Bath and body products retailer Crabtree & Evelyn is hoping an aggressive customer contact strategy and an updated loyalty program will result in the sweet smell of success.
At the heart of its re-energized customer focus is "Platinum," a loyalty program the company launched just over a year ago to replace its "Preferred" scheme. For a five dollar entry fee, members received 20% discounts on merchandise during the first week of each month.
What insight had the company realized in return? Not much, according to Tom Woodside, Crabtree & Evelyn's new vice president of marketing and ecommerce, "There was no analysis," Woodside says. "It was a sales-oriented loyalty program. It wasn't connected to the ecommerce database."
This is no longer the case. Crabtree & Evelyn has brought in direct marketing agency 89 Degrees, and the past holiday season saw a suite of offer and channel tests aimed both at existing and lapsed program members.
The tests included a three-piece direct mail campaign. Roughly 100,000 current and lapsed program members received one mail piece timed right before Thanksgiving, one on Thanksgiving and one during the December shopping season. Within these, Crabtree & Evelyn also tested three different sets of creative designs, such as a variety of discounts, fragrance peels and formats ranging from self-mailers to postcards to catalogs.
Historically, the company had leaned toward "20% off all merchandise" offers. Early analysis from 89 Degrees indicates the strongest performer in the November-December test was a $10 off a purchase of $35 or more structure.
"Money [in a solicitation] always works better than a percentage off, and it has a threshold," says Woodside. Additionally, consumers react better to dollar amounts in marketing pieces. "It's tangible," Woodside adds. It didn't hurt that the piece presented the offer in the form of a tip-on card designed to look like a gift card.
Best of all, the promotion was return-on-investment friendly. While $10 off a $35 purchase is roughly a 29% discount, most customers spent around $60 when redeeming the card, pulling the discount rate down to just under 17%.
Woodside notes that the sales levels were likely buoyed by a concurrent gift-with-purchase program which had a $75 threshold.
Crabtree & Evelyn's next step is to work further with 89 Degrees and refine a set of incentive programs and communication efforts to segmented customer buckets within Platinum.
"Our broad goals are increasing sales by driving greater purchase frequency among loyal customers," Woodside says. There's a lot of potential to boost sales: While top customers make 10 purchases a year, average purchase frequency is only one and a half purchases every 12 months.
Look for the company to increase its use of direct mail to its loyalty program participants. Traditionally, program members received communications twice a year—around Mother's Day and Christmas.
"The new plan is to use direct mail as a tool for the customers that best respond to it," says Woodside. In that, Crabtree & Evelyn's base may be better tuned to it than some: Buyers tend to be mature women who are familiar and comfortable with direct mail. Furthermore, the company's loyalty program database has email address coverage for only about half of its members.
But even this will change, if Woodside gets his way. Crabtree & Evelyn is becoming more diligent about requesting email addresses upon signup. As part of its prospecting strategy, it is placing a greater emphasis on point-of-purchase registration, along with in-mall events such as sampling and intercept programs. And its Web site moved a sign-up solicitation to a more prominent position.