Case study: 7-Eleven digital transformation
This is a guest post by Mark Abay, Content Director at Ashton Media. The article covers the case study of a digital transformation supported by Harris Partners which was presented at the Data Strategy Symposium in November 2015 by Stephen Eyers, Head of Strategy and Innovation at 7-Eleven. It was originally published on Ashton Media website.
Ten months ago, 7-Eleven was “virtually nowhere” in the data space. Digital transformation wasn’t even on the agenda. That was despite the fact the brand knew 98% of its customers shop in-store with their mobile phone in hand. Stephen Eyears, Head of Strategy and Innovation at 7-Eleven, told the Data Strategy Symposium: “We were nowhere in that space.”
In the convenience store business, traditional in-store rules of retail marketing do not apply such as making people wander, consider and delay their purchase. “Our job is to get what you want in your hands as quickly as possible, and do that on a consistent basis,” said Eyears. In fact, the average time spent in store if 130 seconds. “We celebrate if we can get two items into a customer’s basket. That’s hitting our goals.” So without being able to call upon strategies that work for other retailers, could data be the answer to increasing sales? Eyears set about to find out.
Developing a digital strategy
When charged with putting together a digital strategy for the 37-year-old brand with 620 stores across the country, Eyears knew he was going to have to play seriously to compete in the space. It was going to be a giant leap for a company that hadn’t strayed far from it’s bricks and mortar roots. In the planning stages, Eyears spoke to numerous consultants and tech providers. He said: “If you start your strategy based on those conversations, you’re either not going to get anywhere, or you’re going to make some very expensive bets. Big technology is appropriate, but it’s never appropriate, in my view, at the start.”
The real starting point for 7-Eleven was acknowledging there was existing data to work with. Transactional data led to customer data which started to yield insights. Eyears said: “Every time we engage with a customer, we want to pick up a piece of data. We want to take that piece of data, and figure out some insights from that. Then, we’re going to use that piece of data to make the next engagement with that customer – or with customers that look like that – better. That’s as simple as it gets for our digital and data strategy.”
Using this data, 7-Eleven is now able to accurately predict the demographics of customers and what they are purchasing. Eyears said: “You take that and match it to time of day, and it starts to get really, really interesting. You can even match it to the weather, which in our business, is a huge predictor of sales and what people will buy. We’ve now started developing some incredibly rich data that is driving what we’re promoting in our stores.”
A whole new approach
For a company such as 7-Eleven, this is a major departure from how things have always been done. “We’ve spent 37 years getting pretty good at doing mass media. We do spend a lot of money: a little bit of TV, a lot of radio, a lot of billboards, and an enormous amount of money on in-store, point of sale materials. We know that some of it is very effective, but like most marketers, we’re not sure which bit is effective and which isn’t. We see digital and data as an opportunity for us to get a lot smarter, and learn a lot more from what we’re doing. Really divert our spend from that mass space into a much more targeted space.”
From that starting point, Eyears and his team looked at how to bring the online and offline environments together. Adopting a test and learn approach, 7-Eleven began to play with in-store digital displays. “Digital displays are glorified video walls. The more you see them, the bigger they are. It’s generally to do with how big the corporate ego is, and how close the CEO, or someone senior, is involved in store design,” said Eyears. While in-store displays have been around for some time, he admits many companies are grappling with how to make money from them.
“Our hypothesis is that digital displays can be a pivotal piece of technology that will bring the online and the offline world together. It’s a piece of technology that will allow us to pull the data from the customer in the store, learn, and then go back and improve that experience with those customers,” said Eyears.
The test began in seven different stores trialling a range of different screens, technology, graphics, placement and offers. Two stores were soon removed from the trial as they weren’t yielding results. “We started this trial basically not having a clue what was going to work and what wasn’t going to work,” said Eyears.
Facing the critics
Of course test and learn doesn’t come without its critics and Eyears has certainly met with them. He said: “For those people trying to do test and learn, and digital and data integration in a traditional firm, you will always have a lot of people ask, ‘Where’s your business case? Why are you spending so much money on these screens? Where’s the return on investment?’ My simple answer to that is, I don’t have a business case. That’s why I’m doing this. Rather than put up a business case with phony metrics and hope that if it doesn’t happen, it’ll just go into the bottom drawer and everyone will forget about it, we’re trying to get really informed about what we do. Our metric is trying to make more money than we do today.”
And make more money they did. Eyears said: “It was the first time I’ve ever had a conversation with a CEO and he said, ‘These results are so good, I don’t believe them.’ Which is not a bad conversation to have. He said, ‘If it’s even only half true, then we’ve stumbled across something that could really, really propel our business forward.’"
Digital transformation in action
Eyears and his team are already expanding the trial into more stores and he says there is much to learn, particularly when it comes to the content going on the display screens. Beyond that, putting digital screens on petrol pumps is a potential option. As is opening up the display network to 7-Eleven vendors and beyond.
“If I can tell a brand, say a Holden, or a Toyota, that in these 400 stores between 6 a.m. and 9 a.m., our audience is 95% male and I can tell from the registration plate they’re a tradie and they’re driving a van, that’s a pretty valuable piece of information,” said Eyears.
“In five years time, if we can manage to pull this off, we’ll actually see our data as an asset to rival our real estate portfolio, in terms of value.”
Not only is 7-Eleven’s data strategy transforming its own business, it could soon be revolutionising other brands as well. Not bad for a company that Eyears says is “stumbling its way through” data and digital transformation.