Direct Mail Channel Optimization Program

Client: Off-Price Fashion Retailer

Highlights

  • Mailers customized for multiple segments
  • Increased incremental sales 816% in first 90 days
  • Increased 1Q customer spend by $27.8 million
  • 64% lift with versioning to best customers
  • Successfully reduced decline in high-vaule customer spend

Background

This retailer’s off-price assortment of merchandise features moderate to better fashion apparel, accessories, gifts, linens and shoes. The company maintained a substantial database of millions of “Preferred” active customers that could be leveraged for direct marketing. The existing direct mail program, which used simple value-based recency-frequency-monetary modeling for list selects, was a significant investment that generated little return. The retailer knew there was a more sophisticated way to drive top-line sales, especially with their best customers, who were rapidly declining in value year over year.

Objective

The goal of this direct mail channel optimization program was to leverage the retailer’s database to drive direct marketing results and ultimately increase customer retention through increased visits, frequency and spend.

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Strategy

Lift361’s database analysis identified the retailer’s customers via seven behavioral segments and six attitudinal profiles, which were used to support messaging and offer strategies, product affinities and investment. Creative versions featuring different images and products were developed based on customer profiles. Format investments varied based on the customer’s value-based segment. Modeling provided the basis for optimizing quantities and defining expectations.

Results

The sales lift for all customers receiving mailings increased significantly after the program launched. Average best customer response rate in the most recent quarter measured increased 6 percentage points over the control group, and average “nearly best” customer response rate were up 5.3 percentage points. Average spend also increased dramatically: the retailer went from a virtually break-even direct marketing program in the quarter before the program launched to making $27.6 million with 10 promotions in the following quarter.

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