George Orme. August 2016

Transcription

1 George Orme August 2016

2 HBH Catalog / E Commerce Two Primary Channels 3 Major Seasons Channel Driven - Managed Retail: Co. & Franchise Marketing Communications Direct Mail - - FSI Catalog - limited SEO SEM In-store 1

3 A Typical Holiday Season FSI s (Newspaper) 4 Drops: November (2) December (2) Radio :60 and :30 second POP Kits (In Store Support) Direct Mail Thanksgiving, Christmas Power Period s; Opportunity to send additional local s up to 4 times per month 2

4 Holiday Results 2015 Mailed SAME CIRC in 2015 as in previous year Increased Revenue by more than 75% YOY same stores 4/2 instead of 1,1,1,1 $10 DG Lowered cost per mailed name Key: Leveraging transaction data to segment customers - - then - - building predictive models and using deciles and Revenue to Marketing cost {R:MC} by decile by segment to drive mail plan. 3

5 #1: Increase Response /Revenue Lower Cost RFM - [Recency, Frequency, Monetary Value] Most common method to segment customer file 5 R F $ [MV] = 125 cells based on ranges Ranges are good not great 0-90 days means day 5 and day 89 same Build a SIMPLE RFM model using continuous variables Response = B1 * R1 + B2 * F1 + B3 * MV1 Score Everyone in Descending Order - group scores into deciles 4

6 #2: Increase Response /Revenue Lower Cost Evaluate decile performance in terms of response - - average $ - - and $$$ Use Rev/m or R:MC as key driver of contact / circ Initiate r strategy - - mail best TWICE vs average once 5

7 Best Customer Gains Chart Holiday QTY 1,000 BC Model Segment % Resp. Lift Resp Respdrs % Ttl Response Purchase Dollars Lift $ Dollars % Ttl % % $ $13,972 40% % % $ $6,769 19% % % $ $4,638 13% % % $ $3,331 9% % % $ $2,503 7% % % $ $1,472 4% % % $ $977 3% % % $ $691 2% % % $ $607 2% % % $ $382 1% Total 7.55% % $ $35, % If Top Segments get 2, or even 3 contacts - - and the response rate falls off by 50% - - they are still better performers than bottom deciles Go back to where the money is. 6

8 Using the Model /Gains Chart and R:MC Best Customers Segment 1 Proj. RR% 9.65% Proj. Avg $ $ ,000 4 Decile Qty Resp Rate Lift vs Avg # Resp Avg $ Ord. Lift Avg $ Rev Rev/m CPM Mktg Cost R:MC 1 1, % $ $21,186 $21,186 $550 $ , % $ $10,264 $10,264 $550 $ , % $ $7,033 $7,033 $550 $ , % $ $5,051 $5,051 $550 $ , % $ $3,795 $3,795 $550 $ , % $ $2,232 $2,232 $550 $ , % $ $1,481 $1,481 $550 $ , % $ $1,048 $1,048 $550 $ , % $ $920 $920 $550 $ , % $ $580 $580 $550 $ Total 10, % $ $53,589 $5,359 $550 $5, Model Spreads Average - You input Projected Response Rate / Projected Avg $ / Qty / CPM Spreadsheet calculates R:MC 7

9 #3: Test Big - Test Smart - Measure USE Findings If Management or Executive Leadership wants to minimize risk - help them - evaluate what works and drives the best return on ad spend 1. What offer - we found higher discount denominations pay out and deliver better return on ad spend 2. Number of contacts - we found more is BETTER - some people hoard the first - others throw it out and use r - BOTH pay out in better segments 3. Format - found expensive laminate pays out vs less expensive paper in better segments 8

10 BCF 500+ Stores - urban / rural Different customers different places - ethnicity; age; buying patterns Key Metric - Incremental $ - ROA Tested different levels of contact - cadence - found some customers do not need stimulus to shop, come all the time - others visit more and spend more when they get mailers Key to success: buying interval and message / content 9

11 BCF Tested Two Different Mothers Days Covers One Generic - one African American targeted to AA Found that the AA cover had minimal negative impact on non-aa customers, and in fact generated more incrementality overall to both audiences Going forward more tailoring of message and creative KNOW YOUR AUDIENCE - Tailor / Target accordingly 10

