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Case Study: Direct Mail Drives eCommerce Acquisition

Date: February, 2014 --

February is not only the beginning of the New Year in China, it also sees the perennial reappearance of the UK’s popular TFM&A exposition at Earl’s Court, which Data Services always attends. As with China and elsewhere, ecommerce is seeing dramatic growth in the UK. For example, in December online sales grew by over 19% year-on-year and accounted for 18.6% of all non-food retail sales, up from 16.5% in 2012.  

According to the British Retail Federation, the most successful merchants in this market are those who have made their sites accessible to smartphones and tablets, keeping with a trend we’ve also seen in China and the USA. 

But does this mean the humble letter or postcard has been left behind? Hardly. In many respects, it’s becoming a driver of traffic, as demonstrated by the UK retail chain Sainsbury’s. 

Sainsbury’s is a huge retail chain of full-line and convenience grocery stores. It was founded in London in 1869 by John James Sainsbury and his wife Mary Ann. It has grown to become one of the UK’s largest retailers, selling general merchandise and clothing in addition to its signature grocery business.

It is huge, having 1,016 stores nearly equally divided between supermarkets and convenience stores. It is (1) not afraid to use the data it has “to hand” as one says in the UK; and, it is (2) not afraid to do things a bit “off center”, like using postcards to drive traffic both to physical retail locations as well as its online store.

The Challenge

But with nearly every store in the UK trying to get customers on to their websites, and with a new service to launch – online ordering of groceries - how is one to stand out from the crowd?  They are offering a grocery shopping service, but how to get customers to experiment with it online, especially given that other chains offer the identical service? This was the challenge.   

The company decided to use direct mail to introduce and promote a new view of the brand, a new emotional connection, and a new shopping service in their grocery stores: ‘Try Something New Today’. In short, they wanted to beat the competition by getting their customers to try the online shopping service with Sainsbury’s before they tried another provider’s service. 

After all, how different can a company make the service of assembling a grocery order? Getting prospects to shop with you first provides a huge advantage and it’s quite likely that this advantage will carry through even in the face of better offers made by competing stores!  And competition there is with the likes of Waitrose, Tesco, Iceland, Gregg, and many others.

Where to Start

The project was intensely data-driven, something famously mastered by the giant competitor Tesco, whose use of data for prospecting and customer retention is legendary. The starting point was the data generated by its customers’ use of their “Nectar” cards. 

Nectar is a loyalty program under which the customer’s purchases at participating merchants earn points which can be redeemed, as with most loyalty programs. The cards generate consumer data across every conceivable category of commerce: groceries, clothing, dining, travel, sports, entertainment, pets, travel… even charitable giving! In short, the data aggregator is not the credit card company itself, but the “central” loyalty card company, whose card holders may be using many different credit cards, where the consumer’s purchases would be generating non-combinable loyalty points.

What a wealth of consumer behavior data such a program generates, and what a playground for the data analysis experts! 

By analyzing Nectar card data, the analysts built up a picture of the various customers’ shopping habits – and used those to send out relevant and engaging postcards. Each postcard reminded customers about the benefits of online shopping. They also encouraged shoppers to ‘try something new’, offering new recipes and suggestions on how to shop, as well as money-off coupons. In this way, Sainsbury’s changed shopping from something boring and functional into something of interest.

The Results

Response rates for some pieces were as high as 49.25% – more than four times response targets, with a CPR of £1.66, and an average order value of £86.89. Ongoing testing indicates that it works without incentives too – showing that it’s the brand that counts rather than just money-off coupons.

Whether your goal is to drive customers in-store, online or both, Data Services has the necessary data management and analytics technology and services to help your organization achieve its goals!