Case Study Leveraging balanced scorecard for performance analysis to identify drivers of store-level financial performance and deliver brand promise
Client: Major retail chain with multiple outlets Industry: Retail Business Impact: • Actionable insights • Drive loyalty
Business Challenge The client, a major retail chain with multiple outlets, was in need of a balanced scorecard model that would enable its senior leaders to understand the drivers of store-level financial performance and empower the delivery of the company’s brand promise (excellent customer service, superior product quality and range, and a highly enjoyable shopping experience). The client’s hypothesis was that the delivery of its brand promise would directly impact customer loyalty supporting client retention, repeat purchasing and cross sales. They also believed that effective delivery of the promise was driven by employee satisfaction and productivity. To prove their hypotheses and achieve their objective, the client needed to merge a multitude of different research studies – past and present - into one single database, and then analyze that data at both the customer and store level.
Solution Our model was developed and validated in three phases:
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Phase 1: Business & Data Understanding The initial phase began with in-depth interviews among senior leaders and selected store managers, along with employee focus groups. In addition, all past research was reviewed and a number of data sources were identified to be included in the model. Together, this entailed:
• Customer surveys - an overarching customer loyalty survey, departmental surveys, a returns policy survey, an alteration quality survey and a frequent shoppers program survey • Customer spending data - data on charge card spending, loyalty program activities and various store-level financial metrics (e.g. store revenues) • Employee metrics - research on a wide range of employee attributes including satisfaction, commitment, motivation, awareness of the customer satisfaction drivers, their sense of empowerment and views on training and incentivization Phase 2: Data Preparation In the second phase, Blueocean Market Intelligence warehoused all of the data using the Link manager platform to create a linked data set -first, at individual customer level (e.g. Customer X’s satisfaction and loyalty linked to Customer X’s spending’) and then at store level (e.g. ‘Total customer spending and revenues for Store 1 linked to total customer satisfaction’). Phase 3: Modeling & Evaluation The final phase involved the application of various multivariate techniques with customer-level and store-level data stored in the Link database to validate hypothesized relationships between financial data, customer loyalty and employee metrics.
Outcome: Actionable Insights to Drive Loyalty The metrics produced using the Link system provided specific, actionable insights into the relationship between the company’s employees and its customers. Examples include: • Customers identified as loyal spent 65% more on charge cards relative to those who were identified as non-loyal; they were also 50% more likely to engage in the loyalty program and were less open to sales and discounts • The cosmetics department acted as a great entrée to the overall shopping experience - so, customers who were satisfied in cosmetic department surveys also tried other departments and tended to provide higher scores in the overall metrics • Over a 2-year period, loyalty scores had improved by 16% on the loyalty metric to 26%. There were also clear linkages between store revenue / profitability and employee / customer metrics © 2014 Copyright Blueocean Market Intelligence. All Rights Reserved.
Blueocean Market Intelligence generated a separate report using the Link BI reporting platform for each store that included aggregated customer spending data and employee scores at the store level, enabling store managers to see the direct relationship between employee management and store revenues. Based on the results, workshops were held with store managers to drive improvement, while ‘impact-planning’ tool kits were developed to facilitate workshops and train-the-trainer programs.
About Blueocean Market Intelligence Blueocean Market Intelligence is a global analytics and insights provider that helps corporations realize a 360-degree view of their customers through data integration and a multi-disciplinary approach that enables sound, data-driven business decisions. Since we live in a highly dynamic and multidimensional world, we believe the most effective business decisions come from a synthesis of data streams and not from one-dimensional sources. Using our 360 Discovery approach, we ensure the comprehensive use of all available structured and unstructured data sources, enabling us to bring the best to bear against each engagement. Strong decision support is enabled through a combination of analytics, domain expertise, engineering and visualization skills brought together in harmony. Leading companies have benefited from our partnership with financial growth, 360 views of their markets and competition, and improved customer acquisition, satisfaction and retention. For more information or to request a consultation, please email info@blueoceanmi.com or visit us online at www.blueoceanmi.com. Seattle | Phoenix | Denver | Chicago Cincinnati | Bangalore | Dubai | London