Techniques to Simplify Personalized Marketing 5Nov15

© Copyright Loyalty Builders Inc. 2015

Techniques that Simplify Personalized Marketing and

Boost Revenue

Irena McCue, Director of Client Management

CONFIDENTIAL


6 to 7number of times more costly it is to acquire a

new customer than retain an existing one

Improving the Lifetime Value of Existing Customers

Source: Flowtown


Increasing revenue from existing customers with relevance

How many already personalize communications to each customer? How many do not but have it as a goal? What obstacles do companies face?

RelevanceGets Customers

to Buy More


Three Steps to Ultimate Relevance

Communications based on customer lifecycle

and individualized product offers to each

customer

Best customers for any product(s) or customer

segments

Same communication to

everyone

Lift in Revenue & Profit$ $$ $$$

Static

Product-Centric

Customer-Centric

Con

tent

/ O

ffers

Focus of this presentation


How much lift?Proven Over Hundreds of Campaigns

CPG/Ecommerce

$490K Lift in1 Campaign

Product Targeting

B2B Apparel

$342K Lift in6 Weeks

Personalization

Consumer Service

$1M Lift in12 Campaigns

Personalization

B2C Cataloger

$3M Lift in1 Mailing

Catalog List

B2C Retailer

$1.2M Lift in6 Campaigns

Personalization

B2C ECommerce

+66% Profits in10 Product Promos

Product Targeting

CPG/Ecommerce

$315K Lift in3 Month Trial

Personalization

B2B Supplier

24-67% Lift in5 Campaigns

Product Targeting

Print Services

$370K Lift in12 Months

Loyalty Targeting

B2B Supplier

20x Return inCross-Selling

Personalization

Customer Examples:


Even a Little Lift Makes a Big Difference

This $0.42 lift over previous methods delivered $314,700 of additional revenue

At 500K individualized emails per month, this translates to $2.6 million additional revenue per year

Testing methodology: A/B split test, 12 campaigns over 6 month periodAverage Over 6 Campaigns – 750K emails/group

Control Individualized Lift

29,149 orders 34,357 orders 5,208 orders

$3.09/email $3.51/email $0.43/email

Business as Usual Individualized


Loyalty Builders Customer:Consumer Services

Problems: Almost 10K products to analyze

Prior Solutions: Static email to all customers

LB Experience: Personalized emails with 1:1 product recommendations to each customer

LB Results: 6 personalized campaigns(approx. 1M emails, plus 250K control group):

Revenue lift from $0.29 to $1.78 per email ($1.19 average)Average revenue lift $204,597Total lift over 6 campaigns: $1,227,582

7


Apparel Maker (B2B side)Problems: Stagnant return on marketingspend; Limited analytic skills and budget

Prior Solutions: Regular static emails to all customers

LB Experience: 5 campaigns to 3600 customers, individualized offers and messaging by loyalty group

LB Results: Consistent revenue lift in every campaign

30-77% lift in buyers per email over control group

12-80% lift in revenue per order

Overall revenue lift: $342,314

8

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Automotive Services ProviderProblems: Converting 1-time buyers, expanding lifetime value, no analytics team

Prior Solutions: Static print mailers and coupons

LB Experience: Personalized coupons to targeted customers;

LB Results: 12 monthly mailings to about 30K customers:

$348K one-month revenue lift from 1-time buyers$612K one-month revenue lift from loyalistsAdditional $3.55M after 12 months (coupon redemption)

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The Right Offers To Each Customer At the Right Time At Campaign Scale…

© Copyright Loyalty Builders Inc. 2015 11

The Easy Way to Personalized 1:1 Offers

Data file formatted to drive marketing

platform


What Data Points to Use?1. Establishes buying patterns within entire customer base2. Aligns each customer with most appropriate pattern


Bird’s ViewCustomer Migration (6 month)

Loyalists

Nurturers

Underperformers

Faders

Win Backs


Loyalty Builders’ Predictive Metrics

Metric Explanation

Loyalty Segment

Segments population on Value Rank and Risk (7 segments).

