Case study

Client

One of the UK’s largest DIY retailers

Sector

DIY and Home Enhancement

Project

To maximise the sales effectiveness of, and ROI from, the company’s loyalty card scheme and associated direct marketing programme. Analytical and research support was provided for the scheme for a continuous period of over nine years.

Analyses and Answers

The combined database of attitudinal, circumstantial and behavioural measures was created for over 8000 customers and their preferences scored using the RedRoute 5 driver model of Effective Net Preference. These ENP scores were then related to the client’s share of wallet at customer level and a model of SoW developed that could be projected across the full c. 2 million customers in the database using data fusion.

A store exit survey of over 1500 cardholder customers was used to find out everything we could about a representative sub-sample of the base and this informed the segmentation by suggesting new variables we could use such as “time at current address”, “interest in and skill level in gardening and DIY” and many other such dimensions. Our aim was to understand what would make “the floating voter” choose to shop with our client rather than one of its major competitors. Data fusion was used to reliably project the attitudinal information, segmentation and scoring algorithms across the entire 4 million customer base.

The result of these analyses was a realisation of the tremendous importance to the business of the level of activity in the housing market, together with a full and deep understanding of the relationships between lifestage, an individual’s inherent interest in DIY/Gardening (and the “fashion” components within this) and their likelihood to visit a DIY store or garden centre.

Modelling of the motivational drivers for spend level, frequency and content then provided the client with a wealth of information for improving campaign targeting, customer retention and development and, ultimately, the tiering used as a loyalty incentive within the scheme itself. All of which were then used to maximise ROI.

Actions

Rigorous in-market testing was run over a period of 12 months to validate the implications for improved marketing effectiveness emanating from the analyses. These tests yielded an average sales uplift of 25% compared to the previous methods of targeting and incentivising customers. Based on these learnings a revised programme was implemented in year 3 which produced a 50% increase in the annual sales generated by the company’s direct marketing budget. Moreover, it also increased average visit frequency and reduced attrition by nearly 15% each.

These results were subsequently presented publicly by the client at the Loyalty World conference in 2006 and our input was used in the following years to help redesign the scheme, evaluate the impact of major initiatives such as the introduction of mezzanine floors into new outlets, and design store layouts and locations for optimum sales performance.