Apparel specialty retailer deploys a data-driven cross-channel marketing strategy

Maximizing growth opportunities through “micro- segmentation” customer analysis

Industry: Retail

Key solution areas: Data analysis, customer insights, cross-channel marketing strategy

Findings: Yes Lifecycle Marketing’s micro-segmentation strategy, designed to uncover the client’s most likely to respond customers, discovered that:

  • 23% of the client’s ‘High Value’ customers  drove 63% of the total sales demand
  • 31% of the client’s ‘Low Value’ customers  only generated  5% of the total sales demand

 

From Cataloguer to a Multi-channel Web Retailer

This client is a global apparel brand founded 25 years ago. When the company launched, it focused on menswear products but, as it grew, it added women and children’s clothing lines and expanded its presence throughout Europe and the US.

The client’s revenue comes primarily from their website and mail order sales via their widely circulated catalogue. The brand’s catalogue is their predominant strategy for brand awareness but their sales are driven primarily by the web.

While the brand has been successful overseas and the company has reported continued sales growth, it needed to improve its response rates and achieve better margins. With these objectives in mind, they sought the help of Yes Lifecycle Marketing for strategic direction to improve its addressable marketing performance and marketing ROI.

Yes Lifecycle Marketing had a one-of-a-kind approach; they dove in head-first into the mounds of data we collected, thought through every metric, evaluated every data point and came up with a uniquely relevant marketing opportunity framework that immediately identified our core audience segments. From there, they proposed numerous strategies to reach, engage and convert our customers, which would have tremendous impact on our bottom line.”  

Head of Analytics and Strategic Planning

Step 1: Analyzing the Data

At the start of the relationship, Yes Lifecycle Marketing’s Analytics and Insights team went through a rigorous discovery process with the client by initiating a comprehensive data analysis designed to identify, size and prioritize customer and market growth opportunities.

The result from this analysis was a three-dimensional custom framework that included three layers of customer data:

  • Total Annual Spend (how much money customers had spent with the brand)
  • Lifecycle stage (were they new, dormant, reactivated, or core customers)
  • Product category (did they purchase adult apparel, children’s apparel, or both )

This custom framework helped Yes Lifecycle Marketing’s team identify high-priority customer segments to dramatically impact the client’s marketing strategy, media spend and campaign performance.

Step 2: Identifying Areas of Opportunity

The three-dimensional framework based on customer total annual spend, lifecycle stage and product category preference, yielded 125 audience micro-segments and provided a massive opportunity to identify growth areas and maximize customer engagement and revenue. Yes Lifecycle Marketing’s Analytics & Insights team analyzed each of the 125 micro-segments to determine which ones were the most and least valuable and then developed communication strategies designed to maximize the return on investment of each segment.  Findings included:

  • 11% of the 125 micro-segments made up 23% of the total catalogue circulation and produced 63% of the revenue
  • 31% of the catalogue recipients only produced 5% of revenue
  • ‘High Value’ customers made up 20% of the client’s database but drove 62% of revenue
  • ‘Low Value’ customers made up 50% of the client’s database but contributed just 12% of revenue

Step 3: Developing Insights and Strategic Implications

With these significant findings in hand, the Yes Lifecycle Marketing team developed comprehensive strategy recommendations to capitalize on the client’s best customers and maximize brand revenue.

The team calculated that the client would have generated 7X more sales if they had removed the lower performing segments from their catalogue circulation (they comprised 31% of the total circulation) and invested that budget into targeting prospect lookalikes of their most valuable customers through addressable marketing channels.

The work Yes Lifecycle Marketing did for us was invaluable in helping us better understand our audience, refine our marketing initiatives and capitalize on the many opportunities to optimize customer engagement and grow revenue. Thanks to the telling findings from the data analysis performed by Yes Lifecycle Marketing’s Insights and Analytics team, we are reworking our marketing programs and putting our customers at the core while focusing on relationship building.”

Head of Analytics and Strategic Planning