Risk Score Probability customer will not purchase before going “inactive.”

Likely Buyer Score

Probability each customer will purchase within 10 configurable time horizons (7 to 90 days).

Expected Value

Expected amount of revenue from each customer within 10 configur-able time horizons (7 to 90 days).

Metric Explanation

Re-Sell Probability

Probability of customer to purchase each item previously purchased within 10 configurable time horizons (7 to 90 days).

Cross-Sell Probability

Probability of customer to purchase each item never before purchased within 10 configurable time horizons (7 to 90 days).

Cross-Sell Rank Score

A ranked score indicating relative interest in purchasing each item never before purchased within 10 time horizons (7 to 90 days).

Loyalty Predictions: Product Recommendations:

Other Metrics per Customer:Value Rank, Purchase Delay, Category Score, Retention, Recency, Number of Orders, Amount Spent


Purchase History is Highly Predictive of Future PurchasesPredicted Results vs. Actual Results (Recent Prospect)

15

0-3%

3-5%

5-10%

10-15%

15-20%

20-25%

25-35%

35+ %

0%20%40%60%

Purchase Probability Back Test

Predicted Probability

Act

ual P

urch

asin

g

0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%Cross-Sell Back Test% Customers Purchasing in 1 month% Customers Purchasing in 3 months

Predicted ScoreAct

ual P

urch

asin

g

0-1%

1-2%

2-5%

5-10%

10-15%

15-25%

25-35%

35+ %

0%5%

10%15%20%25%30%35%40% Re-sell Back Test

Act

ual P

urch

asin

g

Predicted Probability

Customer Defection Back Test


Mapping Out Customer Lifecycle Lifecycle Welcome & Nurture Engage Retain Re-Acquire

Segment Prospects 1&2x Buyers Nurturers Underperformers Loyalists Faders Win Backs

Total Customers 879,022 678,055 567,798 983,222 345,689 45,900 234,945% of Total Customer 23.5% 18.2% 15.2% 26.3% 9.3% 1.2% 6.3%Total Revenue - $6,915,770 $8,559,536 $916,258 $21,099,472 $307,226 $0 % of Total Revenue - 18.30% 22.65% 2.42% 55.82% 0.81% 0.00%Orders - 39,792 47,286 9,391 65,645 8,351 5,769Average Order Size - $173.80 $181.02 $97.57 $321.42 $36.79 $0.00 Average Tenure - 31 1057 1763 2313 1161 2033Average Recency - 57 49 92 50 91 178Repurchase Rate - 46% 59% 32% 56% 35% 30%


Welcome & Nurture Engage Retain Re-Activate

Sample Segment Strategy - Loyalists

Overview– Best of the best

customers • Buy most frequently• Most broadly• Spend the most

– Best targets for cross sell

– Strong brand loyalty and numerous transactions

– Stronger scoring recommendations

Segment Goal– Maintain & optimize

Considerations– Make a purchase

whether they are marketed to or not, so large discounts are not necessary

LoyalistProgram Themes Offers Calls to Action Messaging Contact Approach Cross-sell focus:

