Why This Case Study Is Relevant
It shows how hard-core analytics, customer insight and predictive modeling can significantly increase retail sales while reducing acquisition costs.
Oreck, a leading producer of home care products, sells through e-commerce and retail channels. But its cost to acquire new customers was not sustainable. In addition, it could not identify its most valuable customers.
An exploratory Customer Value Analysis revealed that only 5% of Oreck’s customers — the people Oreck had been marketing to — had purchased in the last 12 months. What is more, those 5% were extremely valuable — purchasing around five high-ticket items.
Further exploration of its core customers uncovered an emotional insight too: It showed that a clean house was a reflection of the person as a mom, wife and woman.
Catalyst believed that by modeling customers who resembled that 5%, we could uncover prospects who would be more likely to respond, purchase and deliver the highest long-term value. Working with Oreck, the Catalyst team:
- Mined Oreck’s database to identify purchase frequency and history, products purchased, channel activity, and sales amount. Customers were segmented based on current and potential value. We then built models to identify new Oreck customers who could potentially be most profitable
- Developed a segmented communications strategy and media mix that matched the right customers to the right offers, the right media and the right marketing programs
- Instituted a win-back program for lost and inactive customers, which provided higher ROI than an acquisition program
- Created a CRM environment focused on retention and continuously increasing customer value through cross-sell, upsell and optimized marketing spend
- Developed new creative that played to the emotional insight
- In-store sales increased by 10.1%
- The number of customer invoices increased by 8.9%
- Incremental sales generated per marketing dollar increased by 53% in under six months
- Customer acquisition costs dropped by 55%