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Q&A: Ibotta Insights VP Talks Consumer Behavior in a Changing Market

Dave Schaff explains how the mobile rewards platform recognizes new attitudes and meaningful insights.
Charlie Menchaca
Managing Editor
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After stints at CPGs such as Clorox and WhiteWave Foods, Dave Schaff joined Ibotta in 2018 and subsequently founded Ibotta Insights, the company's market research arm.

Path to Purchase IQ recently chatted with Schaff about his work. He will present virtually on Sept. 14 at the Shopper Insights and Measurement Forum. His session is titled “Impacting Shopper Behavior in a Rapidly Changing Market.”

P2PIQ: Why is it so difficult to impact shopper behavior in today’s market?

Schaff: I think it is safe to say that shopper behavior is changing faster and more dynamically than we have seen in perhaps the past 40 to 50 years. According to a recent study by McKinsey, 75% of consumers either tried a new product/brand or a completely new way of shopping in 2020. At Ibotta Insights, we’re continuing to see this type of evolving shopping behavior in 2021 as well. Given this fact, we simply can’t go about conducting consumer research or targeting shoppers like we have in the past. We need to recognize changing behaviors and continually leverage that as our new baseline.     

P2PIQ: With consumer behavior changing so drastically, how is Ibotta recognizing new behaviors and identifying meaningful shopper insights? 

Schaff: Ibotta is a top 4 shopping platform in the U.S. The company has 8-10 million active monthly shoppers. In order to reward these consumers with more than $1 billion in cash-back incentives, Ibotta captures all their shopping data. We believe this represents the largest omnichannel data asset in the country and powers complex analytics and survey research among verified buyers. And it is this last component of “Verified Buyers” that is critically important when trying to identify meaningful insights in a rapidly changing marketplace. 

In conducting shopper research, marketing and retail professionals have historically started by asking consumers which products they have recently purchased. We refer to this as “stated” purchase behavior. Did you know that 45% of “stated” purchase behavior is believed to be incorrect? Yes, it’s a staggering number. Behaviors are changing so fast that most shoppers struggle to accurately recall what they purchased last week, let alone 3 months ago. This leads to significant inaccuracies in screening for market research and targeting. We start all research and targeting activities with 100% verified buyers. This results in immensely superior data quality and yields stronger, more actionable insights and targeting. 

P2PIQ: So how does this translate into more impact among shoppers?

Schaff: Good question. Let’s talk segmentation as it’s a perfect example. We often say in the industry that a traditional segmentation has a five-year shelf life. However, with behaviors changing so rapidly, target segments can become outdated within 10-12 months. This results in billions of dollars in inaccurate or misplaced marketing spend. Additionally, segments used as media targets or proxies” tend to get very removed from the actual consumers who took the segmentation. All of this translates to an ROI or velocity impact at shelf that is substantially diminished. But it doesn’t have to be that way.

At Ibotta Insights, we conduct segmentation based on 100% purchase behavior, then overlay attitudes and psychographics to round out the segments. We’ve branded this as the Ibotta Vantage Segmentation process. This is a substantial change versus the traditional approach and allows us to do a few things that are unique in the industry. First, segment identification is based on millions of POS (point of sale) data records. Once the initial segments are identified, updating target profiles is as simple as querying Ibotta’s database. As behavior’s change, we capture data and update target segments accordingly. No more outdated segments or spending budget to resurvey or analyze target profiles.  

Second, this process maintains a direct relationship between the segmentation sample and targets for working media spend. More specifically, our segment sample sizes are in the millions, and each respondent has a unique and actionable deterministic ID for targeting purposes, which include hashed emails and MAIDs (Mobile Ad IDs). We then work with an industry leading modeling partner to provide tens of millions of additional IDs that fit within the target segment. The net impact of this approach is a greater efficiency in working media spend and significantly improved impact at shelf. No more proxies for targeting based on keywords – Ibotta turns the segmentations into a scalable, targetable audience.

P2PIQ: What type of in-market impact is this having for your clients?

Schaff: Overall our clients are seeing substantial year-over-year increases in household penetration, buy rate and most importantly, repeat. The degree of impact is different for every client based the level of spend and tactics they are using, but the ROI impact is positive across the board.

P2PIQ: Why aren’t there more companies conducting segmentation with this type of methodology?

Schaff: I think it comes down to our overall data asset and access to verified buyers. Ibotta has invested almost a decade into building strong relationships with both manufacturers and retailers. These efforts have yielded millions of highly engaged users who leverage Ibotta to find new products in-store while also getting cash back in their wallets every day. The high degree of loyalty from our user base coupled with omnichannel coverage is why our data asset is so strong. Ultimately, this enables us to complete complex research methodologies and impact shopper behavior in-store in a rapidly changing marketplace.

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