1 upsell, 3 cross-sell product messaging

Offers be more about qualitative benefits vs. discount approach

Call to actions are focused on exploring different products and re-ordering

Messaging and tone should personalized, targeted and appreciative

Emphasize appreciation

High frequency Targeted No more than # communications

– 2 per week– 10 month

New Product Product re-sell Product Cross-

Sell Flash Sale Exclusivity Thank You

Ratchet Offers Free Sample

Loyalty Club Pricing

Double Points Free shipping

Low stock on your favorites

Be first to try it and tell your friends

Personalized recommendations

New products Exclusive

promotions We appreciate

you Reminders

Max touches Jan - Mar 10

Max touches: Apr - Sep 16

Max touches: Oct 8

Max touches: Nov 8

Max touches: Dec 6

Inclusion / Exclusion Did not open previous

email Include

Clicked through, did not buy Include

Opted-Out Exclude

Value Risk Revenue % of Revenue

# of Customers

% of Customers Orders Ave Order

SizeAverage Tenure

Average Recency

Repurchase Rates

H L $21,099,472 55.82% 345,689 9.3% 65,645 $321.42 2313 50 56%


Other steps1. Promotion Strategy and Promotion Planning

No different than any other campaign or marketing program

Add product recommendations and individualized messaging to existing campaigns

2. Variable Content DesignVariable content designs are not difficult – Loyalty Builders can help

Abandon cart template can be easily repurposed

3. Campaign ExecutionMost marketing platforms handle variable content

We’ve worked with most

Loyalty Builders can execute the campaign for you


The Right Offers To Each Customer At the Right Time At Campaign Scale…


Special Offer for NEDMA

We are confident that our methodology works and guarantee at least a $100,000 lift from qualified campaign

If our methodology doesn’t create at least $100,00 lift, our services are free

More detail in the flier, along with a 100 Grand bar that represents $100,000 revenue lift that we can help you to achieve!


Thank You – Questions?

“More Revenue from Existing Customers”

[email protected]


Loyalty Builders: The Simplest Way to Revenue Uplift from the promotions you are already running

Requirements for Fast, Easy Uplift Typical Approach

Loyalty Builders

No data modeling or scoring rules ✔No data integration projects ✔For marketers (no IT, data science skills needed) ✔Immediate access to actionable campaign lists ✔Scores every customer on every product ✔No personally identifiable information ✔Immediate, easily measurable ROI ✔


You Get: Accurate Analytics Packaged to Execute More Relevant Marketing

Email lists with individualized content formatted for your email system

Control files formatted to drive variable print campaigns

Data files for real-time e-commerce and mobile recommendations

Sales leads and recommendations for CRM systems

Data files powering personalized digital banners, ads

Catalog mailing lists that optimize revenue and margins


Loyalty Builders Predictive AnalyticsSharpened Over 15 Years of Research & Experience

24

Customer Loyalty Scores

Product Interests of Each Customer

Who are the best customers for each (any!) product?

What are the best products to recommend to each customer (ranked!)?

When will each customer make a purchase?

Who is worth your marketing $$, and who is a waste of time?

Immediate Answers to Questions Like:


Loyalty Builders: By Far the Simplest ApproachPredictive Analytics-as-a-Service

Upload Purchase Data (Cust ID, date, item, amount)

to Cloud Service

Personalized Product Recommendation

Service

Download Campaign Lists

Email List

DirectMail

CatalogDepth

Online NBO

Sales Leads


How Does Loyalty Builders Work?

LB Data Delivery Service

Metrics DB

Predictions by Customer

Customer PurchaseData from Subscriber

Longbow(Self-service SaaS tool)

Campaign & Program Execution Lists

Campaign Execution Lists

Summary Reports

Predicted Metrics for Each Customer

E-CommerceCRM

Data Import

Campaign Platform

Analytics Platform

Loyalty Builders Cloud Service Deliverables Subscriber-Side

Cust IDTX Date$ AmountProduct ID


How Do We Make It So Simple?1. Focused objective: “predict buying behavior”2. Best predictor data (not any/all possible data)3. Model individuals against population patterns

Cust IDItem ID

DateAmount

ActionableCampaignData Files

Loyalty BuildersAutomation


How is Loyalty Builders Different?

Big Data Customer Profiling: Simple Data Alternative:

Analytics Analytics

Customer ID

Item Purchased

Amount Spent

Purchase Date

A New Insight

For Each Customer:Likelihood to BuyRisk of DefectionExpected Value

Re-Sell ProbabilitiesCross-Sell Probabilities

Loyalty SegmentProduct Affinities

We Get More from the Less Data


Why is this Important?The Typical Approach…

Marketing CampaignsData/Insight InterpretationCustomer TargetingProduct SelectionDiscount/Offer SelectionChannel SelectionContentCampaign Lists

Translate scores and “insights” into marketing actions

Data ModelingData MiningData SamplingAlgorithm SelectionScoring FunctionsRulesTesting

Find “predictor” attributes and score customers

Multiple SourcesData ExtractsCleansingEnrichmentSchema ModelingTransformationIntegrationStorageGovernance

Data Preparation

Integrate as much data about your customers as possible

Translate scores and “insights” into marketing actions

Data/Insight InterpretationCustomer TargetingProduct SelectionDiscount/Offer SelectionChannel SelectionContentCampaign Lists

vs. Loyalty Builders


Three Easy Ways Give Us a Try

① Free Opportunity Analysis (how much could you make?)

