I’ve spoken about how the SAP Campaign Management suite of tools can help prevent internal data disconnects by assessing the holistic Omni-Channel effect of activities on a particular customer or product. At a macro level one can make a strong benefits case for both business and IT to pursue a capability release strategy aligned to enabling this toolkit.
Equally important to making the business case are the tremendous benefits to your particular user groups that should be accounted for as you undertake this transformation. Communication of a strong value proposition with your user stakeholders will drive better buy-in and corporate adoption of these new solutions. I’ll look at some common business pain points faced by retailers today and provide an opinion on how the Omni-Customer Framework can alleviate or eliminate them.
Transparent Marketing Planning & Offer Consistency:
Retailers, in my personal experience, are tremendously frustrated when a vendor attempts to ‘channel manage’ them. Perhaps a vendor will offer promotional subsidies on a product, but the same product offering is shown by your competitor the week before yours will hit the street. A vendor may limit inventory to you in order to enable support of a competitor with that same product on promotion. This vendor tactic damages the brand positioning of your channels, your customer’s shopping experience, and potentially your bottom line. Retailers will have noticed that having a Multi-Customer infrastructure causes these same problems. Many Category Managers have personally experienced being ‘taken out’ from other internal divisions through offer collisions, conflicts, or have seen their product offering cannibalized by similar products in different channels.
SAP can provide solutions to this common problem by consolidating all marketing events, promotional activity and personalized customer engagement into a single and/or transparent source. SAP CRM provides the base of this framework. Beginning with Campaign Management, users will maintain all known or desired go-to-market events across your Omni-Channel landscape. From this base, different application layers will be leveraged to create and maintain the specific marketing and promotional activity to support each event.
To illustrate this framework, we can consider that there are two general types of marketing activities – Mass Marketing and Targeted Marketing.
Mass Marketing, here, can be defined as a go-to-market strategy that does not include an explicit consideration of the end consumer. Examples would be a flyer or circular program that is sent to all addresses in a pre-defined local trading area or a temporary price reduction in a store or stores that is available to any consumer. SAP Promotion Management for Retail (PMR) provides the end user with functionality to maintain products and pricing against a Campaign and gives the user a deconstructed, bottom up causal forecast of sales and unit potential increases against the item, price and location during the timing of the event.
Targeted Marketing in SAP should be seen through two different views. Firstly, one can consider a personalized marketing approach where appropriate marketing communication is personalized and relevant for individual consumers. Secondly, one could consider a go-to-market strategy that is predicated on an explicit understanding of a specific consumer group to be communicated with. In either type of communication systematic consideration is given for both demographic and psychographic differences. However, depending on the content of the marketing communication, particularly regarding product dimension, a user would leverage different tools. SAP Hybris Marketing will support the identification and individualized communication to your customer inclusive of personalized product and pricing recommendations, while SAP CRM is the current solution to manage communication to individual consumers that are not individually product specific. In either case, the vehicle of communication could be e-Commerce, an email, text, or mailer.
In addressing conflicts, consider that each promotional activity described above will utilize identical data sets to determine customer segments and present forecasted sales and movement potential. Users can immediately understand each product offering’s potential within the context of all other product offerings inclusive of cross banner and channel cannibalization. Additionally, users can determine all relevant consumer touch points to a particular customer and consequently can manage the cadence of interactions. This holistic viewpoint introduces a scientific predictability and transparency across your organization.
Budget Management:
Integrated into this cohesive application framework is a transparent view to budget management. I should note here that one must explicitly maintain budget targets in the application layers to achieve this benefit and many retailers choose to introduce this functionality in a ‘later phase’. In other words, budget management is not required for the initial release.
Nonetheless it is typical that different divisions in an organization have their own budgets and own KPI’s, which are managed with a view to the division itself. As a Retailer moves to an Omni-Customer approach, the effect of all known activity across divisions, including regular price management, can be understood. Divisions can still manage to their own KPI’s, but the Unified Demand Forecast will enable scientifically based predictability considering the entire known universe of Omni-Channel offerings and allow for better assessment of divisional offers. Marketing and promotional spends and sales potential in totality can also be assessed. These assessments can be made weeks or even months in advance of the actual marketing events as your business processes dictate, allowing ample time for course correction to best meet the goals of individual divisions and the company as a whole. This predictability allows the users to contextually understand their individual KPI’s potential and have the time and tools to address their own concerns in advance of problems versus reacting to problems after they occur.
Optimized Inventory Support:
Once there is agreement that the marketing and promotional offer plan is set, the UDF can be shared with replenishment systems. This forecast is provided at an appropriate granularity of demand influencers – base demand, promotional lift, cannibalization and affinities, etc. – by location to allow for those systems to ensure that there is a proper amount of inventory available to support the totality of Omni-Channel offerings. Those systems can then do what they do best; demand planning, delivery scheduling, warehousing, distributions and operational scheduling, to ensure optimal product quantities are sourced and delivered at the appropriate time to the correct locations. Merchandising users will actively be helping Supply Chain achieve their KPI’s through the provision of appropriate and accurate information well in advance of the requirement to buy.
Conclusion – A Superior Customer Experience:
This blog is the last in a series of three. The Omni-Customer approach to customer data management and the provision of data as a product is the entry point to engage with today’s consumer. The business and IT benefits of an SAP product solution framework based in HANA, enhanced with high value customizations, is ultimately designed to provide a Retailer with the tools for providing what today’s customer demands. As SAP noted in the study quoted at the beginning of this series, ‘My retailer knows my preferences, provides me valuable advice and lets me tailor my entire shopping and delivery experience.’ You can achieve this with a valuable return on investment through a Retail Transformation utilizing this SAP suite of tools.