Proflowers.com Sows Seeds of Success
In the past, Proflowers launched basic e-mail marketing campaigns based solely on information it could glean about its customers from their past purchases.
"We were doing basic RFM segmentation, but we wanted to take it one step further," said Chris d'Eon, vice president of marketing-retention at Proflowers.com. "RFM only got us so far, and we knew that if we understood a little bit more about demographic and lifestyle characteristics, as well as be able to combine people in similar-type behavioral categories, we should be able to personalize messages."
To meet these goals, Proflowers began working in July with market research, database development and database marketing company Looking Glass, Denver, and its proprietary household-based market segmentation system, Cohorts. This system categorizes all U.S. households into one of 27 psychographic segments that bundle people with similar characteristics.
First, Looking Glass overlaid its segments on Proflowers' 500,000-name database and showed the company which ones were most prevalent on the customer file.
Looking Glass then brought in Proflowers' transaction data so "we could say that this Cohorts segment not only represents X percent of their customer file, but that it also may have the highest average order size, or purchase the most frequently, or are most likely to convert to multibuyers after buying from you during the holidays," said Mike Fitzpatrick, director of business development at Looking Glass. "It is really a way to qualify even further what their top Cohorts segments are."
After this analysis, Proflowers.com found five Cohorts segments that it wanted to target because those customers bought products multiple times. Some had purchased products once but showed buyer-behavioral characteristics indicating that they could buy more if they were marketed to directly. These Cohorts segments included groups such as Alec and Elyse, affluent empty nesters; and Jules and Roz, an affluent couple with children. The analysis also identified customer segments with the greatest opportunity for growth and customer types of less importance.
At the end of September, Proflowers began a personalized e-mail communications program to the best past customers using the customer knowledge it gained from the Cohorts analyses. Proflowers versioned its messages to five key Cohorts segments. The campaign, aimed at creating multibuyers from their past customer file, included relevant subject lines, headers, offer language, recipient references and even salutations tailored to each Cohorts segment.
Insight into the top segments' demographic and psychographic profiles also allowed Proflowers' business development team to focus on partnership opportunities most likely to please their top buyer segments.
For example, Proflowers is now able to identify potential partners with which to offer joint incentives because they share the same type of upscale customers.
According to Proflowers, the Cohorts-driven personalization strategy delivered higher conversion rates and overall response rates, and average order sizes increased by significant margins. The Cohorts segments that received versioned messages and clicked through to the Web site were 56 percent more likely to convert to purchase versus the control group, indicating that the targeted messages significantly increased the intention to buy, not just browse. The Cohort segment Stuart -- rich guys -- generated a 113 percent lift in conversion rates.
In terms of campaign response rates -- or the combination of click-through and conversion -- the aggregate response rate of the Cohorts segments was more than 35 percent higher than that of the control group. Two of their most important segments -- Alec and Elyse, the affluent empty nesters, and Jules and Roz, the affluent couples with children -- responded at rates that were 50 percent and 53 percent, respectively, higher than the control panel.
Additionally, average order size increased when consumers received the personalized message: a combined $1.44 more than that of the control group. Again, the Cohorts segment called Stuart, the rich guys, led the way in order values, spending $3.12 more on average than the control respondents did.
Proflowers is planning a direct mail effort to floral bouquet recipients using Cohorts.