t understand the dynamics of the business, their recommendations weren’t transferable from one brand or category to another, and the client team found the approach hard to understand. As a result, recommendations were unused in marketing decision making.
With the client team uncertain and bruised from this unsatisfactory relationship, we took it gently and slowly. We suggested the Marketing team should run a pilot with us for just one brand, helping them understand the impact of marketing activities on sales. This first project helped both Calidad Pascual and the Ebiquity Spain team understand the dynamics of the brand and the category.
Calidad Pascual asked us to model this first brand for a further six months, to measure the impact of the decisions taken in real time and over an extended period. After that, we extended modeling to all portfolio brands.
This project had a significant impact in five areas.
- We identified different roles for different types of products in the portfolio. First, we optimized the price competitiveness of Calidad Pascual’s mainstream stock-keeping units (SKUs). Then we determined the right price points for innovative new products, enabling us to grow the market with more accurate volume forecasting. And finally we found the right role for niche SKUs, to increase category penetration with new customers.
- We optimized media messages across the portfolio. By determining which combinations of messaging, media, and channels were right for individual SKUs, we delivered significantly enhanced return on investment. And we determined the predominant role of TV in the media mix.
- We found the right balance between pricing and promotional strategy for both mainstream SKUs and for product innovations.
- We were able to focus on wider product benefits in advertising messaging, helping to extend the reach of existing products into new markets.
- And we ran simulations around product launches, calculating the incremental sales new products would bring. These simulations accurately forecasted sales.
Every month since 2012, we have monitored, measured, benchmarked, and advised on the impact of marketing by both Calidad Pascual and its competitors. By continually updating the analytics deployed, by driving up the knowledge and capabilities of the client Marketing team, and by taking a fundamentally business-oriented approach, time and again we’ve found significant opportunities to optimize marketing investments.
“[Ideal analytics scenario]: 3 weeks each month developing plans, taking decisions, and making a difference”
Before we introduced our approach across the Calidad Pascual portfolio, Marketing was overloaded with information, found it difficult to draw definitive conclusions, and couldn’t make decisions in real time. Once our program was in place, we enabled Marketing to spend just one week each month analyzing data and three weeks developing plans, taking decisions, and making demonstrable differences.
…helping the Executive team optimize budget allocation and so maximize sales, increasing profit margin by 5 percent.
…identifying early warnings of unexpected decreases in base sales due to changes in product formulation, enabling rapid response.
…tracking the impact of campaigns with exceptional ROI, enabling brand teams to bid for increased investment.
…helping the Media team choose the best new agency based on projected ROI of their media plan.
…calculating that changing product units from 6 to 4 packs would boost sales by 16 percent.
What’s more, by gradually spreading MPO at SKU, brand, and portfolio levels, in 2013 we expanded our remit to cover trade promotions optimization for Sales and Trade, reducing promotional investments while maintaining incremental sales. From 2015, we built an integrated system for Marketing and Trade to change pricing and promotions dynamically and so increase sales by nearly 20 percent across different brands. And we have developed a formal forecasting and simulation tool to enable Marketing to have a better understanding of performance at any point in the year and where – if anywhere – there is a significant gap between performance and results.
… mighty oak trees grow
Maria Rayo, Market Intelligence Expert at Calidad Pascual, commented: “Before Ebiquity started to work with us, we found it difficult and incredibly time-consuming to analyze all the relevant information that surrounds our business. But they’ve helped to change how Marketing, Sales, and Trade use data to optimize marketing and promotional performance – to empower them all to make better decisions. Crucially, they have done this gradually, brand by brand, category by category, discipline by discipline.
“If they’d rushed into the company and said, ‘We can do all of this for all your departments all at once!’ we would have politely shown them the door. Promising the best relationship ever from a standing start is literally incredible. But by gradually demonstrating value, they have built an incredibly fruitful and mutually beneficial relationship based on trust and respect.”
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