A Campaign You Send To Existing Customers Can Make You An Extra $1 Million
It’s much easier and cost-effective (5x) to retain an existing customer over acquiring a new one. Implementing Optimove’s powerful, scientific CRM tactics, is what you need to start learning “which half of your marketing” is wasted
Relationship marketing is a company-wide strategic initiative, just as vital as branding and customer acquisition. In fact, your existing customers are the secret sauce to your company’s growth. You’ll see exactly what we mean with this intimate wear brand that earned an extra $1 Million by attending to its existing customers.
An undergarments retailer used two powerful Optimove features – control groups and segmentation according to lifecycle stage – to perfect their Seasonal catalogs campaign. The result: a measurable increase of $1 Million in customer spending over a 1-month test period.
And yes, sending out seasonal catalogs is a very common practice for retailers. But, since it’s an expensive channel, it requires some extra thought and preparation prior to sending – which can be done with Optimove.
Here’s how it all went down.
The Experiment: Attending to Customers Via a Company Catalog Campaign
A total of 415.5K unique customers were targeted with the company’s catalog as it was delivered to their homes during the test period. While 27.4 K consumers didn’t receive the catalog.
Out of the 415.5K who received the catalog, 13.2K made an order – totaling $2 Million! Yes, it means we can put that Dr. Evil image here two more times! That happened while only 448 consumers who didn’t receive the catalog made an order at the same time of the experiment.
The Results: Existing Customers Drive Growth
An additional $1 Million was generated by the company via the catalog campaign and 94% of consumers made an order due to receiving the catalog that was sent to their home.
Findings also show that catalogs seem to be more influential on consumers who have made a purchase before.
As you can see in the chart below, an increase in value represents the additional revenue generated beyond what would have happened without catalog campaigns:
Average Total Order Amount / Consumer Per LCS
Without the use of a control group and segmentation by lifecycle stage, the undergarments retailer would have never been able to measure how this catalog generated more purchases per lifecycle stage.
So, one of the main points here is that using these methods allowed the brand to actually measure the impact of their marketing.
Know this quote?
That’s cause Mr. Wannamaker was not using control groups.
Such testing also allows the brand to mimic similar CRM campaigns in the future and with this data, the company can identify which customers are more likely to respond to a catalog prior to sending it out – thus also saving money.
Want some more details on these two features? You got it.
*Optimove’s platform is unique in that it automatically adjusts the ideal control group size for each iteration of your campaign.
Why you need a control group
You should always use control groups in your CRM campaigns to quantitatively understand how they are performing. For instance, without a control group, you cannot measure the uplift of each campaign.
*At Optimove, campaigns that seem to be working will gradually reduce the control group to allow all or most of your customers to receive the working campaign.
How to set up a control group
The segment is divided into various microsegments
Random selection of customers from each microsegment is split into the test and control groups
Throughout the test period, you can easily see if the campaign is working according to the numbers AND it’s optimized accordingly
TIP: Always remember the importance of continuous testing – as customer patterns change over time – what once used to work may not be the best right now (especially post-corona)! So, once your test period begins, don’t stop, and keep testing along the way.
Feature #2 – Segment Your Customers by Lifecycle Stage
Customers from different lifecycle stages behave differently. They require unique personal treatment, incentives, offers, and frequencies of communication. You can ensure optimal coverage rates (and that you are communicating with as many customers as possible from each stage of your customer base) by implementing segmentation based on lifecycle stage.
Why you need to segment your customers based on lifecycle stage
Also, it’s easy to measure and monitor KPIs when you segment your customers based on their lifecycle stage.
How to segment your customers based on lifecycle stage
You can easily segment your customers in each lifecycle stage into distinct segmentation “layers.” As each lifecycle has its own objective, it is recommended to split the plan based on the definition of your customer lifecycle stage. Identifying your brand’s specific lifecycle stages allows you to deliver communications that are relevant to customers in each stage.
Also, here it is important to continuously test as you can’t predict which customer will spend the most in which campaign. This is proven in this undergarment retailer’s catalog use case and clearly visible in the various lifecycle stage levels.
So, it must be clear by now. Happier customers fuel the viral loop and therefore help in acquiring new ones. That’s why attending to your existing customers is key to your success!
Rony Vexelman is Optimove’s VP of Marketing. Rony leads Optimove’s marketing strategy across regions and industries. Previously, Rony was Optimove's Director of Product Marketing leading product releases, customer marketing efforts and analyst relations. Rony holds a BA in Business Administration and Sociology from Tel Aviv University and an MBA from UCLA Anderson School of Management.
