Objectives, Messages, and Incentives

S

Objectives, Messages and IncentivesAbby Rudd

Anchie Chen

Jane Flis

Prakarsh Gupta

The Popcorn

Factory• Founded in 1979

• “Specialize[s] in fresh-popped popcorn in a variety of exclusively designed tins and packaging…”

• “Provides crowd-pleasing gifts and great-tasting snacks…”

• Online purchasing platform

• Part of the 1-800-Flowers Family of Brands

Business

Problem• The Popcorn Factory is

experiencing declining

revenues of -8.7% over

the two-year period

contained in the database.

$4.30

$4.40

$4.50

$4.60

$4.70

$4.80

$4.90

$5.00

$5.10

Year 1 Year 2

Mil

lio

ns

Revenues

-8.7%

Overview of

B2B vs. B2C Customers

B2B Customers

Number of

Customers

6,195

Average Length

of Relationship

311.74 weeks

Average

Recency

56.98 weeks

Average

Frequency

2.22

Average

Revenue Per

Customer

$389.35

Total Revenue $2,399,949.36

B2C Customers

Number of

Customers

93,805

Average Length

of Relationship

170.78 weeks

Average

Recency

56.04 weeks

Average

Frequency

1.65

Average

Revenue Per

Customer

$76.38


Marketing Objective

S The marketing objective is to increase the Popcorn

Factory’s revenue by 5% in the next four quarters.

S Current (Year 2) Revenues – $4,551,996.66

S Desired (Year 3) Revenues – $4,779,699.86

S

B2B Cluster Analysis

ReviewWe selected our target segments from the cluster

analysis we completed. The cluster analysis segments allow us to find more nuanced

information about our customers based on commonalities among customers as opposed to

commonalities among variables (revenue and recency).

The following slides provide a review of our cluster analysis.

B2B Cluster Breakdown

B2B Clusters

Year-Over-Year Change in

Revenue

2012 vs. 2013

• Declining Revenue

• Cluster 1 – -95%

• Cluster 4 – -66%

• Top Performers – -8%

• Increasing Revenue

• Cluster 2 – 235%

• Cluster 3 – 61%

• 2014 revenue is not for full year

Top

Performers

B2B Cluster Analysis

SummaryB2B 1 B2B 2 B2B 3 B2B 4 Top

Performers

Number of

Customers

796 2,306 1,490 1,553 19

Total Revenue $498,980.81 $181,263.56 $1,361,515.07 $82,941.29 $275,248.63

Average

Revenue

$626.86 $78.61 $913.77 $53.41 $14,486.77

Average

Recency

91.87 weeks 36.27 weeks 35.42 weeks 90.38 weeks 50.56 weeks

Type of

Customer

Inactive

Customer

Higher Value

Active

Customer

Lower Value

Active

Customer

Higher Value

Inactive

Customer

Lower Value

Top

Performers

Note Regarding ‘Summary of Clusters’ Chart

S Active Customers – Defined as a customer who last purchased in the time period less than the mean (57

weeks)

S Inactive Customers – Defined as a customer who last purchased in the time period greater than the mean

(57 weeks)

S Higher Value – Defined as a customer whose average revenue exceeds the average B2B customer

revenue ($389.35)

S Lower Value – Defined as a customer whose average revenue is less than the average B2B customer

S

B2C Cluster Analysis

ReviewWe selected our target segments from the cluster

analysis we completed. The cluster analysis segments allow us to find more nuanced information about our

customers based on commonalities among customers as opposed to commonalities among variables

(revenue and recency).

The following slides provide a review of our cluster analysis.

B2C Cluster Breakdown

B2C Clusters

Year-Over-Year Change in

Revenue

2012 vs. 2013

• Declining Revenue

• Cluster 2 – -53%

• Cluster 4 – -72%

• Increasing Revenue

• Cluster 1 – 174%

• Cluster 3 – 1095%

• Top Performers – 49%

• 2014 revenue is not for full year

Top

Performers

B2C: Summary of Clusters

B2C 1 B2C 2 B2C 3 B2C 4 Top

Performers

Number of

Customers

24,022 21,981 34,501 12,903 53

Total Revenue $3,871,685.42 $602,583.43 $1,145,951.60 $1,383,849.11 $134,186.28

Average

Revenue

$161.17 $27.41 $33.22 $107.25 $2,531.82

Average

Recency

33.99 weeks 90.77 weeks 36.74 weeks 89.43 weeks 51.3 weeks

Type of

Customer

Active

Customer

Higher Value

Inactive

Customer

Lower Value

Active

Customer

Lower Value

Inactive

Customer

Higher Value

Top

Performers

Note Regarding ‘Summary of Clusters’ Chart

S Active Customers – Defined as a customer who last purchased in the time period less than the mean (56

weeks)

S Inactive Customers – Defined as a customer who last purchased in the time period greater than the

mean (56 weeks)

S Higher Value – Defined as a customer whose average revenue exceeds the average B2C customer

revenue ($76.38)

Target Markets

S B2B 1 – High Value Inactive Customers

S These customers have experienced declining revenues from 2012 to 2013; this is due to their inactivity with the company.

