Business casing the return from introducing a customer data platform
Client: a luxury clothing manufacturer and retailer
Customer base: 100,000+
The client had invited Berry Thompson to work with them to develop a business case for introducing UniFida in conjunction with our partner technology for website and email personalisation.
Identification of the key business areas where benefits could be obtained.
This was done by holding a workshop looking at all aspects of the marketing processes where either activities could be made more effective, or cost savings could be found through efficiencies.
The key areas identified:
- By understanding the value delivered by new customers in the seasons following their initial order, the client is able to understand the longer-term value of different customer groups that have been recruited, and hence build an overall business model
- Increasing the size of the profitably mailable universe by developing and applying reactivation models so that some parts of the customer base that had previously been regarded as dormant could be reactivated
- Deduplication all customer data so that all types of online and offline communications could go to properly identified individuals
- Introducing a customer segmentation based on the types of product customers had shown an interest in via browsing or purchase so that this could be reflected in the content of the catalogue sent to them
- Similarly, personalising emails; the client was previously sending weekly and largely undifferentiated emails
- Using a combination of offline transactional history and online browsing behaviour to personalise the web experience; in this way for instance a dormant client found looking on the website could be made a targeted offer to reactivate them
- By attributing online orders to the multiple causes that may have influenced them, both online and offline, the client can reorganise their online marketing mix to reflect the value delivered by different channels and campaigns
- Reducing the staff time taken in making selections for campaigns and reporting on results
Estimating the uplift to be obtained from the benefit areas
This was based on the clients estimates of the level of benefit that could be obtained in each of these areas, combined with the staff cost savings from operational efficiencies.
The levels of improvement varied from one benefit area to another, but overall the conservative view fell within the range of 3% to 20% uplift.
This factor was then applied to the current benefits obtained from e.g. email activities and a benefit value calculated for each area.
The calculation allowed for the fact that year one costs would be higher, and benefits lower, than subsequent years because of the need to configure UniFida and test the changes that were to be introduced.
That said, the year one conservative ROI was 200% and subsequent years 600%, where ROI is calculated as the value of the benefits plus savings divided by the full cost of technology.
The client concluded that the benefits of investing in customer data platform and personalisation technology were greater than increasing marketing expenditure by the same amount, and on that basis decided to proceed.