How custom segmentation helped achieve a 125% holiday email campaign conversion rate increase

By Peter Boggs

STEM toys are designed to get kids interested in science, technology, engineering and math (STEM). But one national retailer discovered the skills taught by those toys can also play a role in sharpening a holiday email marketing campaign.

For a little over a year the retailer had been working closely with the data scientists and analysts at Environics Analytics to develop a custom segmentation model to get a clearer picture of its core consumers and determine which segments were being underserved. While this work yielded interesting insights, the retailer was looking for an opportunity to put this work to test.

That opportunity came late last year heading into the holiday rush as it searched for ways to raise consumer awareness about its new STEM toy product category, which was geared towards young children. The challenge, however, was that toys were just one of many product categories sold through its stores and its core customer segments were less likely to have young kids at home. As a result, the retailer knew it had to hone in on the consumers who would be most interested in these new products

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Tapping the right audience

In order to tap the right audience, the retailer needed to target segments who were more likely to have kids within the desired age groups. Without the custom segments this would have been an impossible task, particularly given the retailer’s robust email list includes hundreds of thousands of subscribers.

With the segmentation work complete, the retailer’s own in-house analysts now had the ability to select driver characteristics to target their emails. This enabled them to zero in on a subset of its subscribers they believed would be most receptive to their campaign.

Narrowing down the subscriber list was critical from the retailer’s point of view, given what it has learned from previous campaigns. The campaigns taught them that generic messages didn’t just result in a lower engage rate, they also led to a spike in subscriptions. Targeting a group outside of the retailer’s core customer was also a strategic decision, as it enabled the retailer to extend its reach in the market.

Strong results and follow-up plans

The results were immediate. The targeted campaign not only resulted in a sharp increase in the number of email opens, it saw a 125% jump in the conversion rate over what the retailer typically sees from one of its mass email campaigns.

Equally important: the retailer saw an 86% reduction in its unsubscribe rate, indicating that the campaign was on target and resonated with consumers.

Given the success of this initiative the retailer is now looking to apply its custom segmentations to more of its direct email campaigns. It is also taking steps to make sure everyone on its marketing team has access to the data.

The retailer sees opportunities beyond marketing. It is exploring how to use its custom segmentation system to tailor its product mix and train staff to better align to the key segments who live close to its stores across Canada.

To get to this point the retailer had to overcome several challenges. While it had a lot of transactional data, it didn’t have the depth of data to connect those sales to its customers. Outside of warrantee purchases, postal codes and addresses were rarely collected for many of its in-store sales.

This lack of information make it more challenging to build a segmentation model, but by working with its partners the retailer was able to fill in some of the missing pieces to determine who their principal customers are. The retailer’s own email database and data from online purchases also proved to be to be a richer source of information than the retailer originally believed. They were then able to add third-party data from Environics Analytics into the mix to build a complete view of their customers.

The retailer now has its own in-house experts who can help leverage the analytics work that has already been done to help the company make smarter, data driven decisions.

Peter Boggs is a senior vice president at Environics Analytics

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