Customer Success Stories: Sellforte x Peek & Cloppenburg: Learnings and insights for an omnichannel retailer MMM implementation

Peek & Cloppenburg Introduction

Peek & Cloppenburg is a well established omnichannel fashion retailer in Europe with a rich history of over 100 years since opening its doors. The company currently operates in 15 European countries having almost 200 physical stores.

Peek & Cloppenburg is known for its diverse range of international brands such as Tommy Hilfiger, Polo Ralph Lauren, Hugo Boss, and also for its own brands. They have successfully maintained a strong revenue stream, achieving around €2 billion.

In recent years, Peek & Cloppenburg have been focusing on the digital space by actively expanding into e-commerce and online sales while also exploring different hybrid omnichannel opportunities such as research-online-purchase-offline and so on.

• Established in 1901
• 170 stores in 15 European countries
• 2 BEUR omnichannel fashion retailer
• 3% market share in Germany
• Selling brands such as Tommy Hilfiger, Polo Ralph Lauren, Hugo Boss etc. as well as own brand

Objectives: Why Peek & Cloppenburg started looking into Marketing Mix Modeling?

Peek & Cloppenburg operates through a variety of sales channels, including stationary retail and e-commerce shops, resulting in a diverse revenue stream. Consequently, their media mix is composed of both digital and traditional media, as well as CRM communication. The combination of various revenue streams and the complexity of their media mix have proven to be challenging when evaluating the effectiveness of marketing investments.

The chart below is an illustration of Peek & Cloppenburg’s earlier measurement scope and plan for how to extend it together with MMM (Marketing Mix Modeling).

Moreover, they also wanted to have a holistic view of how all their marketing activities are contributing to the revenue and in this case, looking at the media mix is not enough but one must also consider the promotions and campaigns. Meaning, they needed a tool able to integrate the price promotions into the final revenue results. In this case, traditional digital marketing attribution is not enough.

Peek & Cloppenburg thought about building an A/B testing platform inside their company to get a better grasp of their incremental gains. However, the expense and time needed to develop such a tool for a multi-billion dollar company didn't seem worthwhile. As a result, MMM became a great alternative, because it allowed them to quickly start implementing and analyzing their marketing effectiveness.

While attribution served as their main source of truth for digital campaigns, it didn't fully cover all their revenue streams or their traditional media. Although it worked quite well for digital media, there was a significant blind spot for in-store sales and those channels without a direct response.

Also, due to the "death of cookies," or the deprecation of third-party cookies from major web browsers, combined with recent user privacy concerns and policy changes, attribution is becoming less effective as a tool.

To summarize, the main reasons Peek & Cloppenburg started to explore MMM are:

• A significant portion of in-store revenue, where there isn't a direct link between marketing channels and sales.
• A significant use of traditional (offline) media.
• A need to consider prices and discounts in their analysis.
• Growing concerns about third-party cookies and changes in privacy regulations.

Continuous MMM vs one-time projects

Peek & Cloppenburg chose a continuous MMM service provider over a one-time consultancy project for two main reasons.

The first reason is to integrate MMM into their regular steering process. This means they can analyze performance on a monthly basis, getting a holistic view of their branding performance, CRM activities, and promotions, and how these elements contribute to revenue. Then, they can adjust their campaign strategies accordingly. If some activities are not contributing enough, they can run simulations to see what changes could improve future outcomes. Essentially, the first reason is the need for it to be an ongoing part of their decision-making process, which requires continuous service.

The second reason was agility. They found themselves caught in the classic dilemma of whether to build an MMM solution that meets the requirements of their first reason or to purchase a solution from an MMM provider.

There were two choices. On one hand, there was the option of dedicating extensive periods to discussions on requirements and theoretical aspects, followed by a significant amount of time allocated for implementation. Alternatively, the choice was to opt for a solution provider that could be deployed within a few months, significantly reducing the project's timeline.

Having a continuous MMM strategy is much more effective, especially now in a fast-changing environment where new factors frequently come into play. Building vs Buying SaaS solutions can be a heavy debate, especially in bigger retailers who have stores in various countries and multiple campaigns and product categories. However, even in these situations, this is what Peek & Cloppenburg had to say about their choice to buy continuous MMM:

MMM Implementation Learnings

A valuable insight Peek & Cloppenburg learned during the implementation process of MMM is that MMM is a customizable tool based on the needs and goals of the end user. Essentially, the MMM implementation process begins by identifying the marketing goals or outcomes the user wants to achieve with MMM. Based on these goals, the solution is then designed to fulfill the specified requirements. Essentially you start working backwards from your goals.