S It is believed that if these customers can be brought back to the company that they can be just as, if not more, valuable than before their hiatus.

S Goal: Bring these customers back; get them to purchase again.

S B2C 3 – Low Value Active Customers

S These customers have experienced revenue growth resulting in 2013 revenues being 10 times those in 2012.

S It is believed that there is an opportunity to increase the average spending of these active and newly acquired customers.

S Goal: Get these customers to spend more.

Current (Years 1 and 2)

# of Customers 796

Average Order Amount $626.86

Average Amount Per Order $368.74

Frequency 1.7

Total Cumulative

Revenue$2,399,949.36

Total Year 2 Revenue $1,039,282.07

Achieving the Marketing

ObjectiveThrough B2B Customers

At End of Next Four Quarters

# of Customers 796



Frequency 1.96

Increase in Revenue $76,329.42

Total Cumulative

Revenue$2,476,278.78


We will get 26% of B2B 1 customers to purchase one more time in the next

four quarters (one year), which increases the frequency for these 207

customers to 2.7.

Behavioral Objective

B2B 1

S Increase the frequency or purchases by one for at least

26% of B2B customers in Cluster 1 (796 customers) over

the next four quarters. Because the average revenue per

purchase for B2B Cluster 1 customers is $368.74, this

will yield an increase in revenue of $76,329.42

Communication Objective

B2B 1

S To increase by 10% the belief that gifting popcorn to your

clients/customers and your employees can increase your

business as measured by the company’s annual

customer survey.

S To high value inactive customers, the Popcorn Factory is

the leading provider of premium popcorn products that

offers the widest variety of corporate-gifting popcorn

arrangements because of the creative and custom

packaging designs, fresh ingredients, and variety of

flavors.

Message and Incentive

B2B 1

S Email campaign encouraging for customers to purchase themed gifts (towers, popcorn, samplers) because B2B customers purchase for events such as internal meetings/celebrations, employee appreciation and holidays as well as client-relationship maintenance.

S Promotional offer giving free shipping on purchases between October and January (peak holiday season).

S Deliver promotional code with order confirmation guaranteeing customers 10% off on purchases made within 30 days.

Current (Years 1 & 2)

# of Customers 34,501



Frequency 1.3




ObjectiveThrough B2C Customers

At End of Next Four Quarters

# of Customers 34,501



Frequency 1.3

Increase in Revenue $151,463.78

Total Cumulative

Revenue$7,289,715.23


We will get 50% of B2C 3 customers to purchase one more time in the next four

quarters (one year), which increases average revenue for these 17,251

customers to .

Behavioral Objective

B2C 3

S Increase the total spending per customer by $8.78 for at

least 50% of B2C customers in Cluster 3 (17,251

customers) over the next four quarters, yielding an

increase in revenue of $151,463.78

Communication Objective

B2C 3

S To increase by 10% the belief that popcorn is the best gift

for special and everyday occasions as measured by the

company’s annual customer survey.

S To low value active customers, the Popcorn Factory is

the leading provider of premium popcorn products that

offers the widest variety of popcorn arrangements

because of the creative and custom packaging designs,

fresh ingredients, and variety of flavors.

Message and Incentive

B2C 3

S Promotional offer granting customers free shipping on

orders above $100.

S Free tin or packaging personalization on one item with

orders of $55 or more.

S His and hers bundles offered in the month of February

and promoted through email campaigns.

S Message: “Make every occasion a special occasion.”

Total Revenue - Years 1 & 2 + Next 4 Quarters

Total Revenue – Year 2 $4,551,996.66

B2B Revenue – Year 2 $1,039,282.07

B2C Revenue – Year 2 $3,512,714.59

Total Increase in Revenue – Next 4

Quarters$227,793.20

B2B Revenue – Next 4 Quarters $76,329.42

B2C Revenue – Next 4 Quarters $151,463.78



Objective

Percentage Increase

5% of Year 2 Revenue $227,599.83

4-Quarter Increase in Revenue Over Year

2$227,793.20

Summary

Remarks• Cluster analysis allowed us

to see the commonalities among customers in each cluster.

• Using this data, we were able to establish different behavioral (increasing frequency or increasing revenue), communication objectives as well as messages and incentives for B2B 1 and B2C 3.

• By achieving these goals, we can achieve our marketing objective of increasing revenue by 5%.

Objectives, Messages, and Incentives

Marketing

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