Case Study: Methodically Testing and

METHODICALLY
TESTING
AND
INNOVATING
THAT’S OUR METHODOLOGY.
AND WE’RE LEADERS IN IT.
What do you do when you have an enormous Fortune 100 company
with quite challenging growth goals? You innovate. You test. You learn.
And you earn their ongoing business. That’s what.
SITUATION
Our client, a major Fortune 100 company, had
some pretty hefty goals for their B2B business
growth. In order to meet those objectives, they
tasked us with developing a best-in-class loyalty
program with success measured by: loyalty-tenure,
referrals, retention-churn reduction, participation
and increased revenue.
To do this, we began by developing truly
meaningful engagement with members, testing
those efforts substantially, learning from those
tests and evolving to what best resonated with
customers. Two of these tests included:
•
Sweepstakes Engagement
and Retention Effort
Sweepstakes have proven to be a very effective
and cost effective tool for engagement and
retention with this client. Because of its
popularity and the return on investment it
results in, this program now runs ongoing
sweepstakes throughout the year. It not only
engages existing members but it is enormously
successful in acquiring new members too.
Each sweepstake is measured by the following:
number of new members and newly-activated
or engaged members obtained, member
participation rate, short-term and long term
churn reduction, revenue value of participators,
and the impact on the bottom-line by the
sweeps’ retained revenue and R-E.
•
Proactive Service Communication
Retention Effort As part of this loyalty program, our client now
proactively communicates to customers with
recent service issues by offering reward points
or a gift card. This is an effort to improve
retention and customer satisfaction by thanking
them for their loyalty and patience while
resolving their issue. And, next to sweepstakes,
it is one of the most effective campaigns in
this program. Results are measured by cost
per contact and cost per response/enrollment.
For non-member targets, we measure the
percentage of new member enrollments
whereas for member targets we measure
the response rate percentage of those who
claimed the reward. Impact on bottom-line
is also considered through service recovery
cumulative net revenue and basis point
reduction in churn - both in the short term and
long term after the service issue experienced.
SOLUTION
Our client has a very thorough approach to
strategic loyalty program management. Many
companies in our industry measure success
simply by the response stage, while others focus
the financial benefit, churn reduction and pay
back. We, on the other hand, innovate through
a methodical random sampling A/B testing
approach, which is applied on every single offer,
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each creative execution, and by target testing. This
level of scrutiny ensures that our campaigns have
a significant impact and that we are constantly
learning and evolving our strategies to reduce offer
fatigue and raise the bar for future integrations.
In fact, control groups are used and statistical
significance tests are applied to all lift analysis and
re-tested a minimum of three times before rollout
recommendations are made.
RESULTS
We have quantifiable metrics that show how our
innovative measurement approach has helped the
organization improve the customer experience. Our
Service Recovery campaigns, mentioned above,
drive rewards membership for short term and long
term churn reduction. In fact, these campaigns
delivered almost an 80-basis point churn
improvement over non-responders.
mail drives more new member enrollments and
lower churn (but at a slightly higher cost over
email, of course).
2. Copy Testing- We learned that acknowledging
a service issue with “Thanks for your patience”
copy brings in more new enrollments but
“thanks for your loyalty” copy positioning has
better churn reduction. Depending upon the
client’s current strategy, we employ these
results for future integrations.
Here are two examples of what we learned from
this proactive service communication effort:
Additional quantitative evidence of the success
of our measurement approach is evident in the
impact of our sweepstakes, also mentioned above.
Sweepstakes drive rewards membership for short
term and long term churn reduction, are directly
correlated with over 10% of new member growth in
2014, and delivered nearly a 25-basis point churn
improvement over non-participants. Additionally,
we now know that sweeps participants spend
more: 10% higher than non-participants.
1. Direct Mail vs Email – We discovered that
despite what general opinion keeps dictating,
print isn’t dead. In fact, for this client, direct
To us, it’s the data that makes the difference. All of
the data. And we at Kobie specialize in methodically
innovating with every single number we crunch.
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Find us at www.kobie.com or drop us a line at [email protected] to learn more.
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