Direct Mail Segmentation Program

Client: Off-Price Fashion Retailer

Highlights

  • 9 versions customized for three customer segments
  • Right message increased response 8% to 16%
  • 151% ROI in 16 months
  • Reduced direct mail costs $1.2 million annually
  • Increased average transaction 15.8%

Background

Our client is America’s largest manufacturer of bed and bath textile products. The company’s 60 factory outlet stores, located all over the country, were experiencing diminishing returns from their direct mail efforts. The company wanted to rework its direct marketing efforts to make the most of its differentiated customer database and its direct mail investment.

THE VALUE OF
RELEVANT MESSAGING

What you’re telling your customers matters so make sure you are getting the right message across.

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Objective

The goals of the direct mail segmentation program were to:

  • Increase response to direct communications
  • Drive sell-through of multiple product categories
  • Increase sales and tactic ROI
  • Drive customer lifetime value

Strategy

Lift361’s database analysis classified the company’s customers into six profiles that fell into three distinct product-value preferences — fashion (style/luxury), moderate (brand/price) and value (bargain). In addition, a behavioral or transaction-based segmentation yielded six clusters that were consolidated into three groups based on typical spend and frequency — high spend, average spend or high frequency, and low spend or low frequency.

A total of nine versioned mailers were developed in three different formats, targeted with appropriate product focus, look and feel. Customer profile determined the creative approach, and behavioral segment determined the format. All were mailed based on the individual customer profile and segment within each store’s trade area

Results

The segmentation program delivered 151% ROI in 16 months, increased direct mail response rates 38%, and increased average transaction 15.8%. The program also saved the retailer $1.2 million through marketing recommendations, vendor realignment and production efficiencies, reduced cost per touch by 30%, and increased profitability of direct mail tactics by $1 million annually. Moreover, the program illuminated the value of relevant messaging.

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