AI-based email targeting improves campaign ROI for retail brand

About client 

Our client is a luxury goods retailer with global presence, holding 400+ flagship stores in 50+ countries (existing more than a century by now). They manufacture and sell luxury accessories for luxury connoisseurs, product collectors, celebrities, and classic buyers. Having an active buying community, their products combine timeless luxury with contemporary fashion that resonates well with their vibrant, trend-setting audience. 

Challenges 

Be it design, POS sales, or customer service, our client always wanted to ensure utmost exclusivity, personalization, and convenience. But following were some of the challenges they faced while trying to sustain clients, conduct marketing experiments, and increase its engagement. 

It’s difficult to maintain customer retention; even more in luxury market. 

For a retail luxury brand, repeat customers are very important, as 60 to 70% of them are likely to buy again. When they are engaged in the right way, they could purchase again. Similarly, there are customers in ‘at-risk' categories, who needs to be engaged with the right message. It takes a lot of permutation & combination of engagements for marketing teams to craft the right engagement strategy.  

Even though the client meticulously maintained records and stayed in touch regularly, they couldn’t go beyond having generic customer segments and sending assumption-based emails. This leads to customers leaving the brand quietly, impacting customer lifetime value (CLV).  

Brand communication is just noise, if it’s not personalized. 

Emails is their major communication channel, where they announce new products, offers customized discounts, abandoned cart reminders, new range alert, or any other brand message. But sending same messages to everyone only led to information overload. It also felt like treating first-time buyers and repeat customers the same way, notwithstanding each user’s unique shopping preferences, wish lists, etc. Such generic campaigns didn’t perform well, results? Half of them being unopened, rest of them are unclicked or ended up in spam. 

Taking the right message to the right person at the right time 

Rather than doing mass emailing and info-dumping, the retail company wanted to deliver the right message to the right customer. This means sending personalized offers and product suggestions to the customer who is most likely to click & buy. This way, they could target less than 20% of their customers and garner 80% of the planned ROI. 

Competitors are always up to something new 

Other luxury brands are always doing things to keep their name alive, which includes personalized targeting as well. This soon became a trend post Covid-19 with the reduction in foot traffic and increase in online purchase channels. Our client wanted to stay ahead of it, putting their customer insights data into good use. 

Solution from datakulture 

Analyzing customer datasets, we built an AI and predictive analytics-based email targeting system. Here is how the system works.  The marketing team can select the campaign type and product. The system will select the most narrowed-down audience segment and the possible ROI projection the targeting can generate.  Explaining what our data scientists did in six steps 

• Build a customer-360 view: used clustering algorithms to segment customers based on demographics, purchase history, website behavior, and more categories. 

• Find product propensity: analyzed past purchase data to look for trend patterns and understand customer purchase trends. This helped us map customer segments to the products they are likely to purchase. 

• Maximize campaign impact: the customer should engage with the email and make the purchase. Hence, we used ‘Click’ models and revenue conversion models to predict how likely the purchase can happen for a given campaign. 

• Expand prospective customers: by matching demographic and web engagement data, we helped the system expand the customer reach by finding similar high value clients. 

• Stop customers before they leave: this is to identify and show the high-value customers who are likely to leave along with the revenue loss projections. It helps the client run targeted customer retention offers, extending lifetime and minimizing churn. 

• Enhance model performance: address issues like missing value imputation and class imbalance. 

Conclusion 

A personalized targeting system can be a game-changer for a luxury brand. It helps the company send the right message to the right person at the right time, making customers feel special and valued, deepen customer loyalty, increase engagement, and drive higher sales. By setting up what’s likely to become the future way of digital communication by brands, we have helped our client improve conversions and campaign ROI and prevent losing a Customer Lifetime Value (CLV) of millions of dollars.