• Are you interested in learning how to balance your brand and performance budget?
• Do you want to find out how efficient specific channels are?
• Do you want to know the spillover effect between digital channels and stationary revenue?
• How do you want to slice your data - product category or sales channel or other dimensions

The MMM framework is designed to address all of these objectives.

One of the strengths of MMM is the fact that it tracks baseline sales which is often overlooked by other marketing analysis solutions. Essentially, this baseline revenue is what your business would earn regardless of your marketing efforts, thanks to your brand's strength and recognition. This means that even if your website is down, customers are willing to visit your physical store. And if that store is closed, they might even drive to another location. This baseline shows the value and loyalty your brand commands in the marketplace. When you can identify your baseline sales you avoid over-attributing incremental sales to media channels which allows you to look at your marketing efforts more objectively.

However, continuous MMM requires strong data support. Therefore, having a robust data foundation is absolutely crucial for the project to succeed. If the data engineering isn't mature and well-organized, the technical implementation of MMM can turn into a complex and challenging process, which will make it hard to achieve accurate results.

After using Sellforte’s continuous MMM, Peek & Cloppenburg had several findings:

• MMM revealed the real impact of traditional media on in-store sales, highlighting which channels and campaigns effectively drive sales.
• Peek & Cloppenburg was able to understand the real performance of classic media and see which channels & campaigns actually drive sales in stationary.
• They observed a strong Research Online, Purchase Offline (ROPO) effect, indicating that online channels boost in-store sales.
• Analysis showed that some channels with low Return on Ad Spend (ROAS) in attribution models (like social and display branding) have high Return on Investment (ROI) when assessed with MMM.
• MMM emphasizes a comprehensive view of marketing performance, beyond just direct response metrics.
• MMM is agnostic to campaign content, focusing instead on the financial impact of marketing efforts.

The charts below show a concrete example of use case for continuous MMM that helped Peek & Cloppenburg understand the impact of their marketing efforts on their incremental sales. The data displayed is not the real data from Peek & Cloppenburg but an example.

Like most onmnichannel retailers, Peek & Cloppenburg uses both digital and offline media. Measuring the impact of these two types marketing on incremental sales can be difficult with Attribution alone, which used to be the standard go to tool. Looking at the first chart, we can notice that attribution can measure only the impact that digital channels have on the e-commerce sales. However, this view is rather limited as it is not able to understand the true ROI generated by marketing tactics because it cannot measure the incremental sales generated through digital channels in physical stores.

Continuous MMM can measure both digital and offline media channels as well as the incremental sales in both e-commerce and physical stores. If attribution is the only marketing measurement tool in place, then retailers might miss the true incremental sales of the marketing channels and underestimate the performance of offline vs digital channels.

This way, Peek & Cloppenburg discovered that their online ads drive significant in-store sales. This is the ROPO effect mentioned earlier. This was another piece of proof that the idea of an omnichannel retail strategy, where online and offline sales support each other, is not just a dream but a reality.

How to implement MMM in the internal process?

MMM implementation starts with clear goals about your marketing process but also with an open mind towards marketing measurement. Ultimately, the continuous MMM solution must be used as frequent as possible and not only during special occasion. Moreover, end users must understand that there is no final truth, but MMM can get as close as 99% accurate. Nevertheless, one should use multiple measurement tools such as MMM, attribution, and split tests to triangulate the final truth.

Secondly, your company must have a secure data structure for MMM to be successfully implemented. Some ideas include, cloud infrastructure, data catalogues etc. Otherwise, linking all the different data sources and arranging for them to update regularly might be a bit complicated. However, this probably a whole other discussion about digital transformation.

Ultimately, MMM is a tool that can get all the marketing leaders, who each handle different parts of the campaigns, to sit together at one table. Some look after branding, others handle promotions, and some focus on digital media and performance, like CRM campaigns, among other things. Therefore, MMM can present a complete picture where all the marketing efforts come together to achieve a common goal.

Please check out our live webinar with Peek & Cloppenburg here.