Data Drives Innovation at Kroger

Kroger traditionally has been slow to adopt new shopper marketing technologies, but that measured approach is driven by the retailer's focus on catering to its most loyal customers.In a presentation titled "Getting Personal Through Customer Science" at the National Retail Federation's 2016 Retail's BIG Show, chief information officer of 84.51 Yael Cosset described the Cincinnati, OH-based agency's work tracking and using vast amounts of customer data."The better I know my customer, the better I am at delivering that personal experience," he said. "Our customers are changing every day. If you look at the customer 15 years ago and the customer today, you could not believe this is the same geography, the same demographic or the same store."For Kroger, one loyal customer is worth eight non-loyal customers and harnessing data about its most valuable shoppers' past behavior allows the grocer to shape future offers and marketing content to their needs. Kroger and 84.51 build demographic profiles to tailor the shopping experience, which involves understanding not just that a shopper cares about specific products but the drivers that led to purchase, such as an aspiration to be healthier or a need to stay within a specific budget."Customer needs are very different," said Kroger vice president, digital business Matt Thompson. "One of the things that we've been working on for a decade is what does it mean to take data and personalization and deliver that to customers?""For us, its not just about a sexy app." -- Matt Thompson, Kroger vice president, digital businessShiny, new technology alone cannot meet Kroger's personalization needs. While Kroger does use its data to develop custom emails, which have a 50-70% open rate, the supermarket operator also uses that information to shape how to design stores, the products and services offered at each location, and its private-label brands."For us, its not just about a sexy app," Thompson said. "We've got millions of customers in our store every day, so bringing that customization to life is going to be about technology and our associates. It all needs to come together in a way that's relevant to the customer."That also means being slow to abandon traditional tactics. Kroger still relies heavily on direct mail and has found that 60% of households that receive its mailers redeem at least one of the enclosed offers. In the last month, half of Kroger customers used paper circulars to plan their shopping trips, often combined with coupons or recipes."When you put those three things together they create more engagement than you would ever see separately," Thompson said.Meanwhile, the retailer is striving to make the technology it does use more relevant. Tactics include making products a customer is more likely to shop show up at the top of the mobile version of the weekly circular as well as a "Savings Center" within Kroger's website that offers digital coupons and weekly deals personalized to every customer."When we do this for customers, we see them spend more with us," Thompson said. "We see their weekly trip go up. We see their loyalty go up."With successes like that, the retailer has had less incentive to experiment with new tech such as beacons, which Cosset said he fears could make a trip unpleasant by bombarding shoppers with messages."What we have, we spent a lot of time on, which is why we're taking a slow approach to [beacons]," he said. "It's kind of a difficult compromise which is to make sure we have a positive impact on the experience."

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