11 Million Customers: How Kroger Wins Loyalty in Economic Uncertainty

[00:00:00] Kay Vizon: Marketing people, I would say we get very caught up in our own language, the way we measure things is constantly changing and so it kind of makes it hard for us to communicate to the rest of our organization or our finance team 

[00:00:17] Brian Quinn: Welcome to the Home Screen Advantage, where we showcase how omnichannel business leaders turn their mobile apps into measurable growth levers for their business. I’m Brian Quinn, President and General Manager at Apps Flyer. 

[00:00:33] Brian Quinn: Today I’m gonna sit down with Kay Vizon, Director of Media Services at Kroger. We’re gonna talk about how Kroger runs their marketing mix model every four weeks, not once a year, as the largest traditional grocer in the US with 2,800 stores and 11 million daily active users of their apps. We’re gonna talk about how Kay aligns marketing language with finance languages, how the business talks in trips and sales and household, not simply media metrics.

[00:01:07] Brian Quinn: Kay talks about this being the most disruptive period. Of her 23 year career balancing short-term performance with long-term brand building goals and how she helped turn their app to anchor their omnichannel growth strategy.

[00:01:24] Brian Quinn: First, just help, help, help us understand the business a little bit more. Tell us a little bit more about Kroger.

[00:01:31] Kay Vizon: Okay. So, uh, Kroger, uh, we operate about 2,800 stores across the country. Um, as I mentioned, we are the largest standalone grocery store we service, and I just. Pinch myself every time I hear this stat. 

[00:01:49] Kay Vizon: We serve an average of $11 million or 11 million customers every single day. Uh, they shop in our stores every single day.

[00:02:00] Kay Vizon: Um, and so what that means for us is we know our customers incredibly well. Uh, we have the data that we have on our customers and the purchases they like. To buy the most are of incredibly high fidelity. You know, they’re shopping with us weekly, sometimes twice, sometimes three times a week. Uh, but so we have a really good view into their preferences.

[00:02:26] Kay Vizon: And so what that means for us is we are able to tailor and create highly personalized experiences for them, uh, which they really love. Uh, they’re also able to give us a lot of feedback. And so a lot of our strategies are very much, um. Informed by what our customers are telling us. Mm-hmm.

[00:02:47] Brian Quinn: understand you’ve recently, uh, relaunched or, or refreshed the app, um, which interfaces with these sort of 11 million daily customers and more. Can, can you tell us a little bit about that?

[00:02:59] Kay Vizon: Yeah, so we’re pretty excited about it. Uh, we’re celebrating 15 years of our mobile app, uh, and it is for us what we co consider a significant refresh. Uh, and what that means, it’s a much more streamlined, uh, much improved user experience. Uh, it is now optimized differently for iOS. Android users, uh, to match the look and feel that they expect more from their devices.

[00:03:28] Kay Vizon: Um, there’s just also a lot of improved accessibility features to ensure that we can accommodate all of our customers. Um, now. The app is super important to us because number one, we know our customers use it a lot. It is probably the primary channel that they are now using to engage and interact and shop with us.

[00:03:52] Kay Vizon: Um, and so I. The app had to be able to serve our customers however they wanna shop with us, so now they can shop with us either in store or if they wanna place the order ahead of time and pick it up or have it delivered to their home. It really is a function of what. Their customer needs and demands are that day, uh, and we wanna make sure we’re able to deliver that for them.

[00:04:20] Kay Vizon: And so because they shop with us in all those ways, it meant that our app had to be a very fluid and seamless experience, uh, for our shoppers to create their shopping list, to easily choose how they wanna shop themselves because it’s a very personal, personal choice and in that moment. And so, um.

[00:04:42] Brian Quinn: Mm-hmm.

[00:05:08] Kay Vizon: work as hard as possible, we also needed to provide. Easy ways to save money. So we consolidated all of our offers, our coupons, the weekly ads, the rewards points into an easy to access centralized location within the app.

[00:05:25] Kay Vizon: Um. Health is another aspect that’s super important for our customers, uh, because we have pharmacies in all of our stores, so we’ve elevated the health portion of the app so they can access more easily personalized as well as convenience solutions. Around pharmacy and health all in one place. 

