While one might not know what to wear to work tomorrow, some companies are increasingly able to predict who is likely to buy a pair of corduroy pants in the coming month.
That’s the conclusion from marketing firm Sailthru, which helps companies personalize digital communications with existing customers on e-mail, mobile apps, web sites and social media. Sailthru has begun testing of a program that uses similar technology to help its clients acquire new customers.
Ten companies participated in the pilot program, including Rent the Runway, Betabrand and SheKnows Media, using retention data to pinpoint and market to ideal potential customers on Facebook; the technology is able to determine which people are more like to become long-term, repeat customers.
In the world of data and analytics, often the goal among merchants is not about finding new customers but about linking with the right customers at the right time — and making that connection feel personal. It’s an old concept, said Betabrand chief marketing officer Aaron Magness, but it can be challenging, and expensive, to nail down.
According to Magness, Betabrand, which had been an existing Sailthru client for more than a year, experienced a 21 percent increase in projected revenue per customer with the new program. “We are a very analytics-driven company, and this allows us to get even more intelligent,” Magness said. “For marketers, we used to say, ‘I need customers,’ then ‘I need female customers,’ and now it’s ‘I need female customers who do this or that.’”
The technology works by building models based on existing customers, and connecting data from different channels such as e-mail and web sites, to find other people who behave similarly; this allows brands to market toward an “intelligent” audience.
This practice isn’t unique to Sailthru, but Magness said this pilot program is significant in that it combines the existing insights that the company powers across channels. “We didn’t have to staple together third-party tools,” he said. “It’s important to have a single partner that can take on what so many companies do without having to cobble it together.” Soon, Magness said, Betabrand, which relies heavily on crowdsourcing and customer feedback, will begin customizing its web site homepage to accommodate the customer.
By marketing to the most lucrative customers, companies are able to be more efficient with their ad spend, Magness said. Rent the Runway reported a 40 percent reduction in mobile subscriber acquisition costs and a 53 percent increase in expected lifetime value of new customers, according to Sailthru. Since participating in the pilot, it has tripled its acquisition test spend.
“Improving the quality of acquisition programs is traditionally very labor intensive,” said Rent the Runway’s Josh Gray, who is director of acquisition marketing. “With this program, we’ve expanded our audience reach and the results have exceeded our top performing customers segment.”
The decrease in acquisition costs for mobile customers specifically is compelling, said Jason Grunberg, who is senior director of marketing at Sailthru, as desktop often still “rules the roost.”
The average contract value to use Sailthru is $100,000 to $150,000 a year, depending on the number of users and a company’s e-mail volume, he said; from there, a company can add on the predictive acquisition program.
A representative for Sailthru, which began with e-mail marketing in 2008, said that clients from both the U.S. and the U.K. would be signing on to begin testing. The firm currently works with 400 retail and media companies.
“E-mail has become commoditized, so using web site, mobile and in-store data to personalize e-mail marketing is a tremendous differentiator,” Grunberg said. “Prediction is another element of that.”