② Low-Cost Pilot Program(multiple campaigns)

③ $100 Grand Trial Campaign: Substitute one of our lists for yours in your next campaign

We’ll get a revenue uplift at least $100,000 over our $5,000 cost in a test campaign, or your money back

It’s easy! We’ll show you.


Proven Product: Keurig’s customized offers$490,000 revenue uplift

• Over 800,000 emails sent

• 250,000 emails in control group

• Customized emails produced 3x to 4x more revenue

• Over 65% lift in number of buyers for Dark and Decaf

Open Rate Click-Thru Rev/Email Revenue Lift/Email

Tea 34% 19% $0.73 $0.16

Dark 54% 27% $2.19 $1.62

Decaf 49% 29% $1.90 $1.33

Flavored 43% 22% $1.27 $0.70

Light/Med 42% 22% $1.34 $0.77

Control 30% 16% $0.57 $0.00

This campaign was nominated for most innovative marketing campaign award by MITX.


Cross-sell Campaign Sample CriteriaGoal – broaden variety of products and drive incremental sales from the best customers

Loyalty Segments – Loyalists and Nurturers

Optimal product combination: 1-2upsell products and 2-3 cross-sell products (4 products total)

Upsell products criteria – upsell product with highest scores for each customer

Cross-sell product criteria – cross-sell products with highest scores for each customer (preferably with scores 7 or higher)

Level of discount – no discount to low discount, preferably on products never purchased before

Frequency – 1-2 times a month as a part of individualized & triggered communication strategy (rotate products from the top recommendations to avoid emailing same product recommendations more than once)


Retention campaign sample criteriaGoal – reengage customers that have deteriorating behavior

Loyalty Segments – Underperformers, Faders, Winbacks

Optimal product combination: 3-4 upsell products and 0-1 cross-sell products (4 products total)



Level of discount – medium to high discount, based on the customer segment (medium discount to Underperformer and Faders, high to Winbacks)

Frequency – 1 times a month, when customer moves down to the lower loyalty segment and remains there (as a part of individualized & triggered communication strategy)


New customer campaign sample criteriaGoal – convert 1&2xBuyers into loyal customer

Loyalty Segments – 1&2xBuyers

Optimal product combination: 1-3 upsell products and 1-3 cross-sell products (4 products total, use as many upsell as available )



Level of discount – discount based on recency from the last purchase, introduce discount and increase it with increase in recency (test optimal level and time for increases)

Frequency – 1 – 2 times a month, as a part of individualized & triggered communication strategy (rotate products from the top recommendations to avoid emailing same product recommendations more than once)


Back-of-Napkin ROI Calculator

Number Customer Contacts Per Month 100,000Normal Buy Rate per Month 1.0%Loyalty Builders Buy Rate per Month 1.5%Average Order Value (Normal) $200.00Average Order (Loyalty Builders) $200.00Loyalty Builders Cost Per Month $5,000.00Additional Costs Per Month $500.00Average Product Margin 40%Additional Responders 500Revenue Uplift per Month $100,000.00Product Margin Uplift per Month $40,000.00Uplift Cost per Month $5,500.00Immediate Return per Month 727.27%Campaign Revenue per Year (No LB) $2,400,000.00Campaign Revenue per Year (with LB) $3,600,000.00Revenue Uplift per Year $1,200,000.00Subscription Cost per Year $60,000.00Revenue Multiple on Subscription Cost 20.00

The Drop-Dead SimplestWay to Boost Revenue with

Predictive Customer Analyticsfor Personalized

Marketing Campaigns for:

RetailersE-tailersCPG companiesB2B suppliersService providersCatalogers

Techniques to Simplify Personalized Marketing 5Nov15

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