[00:05:46] Brian Quinn: Amazing. It’s really, really inspiring to hear the thoughtfulness and the strategy behind this. Right. Giving, you know, kind of meeting the customers where they are, giving the central place, um, for them to shop and build lists offline, in store. And, and be very sensitive to sort of the economic realities.

[00:06:03] Brian Quinn: Right. You, you touched on affordability is really, really critical. 

[00:06:06] Brian Quinn: Maybe elaborate a little bit about the, the current sort of economic situation, both from a, your, your customer standpoint, but also, you know, you know, you as a, as a media professional and in the business. What’s the, what, what, what’s the current sort of state of affairs economically and how is that impacting your business, uh, and, and your work and, and how do you think about this?

[00:06:30] Kay Vizon: Yeah, so that is a huge question, Brian. Uh, and it is something that is, I think, occupying a lot of us today. Uh, a lot of us that are out there in the marketplace. Um, and my. 23 years here at Kroger. I would say this is singularly the most disruptive, uh, state of business in generally speaking. And there’s just so many factors at play, you know, that impacts our business.

[00:06:59] Kay Vizon: But I would say more globally, a lot of businesses, uh, there’s, uh, inflationary costs. There are tariffs, uh, that are having impacts. It seems almost on a. Regular basis. Something that used to be really steady can now change on the dime. And then, so it’s making businesses, I, I think really it makes it difficult to really forecast in the same ways that we used to be able to forecast.

[00:07:26] Kay Vizon: So what that has meant for us and for my team in particular on the media team, it means that the annual plan that we fully thought we would be executing at the start of February, that’s when our fiscal starts. It has changed so many times in the course of the year. And I’m not saying minor changes, I am saying significant pivots, uh, in strategies and approach.

[00:07:54] Kay Vizon: Um, because of the economic uncertainty and how people are feeling it in their wallets, it has changed the way they shopped. Dramatically. Um, and so I think it just makes it that much harder for brands and for marketers, um, to stand out and drive loyalty with those customers when ultimately the most important thing for them right now is. Buying the products that they love to use the most, that are of high quality, but at the best price possible. So we do see a lot of shoppers shopping around. One of the things they’ll utilize is their mobile phone and their app to check and compare prices on a regular basis amongst the products that they use the most.

[00:08:42] Kay Vizon: They are willing to shop at multiple locations to do their weekly shop. And, and I think a lot of others are now very much focused on trying to elevate their price and value equation to their customer base in ways that are meaningful for them. Uh, so we are very much leaning in on that messaging.

[00:09:02] Kay Vizon: Um, pretty much for the majority of this year, the rest of this year, and probably going into next year. Um. But we’re having to pay very close attention to how our shoppers are behaving on a regular basis because they are making very strategic shifts in order to feed their families. Um, and so, Being dynamic, being agile, being to move with speed is so key right now.

[00:09:34] Kay Vizon: Um, and so we’ve had to learn how to do that. In some ways COVID trained us to do that. Uh, we just didn’t imagine that that approach would have to continue on for much far, for far longer than I think any of us expected.

[00:09:51] Brian Quinn: right, right, right. And Kroger’s a large organization. Right. And I think, you know, um,I, I think, you know, it’d be interesting to, to understand what you have learned as a business. How have you created the ability to be dynamic and agile and respond to customer behavior with, with such a large organization, the scale of your campaigns?

[00:10:15] Brian Quinn: C, can you tell us a little bit about maybe what you’ve like learned along the way or any insights related to this?

[00:10:20] Kay Vizon: Uh, I, I think what COVID taught us is that we can move a really big ship like Kroger in record speed and time. Uh, COVID taught us that we had to accelerate our e-com offering to our customers because a lot of them just didn’t feel safe going into the stores. So we had to really expand, advance, um. E-com pickup, delivery, and everything that that entails.

[00:10:51] Kay Vizon: And if you think about what it takes to bring something like that to life across our entire front footprint, it is a massive effort and it requires a highly coordinated, um, cross-functional, um, effort across a lot of teams to make that happen. So I think living through COVID, it taught us that we. Had the ability to do that.

