Five strategies for smart cost-cutting your door-to-door distribution budget

With paper prices going through the roof and taxes being imposed by a growing number of cities, cost-cutting your leaflet distribution is more important than ever before. We have listed five strategies to offer help you tackle this tricky job at hand.

We are currently living in a digital world where online marketing channels such as SEO and pay-per-click advertising seem to take the upper hand. However, the relevance of traditional leaflet marketing cannot be underestimated for retailers. We know for a fact, as we have complex algorithms to define the attribution impact of your door-to-door efforts, answering the question: "Is my door-to-door driving traffic to my stores?". Truth be told: this offline type of marketing does need to be organized as efficiently and effectively as possible, especially since paper is becoming more expensive and municipal taxes are rising. Optimization of door-to-door distribution by targeting highly potential zones is the solution to cut costs in a smart way rather than surfing blind and dropping zones based on vanity metrics. Below we describe five strategies to guide you through your smart cost-cutting journey.

Guard or surrender your loyal customers?

Cost-cutting does not come easy, it requires you to take well thought decisions. Data can support you in this process. Accurat determines where your customers live, expressed as the market penetration per zone (typically a district or a zone as defined by your distributor). Regarding your current customers, the question rises if you want to play it more defensively or not. One could argue that targeting zones with the highest penetration of customers or even zones with the highest ratio of loyal customers are less relevant. The reason is they are already convinced to shop in your store anyway, ready to visit your store no matter the weekly action you have on offer. On the other hand, even your most loyal customers might still be interested in your folder and could inform other potential shoppers. Keeping them might be your reason to preserve the precious market penetration you have built up over the years in a zone. Whether your need to keep or drop your loyal customers strongly depends on your (type of) company and your culture. Make sure you know the zones where your (loyal) customers live. When your company decides to stop distributing the leaflets to its customers as an experiment, the impact can be easily quantified.

Focus on your relevant acquisition potential

The second approach to improve your zone selection is by dropping those zones offering the least relevant potential. Although we'll outline in a moment, how to target a very specific audience, a good way to gauge your relevant potential is by looking at your (direct) competitors' customers.

Location-based insights reveal all customer behaviour including visits to your competitors or people switching between different brands. Initially, it might appear that a certain zone does not show very much potential but when compared to your competitors it could turn out that it certainly has potential and that shoppers just live in a highly competitive region. By taking into account not only your own market penetration but also that of competitors as well as the number of competitors in a zone or even the share of visits for your brand and your competitors, you have all the data you need to make informed data-driven decisions.

Define & target your key audiences

A leaflet can be a very cost-effective way of reaching a large number of people and targeting your own customers as well as your competitors' customers is a valid strategy. Let's dig a little deeper. You know your customers best. What defines your customers, is defined by your brand promise. If you are a discount brand, you might acquire price-sensitive shoppers. When your promise is to deliver large packaged goods, you are probably attracting (big) households with ease. But how to know where these audiences live in order to distribute your future leaflets in the right geographical zones?

Key audiences are based on demographics, mobility, shopping behaviour or social class and show a high potential for your company. As location data reveals the places people visit, the transport modes they use and the categories they frequent, you are able to identify which key audiences you attract compared to your competitors. Once your key audiences are determined, geographical zones with the highest selectivity for the chosen key audiences can be defined. This way, you are able to target only the relevant shoppers which results in a smart expense reduction. Think about it: what defines your customers? What audiences would you like to target?

Drop zones with limited folder impact

Marketing is an essential part of any business. However, marketing expenses can be hard to control and often lead to unforeseen costs. Cost-cutting requires serious thought and an organized approach to avoid sacrificing the effectiveness of your marketing efforts. Most likely you try to correlate the impact of your leaflet with your distribution plan. Are stores more successful? Do promotions work better in nearby stores? Are revenues better?

Attribution is the practice to define the impact of a channel. Most models center around digital channels such as SEA or social media ads because of the high measurability those online channels offer. Location data offers the potential for offline media to be measured. Think of cinema ads, out-of-home billboard campaigns but also... you guessed it right, door-to-door campaigns. As your distribution plan includes zones that will receive a leaflet, some others won't. By comparing the impact across those regions over time, the drive-to-store impact can be understood, even on a zone-by-zone basis. By knowing the door-to-door impact, your company can decide to cut expenses by not distributing leaflets in those zones that are the least performing.

Smart cost-cutting: put budgets in perspective

Bringing your frequency down without sacrificing zones is an easy solution to cut costs fast. Dropping zones as mentioned above will most certainly result in lower overall costs, but your goal should be to cut costs 'smart'. As costs of a leaflet and distribution costs are nearly linear, municipality costs certainly are not. If your company is in the situation to cut a certain amount of costs, we propose a very intuitive metric: the incremental cost (e.g. taxes) of leafleting a zone (= all boxes x the costs) divided by the % of potential shoppers of your key audiences in the given zone. Simply put: if you want to target big households, you better keep the zones with the lowest cost-to-audience ratio. A penetration of 20% of big households with a cost that is twice as low as another zone with 40% of your audience of choice, results in an equal score.

This simple metric can be very useful when you need to decide which zones to focus on and in which zones you will not distribute leaflets anymore as the different zones can be easily compared. Knowing the (variable) cost structure of your leaflets and the penetration of your key audiences is the way to start.

Summarized: cutting costs is on the table for many retail decision-makers. Make sure to make your analysis as data-driven as possible. Location intelligence has evolved over the years to provide you with the proper insights to make smart cost-cutting decisions. Five strategies can kickstart you and so can our solutions. Get in contact with us for a free consultation to see exactly how we can help you.

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