Portfolio - Case Studies

CASE STUDY #2: INCREASING LIFETIME VALUE AND INCREASED REVENUE BY OPTIMIZING HOUSEFILE RFM VALUES

Problem: The Direct to Consumer channel was showing a significant decrease in customer lifetime value. The majority of the marketing budget of the subject company was allocated for acquiring new customers and, at the same time, reinforcing the individual brand messaging so consumers would be motivated long-term to purchase in the retail channel. If the lifetime value did not increase, the direct channel was in jeopardy of becoming unprofitable.

Solution: Increase customer retention and revenue through leveraging existing e-mail marketing strategy by refining the criteria by which the subject company targets their housefile. By using RFM (Recency, Frequency & Monetary) values, the unique messaging for each e-mail deployment split will reach a more receptive consumer, causing the consumer to click-through and ultimately convert to a sale.

Consumers who receive the retention-based e-mail got an opportunity to read about new products, find out more information, purchase online, and have a nationally-known spokesperson talk directly to them through the e-mail. Since e-mail users are not necessarily loyalists, as 80% say they have stopped reading e-mails from companies they had once signed up with because they now consider the e-mails irrelevant, the strategy consisted of two different e-mails each month.

Both mailings had a distinct place in the overall e-mail marketing strategy and helped to deliver the appropriate messaging to achieve the campaign's objective.

Results:  Within days of implementing the strategy, it was clear that the frequency of visits increased and the recency since the last purchase was reduced which positively impacted the monetary value of each consumer in the housefile. 

	Sample Size
	Visits / Click-through	Orders	Average Order	Revenue
Before Strategy	128,679	6,339	$42.61	$270,093
After Strategy	238,326	14,884	$32.13	$478,291

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