[00:11:16] Kay Vizon: And then, so now in this highly dis disruptive business environment in which we are all operating, we’ve had to tap back into those skills and, um, and in a lot of ways, and, and it’s almost feeling like this is the natural course of business these days. This is the, this is the new pace and cadence at which we are operating.

[00:11:38] Kay Vizon: Uh, so it is causing us to rethink, you know.

[00:11:42] Brian Quinn: Right,

[00:11:43] Kay Vizon: We might go in with an annual strategy, but that annual plan has to be built with flexibility, um, in it so that we can make those quick and easy pivots, uh, when we need to.

[00:11:57] Brian Quinn: Got it. 

[00:11:58] Brian Quinn: And talk a little bit about, from a media perspective, right? ’cause this is, this is really where you’re focused. Like how does the media strategy, the media plan factor into some of this agility that you have, um, in, in the business that you speak of?

[00:12:12] Kay Vizon: Yeah. So that means we have to work really closely with, uh, the rest of our marketing teams, number one, uh, and make sure we are all aligned on what the strategic pivot is going to be. And then, so when we made the pivot, uh, to really focus on, um, on value messaging, you know, more ways to save quality is affordable.

[00:12:36] Kay Vizon: That did mean reworking the plan in its entirety. So we did that mid-year. We did that in very close partnership with our media agency, which is Dentsu. Uh, so they have been our co-partners throughout all of this. Um, and we basically work in lockstep. Um, we’re very clear on what it takes. To change our buys, you know, to basically pivot, change our buys entirely, um, and set those expectations up front with the rest of the teams because, um, you have to do this in a highly coordinated way.

[00:13:16] Kay Vizon: Um, you know, even the. Changing of our messaging and what it takes to produce those messages across all of the channels, both traditional and digital and um, and creating all those ads and being able to traffic them all out in their ver versioned. Everything that we do is highly localized. It is a pretty. Gigantic operational effort to do so. Um, there are aspects of it that is still more manual than I would like to be, than, uh, which does make me nervous. Uh, so I, we are actively looking for more ways to automate, uh, the way we execute these programs at scale and on the fly.

[00:14:01] Brian Quinn: Yeah, managing that complexity just sounds like a massive task, right? You have something like 2,700 stores or, or, or whatnot. You know, you have digital offerings. You’re hyperlocal in your messaging, so. I can imagine like the enormous complexity that is to sort of manage with all your internal teams, your, your external partners.

[00:14:22] Brian Quinn: Um, I’d love you to comment a little bit on, you know, when I talk to senior marketers, there’s, there’s always a big conversation over. Especially when, when the economics, um, are, are factoring in here, how do you balance the performance of media and marketing in the short term to demonstrate results, uh, with long-term brand building, long-term, um, strategic, you know, sort of marketing strategy.

[00:14:49] Brian Quinn: Love you to comment on that.

[00:14:52] Kay Vizon: we are big fans of the long and short of it. Uh, so that is the work that was done by Les Benet and Peter Field a few years back, uh, where they have hypothesized and ha now have proven, uh, that you need to have a balance of both short term and long term. Um. Advertising tactics because that is what is required to drive long-term growth.

[00:15:23] Kay Vizon: When you are very focused on short-term activations, you know, driving conversions, very much lower funnel, uh, kind of activities. Yes, you might see a nice lift in sales and performance short term. But if that’s all you are doing over time, you’re not gonna really grow your business that way. It does require those higher funnel brand building, uh, brand equity driving tactics to be also at play.

[00:15:56] Kay Vizon: Uh, and if you’ve got both happening, um, simultaneously, that is the key to unlock long-term, um, growth for a brand. So we have been. Big proponents of that for quite some time. We’ve tried to strike the balance of a 60 40 blend, 60% towards brand awareness, uh, 40% towards, uh, short term, you know, quick performance, uh, kind of tactics.

[00:16:23] Kay Vizon: Um, but given the environment in which we are in right now and when our customers are. Crying out for help to stretch their dollars as much as possible. And you know, if you think about it, we’re grocery, you know, in an environment like this, we do pretty well because this is, food is, it is a must. It is not a want.