12 #4: Engage Customers - Build Stronger Bond More Value and LTV Many marketers send same to Active names BCF tested thank you s to recent customers with address; it worked more visits and more Incremental Asked customers to reply with product preferences Now customize message based on customer preference Dramatic increase in open rate, click through and average ticket = leading to higher CLTV. Next step is to test impact of Mail and , only and Mail only. Results will drive Customer Contact Strategy across channels 11

13 #5: Build Community Inside Your 4 Walls Everyone is looking for opportunities to have a little fun, relax and deepen relationships with friends - donate meaningful causes, etc. We are inundated with choices cable channels; 1000s of magazines. Socializing is often done on-line Make your space the place to meet and greet Meetup.com, Nextdoor.com. YELP.com offer forums for clubs and social organizations across America CUTCO Retail Stores began offering their space to select groups and organizations CUTCO provided the space and Wine and Cheese, and offered to share in sales from event Event are a chance to relax, learn cooking / knife skills and have fun So successful now doing 5-6 a month per store across America 12

14 #6: Create Customer Segments Based on 12 Mo Spend plus Market Basket - Season / Reason Customers buy at different intervals and for different reasons in different seasons Use your transaction data to group people based on shopping regularity, revenue velocity and marketing results. Identify actionable segments using market basket anchors and affinities. Contact the active folks in the window when they are most likely to buy Identify the early warning signs of an active who is beginning to lapse and rescue them before it is too late Optimize your valuable marketing dollars by tailoring the message and creative, as well as the product, so you really are treating different people differently. 13

15 #7: Use Social Media - FB/CA - to Extend Reach - Amplify Marketing Mix A Cutlery client captured $500k+ in online Holiday revenue using the Custom Audience feature from FB Provided names to FB who matched and hashed names Developed test campaign on FB - different times - different ads different segments on FB FB customers liked, commented, and could click thru and order Test results led to a continuation - but - key finding this initiative is SUPPLEMENTAL to - not a replacement of other marketing efforts. Pros: Relatively easy and quick to implement - can be DIY Affordable - pay as you go - no required contract / minimum Cons: Quid pro Quo - you give up your names in exchange for FB impressions Hard to test multiple offers / creative / Difficult to attribute directly and measure key steps in sales funnel Need SM / FB experience to succeed - integrate w/ other marketing 14

16 Thank You!

17 Appendix - Reference Slides

18 A 5 Minute Modeling Refresher A model is an equation Y = a + b1*x1 +b2*x2 Y = is what you want to predict The X's are predictive variables The b's are weights Y = 5+ 2*$Sales + 4*Frequency Customers are scored and sorted in descending order Deciles based on scores are created A Decile Analysis depicts the value of the model Resp Rate 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% A Decile Analysis Gains Chart Deciles 17 17

19 The Modeling Process Create a copy of the mail file Freeze the values on the database Append Responders and then split the file in half, into Calibration Validation files Sample from the calibration file All responders A sample of non-responders Create the model Apply equation to the validation file Sort the validation file in descending order of exp. response 18

20 The 3 C s of CRM - Content; Cadence; Contact How it all works together LT Business Goals Enhanced CRM Customer Loyalty Measures of Success Customer Lifetime Value Content Business Measure: Sales Volume CRM Campaigns Key Measure: Incrementality Campaign Cadence Long Term: Incrementality Over Time Merchandise Productivity Contact Customer Engagement 19

21 Outcomes - Strategic Themes - Initiatives Outcomes Strategic Themes Initiatives Grow Revenue & Transactions Customer Insights Multi- Dimensional Segmentation Profiling Targeting Optimize Campaigns Increase Incremental Revenue Test Plans Expand Measurement Reporting Weighted Attribution By Channel Improve Customer Lifetime Value Multi-Channel Integrate channels Things to think about - focus on - build toward over time 20

22 Bonus.Variable Consideration RFM variables - annual - LT spend; # Times purchased, date of most recent purchase Tenure - date of first purchase - Buying interval Seasonality Type of purchase - product and / or category Most recent product purchase Address information 21