New Customer Development Program

Client: Department Store

Highlights

  • Delivered $9.5 million in annual sales
  • 22% lift in second transactions
  • 80% to 100% increase in promoted category spending
  • ROI = $17.80 in sales, $6.60 in margin for every $1 invested

Background

Our client, a chain of moderate-to-upscale department stores, had stores in the Southeast and Central U.S. The retailer’s credit cardholders were an unusually loyal group, representing an extraordinarily high percentage of total sales and significantly more value per customer. However, a significant portion of new cardholders were “one and done” shoppers, meaning they did not make a second purchase on the card. In addition, the time from card sign-up to first communication from the store was nearly 90 days — too long to make an impact. Clearly, these customers represented enormous untapped potential for the store.

Objective

The goal of the new customer development program was to assimilate these new customers into the brand more quickly by accelerating their subsequent purchases and reducing the time between transactions.

Strategy

Lift361 developed a multi-touch, lifecycle-based communication strategy to increase the value of the new customer base. Communications were sent at regulated intervals, incorporating information on benefits, events, services and in some cases, incentives to welcome and engage customers with the brand.

Results

The new customer development program had an immediate and long-term impact on sales. In the first 90 days, new cardholders in the program were worth $32 more than those in the control group. Within a year, these new customers were worth $95 more.

The program resulted in a 22% lift in the number of cardholders who made a second transaction, and indeed increased cardholder spend throughout the store by driving shoppers deeper into the initially promoted category and then into other departments.

Cardholders in the program spent on average between 80% and 100% more in the category promoted, and spent four times as much in other categories. For every marketing dollar invested, the retailer enjoyed $17.80 in sales, and $6.60 in margin. At the end of one year, the program drove $9.5 million in sales — a 2% comp sales gain.

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