[00:16:50] Kay Vizon: And right now customers are very much focused on the musts, uh, and food is a daily requirement. So. But even within this, um. You know, we, we do know what our customers are craving as more ways to save money, and so we have to be hyper-focused on that messaging because that is what is going to help them the most.

[00:17:14] Brian Quinn: And can you talk a bit about how you get alignment within the organization? On that shift, particularly, I think, you know, when I, whenever I talk to marketing leadership, the conversation with the CFO is a really critical one, and oftentimes it’s, it’s a challenge because the thinking is different, the language is different, the, the terms are different.

[00:17:36] Brian Quinn: But, you know, do you, do you find and, and may maybe, how have you. Built that partnership and, and ensure there’s alignment. So when you’re looking to shift from, let’s say, 60 40 to more 50 50 or whatnot, that it’s done in unison in the company C can you, can you share any insight there?

[00:17:54] Kay Vizon: we are maybe fortunate in that we do have. Greater alignment across the organization on that front. Um, when we launched Fresh for Everyone, uh, several years back, that was became a company wide initiative. That meant our merchandising teams very much focused on ensuring we were delivering the fresh and quality experience that our brand was messaging out there to customers.

[00:18:22] Kay Vizon: That meant operationally. We had to ensure that what we were putting out there was the fresh. Was freshly picked, was the best quality stuff that we could be putting out there. Um, and so the company, I think already, because we’ve lived through that, they see the value in it. Um, so I wouldn’t say it’s a terribly hard sell.

[00:18:47] Kay Vizon: Now to your point about finance, yes. That is an area where we are now working more closely with our finance partners than ever, and one of the key things that we have learned is that. people, marketing people. I would say we get very caught up in our own language, you know, and we come up with our own terms and, and you know this better than I do, Brian, but the way we measure things is constantly changing and so it kind of makes it hard for us to. Communicate to the rest of our organization or our finance team when the way we speak is constantly changing. And so one of the things that we are trying to focus more on is aligning the messaging that we do use to be more in sync with what the rest of the, the company uses in order for, um. To make sure that we are in greater alignment, uh, and focused on all the right things.

[00:19:50] Kay Vizon: Um, I think the marketing teams have done a great job in that. We have tied so much of what we do. Our objectives, our performance objectives are very much tied to. Business impact. And, um, so it, it is going to be tied towards driving incremental, uh, number of trips, incremental amount of sales, incremental amount of new households.

[00:20:16] Kay Vizon: And so our strategies are, plans are all very much focused on that, and that is what we measure ourselves against. Uh, and that is very much in sync with how the rest of the organization thinks about, you know, what? How marketing should be proving out its value to the organization.

[00:20:33] Brian Quinn: Yes. Yeah,

[00:20:34] Brian Quinn: I think it’s a very common challenge across all businesses, the shared language, or lack thereof between marketing and finance. The way that both groups measure, uh, marketing oftentimes in my opinion, can, can kind of be in, in, uh, you know, new, new methodologies, new terms, new ways to look at the business.

[00:20:55] Brian Quinn: Finance is oftentimes looking for very consistent ERV or stable ways to sort of, you know, run, run the business and where you can align. Particularly around, you know, outcomes, right? If it’s incremental trips, incremental new customers, and, you know, this stuff is really important. Uh, let, let’s dive into measurement a a little bit.

[00:21:13] Brian Quinn: How do you measure, uh, you know, from a media perspective, what are the methodologies, what are the tools? What, what, have you found is, is really sort of underpinning this, uh, this relationship between marketing and finance?

[00:21:27] Kay Vizon: So at the highest level, we are very actively, uh, using a marketing mix modeling or MMM as a way to continually optimize our media channel mix to drive improved ROIs over time. Uh, and those ROIs are very much tied to. Trips sales and growing new households for us.

[00:21:51] Kay Vizon: So we’re fortunate. You know, a, a lot of times when you hear MMM, you know, a lot of people might get a readout once a year or maybe twice a year. We’re pretty fortunate in that we get those readouts

[00:22:03] Kay Vizon:  every four. Weeks. Um, and so our marketing teams have exposure to those readouts and as well as those opportunities to optimize our investments.

