I work in insight, but I’ve never really done an insight job.” Coming from Andrew Mann, director of insight and loyalty at Sainsbury’s, that is a hard statement to believe. After all, he has held not one but two of the biggest insight roles available, having moved to his current post two years ago from Tesco, where he was first Clubcard director and then director of innovation.
What he really means is that his focus has been on the business end of the task, rather than the back-end data mining. “I am passionate about getting it right for the customer. Retail has a simple relationship with shoppers – did the customer visit and buy?” he says.
Understanding that customer relationship is supported by the masses of transactional data captured at point of sale and associated with customers via the Nectar card. Sainsbury’s makes 20 million weekly sales and 17 million consumers hold the loyalty card, generating billions of rows of data about shopping behaviour.
Based on that information, the retailer looks at levels of loyalty, sends direct marketing to card holders and runs analytics to spot future buying trends. “I do a combination of all three and use Nectar to get insight. But I don’t use it on its own,” says Mann. Research and other indicators also go into the mix to help keep Sainsbury’s on top of what is happening in the market.
Retail has a simple relationship with shoppers – did the customer visit and buy?
Its recent financial results suggest it is back in tune with those shoppers, having enjoyed its best-ever Christmas trading period. Third quarter sales to 8 January 2011 were up 3.6% (excluding fuel) compared with the same period last year. It was the only one of the big four supermarkets to increase market share, adding an extra 0.3% to hit 16.6%.
With 800,000 new Nectar cards issued during 2010, there are strong signs of the brand returning to the place it held in the nation’s heart during the Eighties, before being toppled by Tesco in the Nineties. Retail is such a dynamic and complicated sector it is hard to give credit to any one thing alone. But understanding your shopper is never going to hurt.
Mann says this is actually a simple process. “When you look at Nectar data, you can build decision trees and group together different purchasing behaviours. For example, do people buy apples or not? Then you look at whether they buy green or red apples, then if they buy Granny Smith’s or Golden Delicious,” he says.
Following this simple process not only reveals segments within the customer base, it also gives the retailer insight into how to arrange products. Putting all the green apples together might make it easier for shoppers if colour preference emerges as a very strong differentiator.
Tapping into behaviour
According to Mann, there are many examples where buying really is binary. “People either buy ready meals or they do not,” he notes. “It is easier to get somebody to carry on with an existing behaviour than it is to try to get them to change to a new behaviour.”
In the context of loyalty programmes, there is sometimes a tension between offering an incentive to try a completely new, out-of-portfolio product – usually driven by a manufacturer wanting to expand share or launch a line extension – and the risk of such incentives being seen as irrelevant.
Mann’s response is to keep things as simple as possible. “Don’t try to be too complicated. If you make a coupon too complicated, for example, people won’t get it. If you have a picture of a chicken and ’£1 off’, people get what it is. They have a split second to make that decision, so we need to be really clear about things,” he says.
One of the biggest innovations he has helped to drive using Nectar has been Coupon at Till. While simple enough to hand to shoppers at the checkout, behind the scenes it involves a ferocious level of data integration, mining and analysis involving 15 billion lines of data. After segmentation and modelling, business rules are applied to create nearly 1,200 different coupons, each targeted by type of offer, strength of discount and other key dimensions. So less loyal customers will get more money off, for example. All of this is delivered in real-time the moment a customer swipes their Nectar card at a till. It won a Data Strategy Award for Best Use of Data in Retail 2010.
When you go looking into customer data on this scale, you start to find some very interesting things. Sainsbury’s had the biggest market share for sales of multi-platform game Call of Duty, for example. “We sell a lot of Xboxes, PS3s, Nintendos. What is the first thing you do when you buy a console? You buy games. We know if you bought Call of Duty a year ago, you will be very interested in the latest version,” says Mann.
Non-food sales has been a critical area of growth for grocery retailers and have undoubtedly helped Sainsbury’s in its recent successes. What Mann and his team have to do is keep coming up with new insights that spot the opportunities and help the retailer plan new store locations, drive in-store ranging and merchandising and inform customers about both.
“The team come up with all the ideas. My job is to keep those people working well together and coming up with simple ways of doing things,” says Mann. Colleagues and customers are a constant refrain when talking about his work at Sainsbury’s. The sense of a genuinely customer-centric business that respects its staff comes across strongly. Or as he puts it, “happy colleagues, happy customers, happy profits. We have 20 million opportunities to interact with customers each week and we have 150,000 colleagues. That is a large resource.”
The Tesco question
One question Mann is constantly asked is the move he made from Tesco to Sainsbury’s. To outsiders, it looks like one of those behaviour changes that is so difficult to achieve, like getting a consumer to switch from Coca-Cola to Pepsi. His answer is diplomatic and measured.
“Tesco is a really good business. I have a lot of respect for it. It is a great retailer. Sainsbury’s is also a great retailer and a good company. My personal reasons for the move were to have a different challenge, do something new. I’d done a lot at Tesco in terms of working internationally and on Clubcard and developing that scheme. Sainsbury’s was a good opportunity to develop insight and the loyalty programme,” he says.
A simple answer undoubtedly conceals more complicated motivations. Yet that is typical of Mann’s whole approach, like the way he sums up customer loyalty/ “The key thing is getting the customer to turn left and come to us, rather than turning right and going to somebody else.”
2009-present Director, insight and loyalty, Sainsbury’s
2008-2009 Director, innovation, Tesco
2004-2007 Clubcard director, Tesco
2001-2004 Head of brand communications and internet, British Gas
1999-2001 Global brand director, Coca-Cola
1998-1999 Marketing director, Cadbury-Schweppes Beverages UK and Ireland
Educated at the University of Durham, Mann is married with three children, which takes up all of his free time. “Everybody should run a marathon once in their life,” he says. “Mine was ten years ago.”
Is there senior-level buy-in to data at Sainsbury’s?
Yes. Our chief executive, Justin King, is always talking about how important data is to us, and Sainsbury’s clearly understands how it can use data. Our chairman David Tyler is also a non-executive director of Experian, so we have got board-level buy-in to what the company can do with data.
Do you see yourself as working in data, marketing or customer loyalty?
I am passionate about getting it right for the customer. We use Nectar for loyalty, Sainsbury’s also uses it for direct marketing and we also use it to understand what the customer is thinking of doing. So I do a combination of all three.
Who makes use of your skills in the business?
The real challenge in any organisation is how to embed data into that organisation. My role is about working with every part of the business to make sure data is right at its heart. We are working on short-term and long-term projects. For example, we are planning next Christmas already, but we are also looking at what happened last week.
What is the best thing about working in retail?
We have got to come up with ways of doing things differently. The thing about retail that is challenging is also the thing that is really good – retail is the only business where you are so close to your customer. So you have to work very hard to keep them, which is very different to a bank where a customer is almost never going to leave. The challenge is that as soon as a customer leaves, we want them to come back.
What are the major differences between working for a retailer and your other jobs?
When I worked at Coca-Cola and Cadbury-Schweppes, I didn’t use data at all. They are very different businesses. British Gas made significant changes around how it understood customers. But as a utility, it is more about the contract and retaining people, rather than having to sell to people on a daily basis.
What are the main key performance indicators for your job?
We use a balanced scorecard covering customers, operations, finance and people. That works, because it allows you to see if you have got it right on every dimension. The key thing, though, is getting it right for customers – that means listening to customers and getting the business to do the things they tell us. I have to work across three cycles – insight, which is about getting the business to align with what the customer
needs; loyalty, which is looking at whether we are successful at growing customer value; and direct marketing, which is measured on return on investment.