[00:22:16] Kay Vizon: And so we are optimizing at that cadence and improving our ROI with every single readout. So that is at the highest level, and we do rely on MMM because to my knowledge. It is the only solution, the only tool that marketers have available to us to measure performance across all marketing channels and touchpoint.

[00:22:40] Kay Vizon: There is no other, it is modeled information. So we do have to recognize that, but within our marketing teams, we have found it to be very effective in optimizing our investments.

[00:22:54] Brian Quinn: I see businesses at your scale often struggling with the creative. The measurement of, of creative, right? You have lots of creatives, you’re running lots of campaigns. Maybe talk about that. ’cause in, in one sense, a lot of the portfolio management, the bidding, the budget, that stuff has been sort of algorithmically optimized over the years.

[00:23:14] Brian Quinn: But creative tends to be one of the more complex, expensive, time consuming aspects of, of, of media. A do you agree with that? B, do you are, are, you know, how do you look at sort of optimizing and measuring, you know, that part of the equation.

[00:23:29] Kay Vizon: Yeah. Uh, that is, um, very much a heightened topic, uh, within our organization as it as it is, I believe, for other brands too. Um. It is a gap. There are tools available out there, and we do leverage quite a bit of tools to, uh, to test our creative even before it goes live. Um, there are tools available, and I’ll say it like VidMob, for example, is one that we have, uh.

[00:24:01] Kay Vizon: Partnered with prior and are looking to, um, engage in even further because VidMob is able to provide readouts in real time while campaigns are live. So they can provide guidance both pre, during, as well as, uh, creative insights post. Um, and so while we feel like on the media side, we’ve really done a good job and.

[00:24:31] Kay Vizon: Leveraging data, really identifying which audiences to go after. Um, activating that with our media agency. We feel like we’ve got a really good handle on that and optimizing it. We still feel like there is a significant opportunity that if we’re reaching the right person on the right channels at the right time, we should absolutely be doing everything we can to make sure that the messaging we’re putting in front of them is the best messaging we can possibly be putting out.

[00:25:04] Kay Vizon: Um, testing it, optimizing it, similar to the way we have been doing all those things against our media investments.

[00:25:12] Kay Vizon: What. We understand to be true is that other than media investments, the number two, uh, ranked, um. Piece about marketing that can, has the potential to drive growth is creative and messaging.

[00:25:30] Kay Vizon: Uh, so we do see that as an opportunity to elevate our investments even further, make them work that much harder so that when it does land on our customers, it resonates with them and it also lands with impact.

[00:25:45] Brian Quinn: Right. And I wanna ask you about how you’re leveraging generative AI in that context. Right? Because, uh, you and I both, uh, sit on the board of the MMA, uh, and, you know, recently rebranded to the Marketing and Media Alliance and at those summits, and in those conversations, AI and creative is, is one of, if not.

[00:26:07] Brian Quinn: The main topic. Um, so everyone’s talking about it. Um, but given the challenges with creative and measurement and performance and the sort of promise of generative ai, would love to understand sort of where that sits in your world. What’s, what are you testing? What do you believe is hype, what’s in production, and driving real outcomes?

[00:26:29] Brian Quinn: Can you give us a sense of what that looks like?

[00:26:31] Kay Vizon: Yeah, so we have been leveraging AI in a number of ways, but in very focused and distinct areas, I would say, where we are using it. Primarily today is around creative automation. Uh, ’cause as I think I, I said before, we go by different names depending on where you’re in the country. So that means all our campaigns we have to version our creative, uh, to accommodate all the various banner names. Ongoing. 

[00:27:02] Kay Vizon: The other area that we are in deep exploration on is using AI to help operationalize and execute what we do at scale. So when you think about all of that creative that we put out there. All of that needs to be trafficked out in some cases on a weekly basis. 

[00:27:22] Kay Vizon: And so, uh, we have been also exploring ways of how AI can help streamline writing of media briefs as well as media strategies and plans. Uh, but. While advancements have been made in that space, we have to find, we have yet to find a solution that really is ready out of the box.

[00:27:46] Kay Vizon: Um, um, but even when it is out of the box, it requires extensive compliance and governance approvals. Uh, you also need time and resources to implement that into our systems and, um. Foundationally. It also requires making sure that your data is in a really good place. It is clean, it is deep duped, it is sound and of high quality, and importantly organized well in order to take full advantage of AI’s potential in that space.

[00:28:18] Brian Quinn: Yeah, for, for sure. I, I see a lot of the businesses that we work with, particularly large enterprises, the amount of security and government governance and the, you know, the quality and the consistency of that data to feed the AI is, is really where companies are, are struggling. And that’s the, the stage a lot of them sit at where there’s a lot of pilots and there’s a lot of hype and excitement and promise, but real scale.

[00:28:41] Brian Quinn: Um, production level, you know, rollouts are, are still very slow because of all the internal sort of readiness that’s needed. 

[00:28:49] Brian Quinn: What are you, I, I wanna ask as we wrap up here, what you sort of foresee in the next. Six to 12 months along this sort of vector of, of ai, where, where do you see it impacting the business? Whether that be operational and internal efficiency or, uh, you know, in, you know, enhancing the, the, the creative and the engagement with consumers from a media perspective or other parts of, of the business.

[00:29:14] Brian Quinn: Where, where do you think in the near future you’re gonna see the biggest unlock from generative ai?

[00:29:20] Kay Vizon: Well, um, this is where being a part of the MMAI think it gives us a little bit of visibility and just how quickly some of this is evolving. I know one of the initiatives that we’ve been looking into is a three, and I think just year over year that advances that have been made around and leveraging Gen AI to shorten the amount of time that it takes to brief design develop.

[00:29:48] Kay Vizon: Produce creative. Um, the time equation has been shortened tremendously from what used to take months. Can now just take two weeks? Um. I do feel like there’s gonna be a lot of brands that are gonna be super interested in testing that out for themselves just because you can’t deny the time efficiencies that you would gain in order to do so.

[00:30:13] Kay Vizon: And I think, and I probably speak for a lot of marketers and companies and that we have either the same or sometimes less resources available, but the business. Demands and requirements are so much more than what teams are able to absorb. So we are at that inflection point where we are going to require or need to leverage more of these tools to help automate some of the work that is being manually done, uh, that is highly repetitive, um, and still be able to, uh, execute our programs.

[00:30:54] Kay Vizon: Um. With excellence and with efficiency.

[00:30:57] Brian Quinn: Yes, I fully agree. It’s, it’s, it’s now becoming a must have. It’s a critical tool in order to bridge the gap between, you know, the outcomes and the output you need to produce and the constraints and the headcount and the resources that are, that are available. Um, and, and, and we, we see this very broad.

[00:31:13] Brian Quinn: Across, um, our customer base and, and marketers in general. Um, I wanted to thank you for this time and, and maybe ask you sort of any parting thoughts to the marketing leaders, uh, the media folks listening, enterprise, you know, leaders in a business. Um, what, what, what advice or parting thoughts, uh, do you have for the listeners today?

[00:31:35] Kay Vizon: In order to move with the speed and agility that our businesses require today, you’ve gotta make sure your foundational house is in shape. And what I mean by that, make sure your data is in a good place so that all of your decisions and strategies are well grounded because the ask that are coming down fast and furious and the pivots that we have to make, um, it.

[00:32:01] Kay Vizon: That is just kind of inherent in business. This, these days. It means we’ve gotta move with greater speed and agility than ever before. Uh, it’s a lot easier to do that and be able to do it strategically when your data, your ad tech, your measurement systems are all in a good place, foundationally. So that I think is point number one.

[00:32:23] Kay Vizon: And then point number two is just. Really lean into learning. Um, I’ve been in this business now for close to 30 years and I feel, still feel like I’m a student every day. I’m still learning every day. That’s partly why, um, I’m still at Kroger because I feel like, uh. Is a new challenge. And so my adoption would be to really adopt a growth and a solution oriented mindset, uh, because that’s going to be what’s critical for you to make sure you are adding value wherever you are in your journey, both professionally and personally.

[00:33:00] Brian Quinn: Love it. I love that advice. I fully agree. I wanna thank you again, Kate. This is a great conversation. Thanks for taking the time. 

[00:33:08] Kay Vizon: Thank you. This has been really fun.