One of the insightful things that has been said to me recently came from an independent consultant working at a major FMCG client. He said: “The problem here is that we have some people who are world-class at marketing to the masses, but they haven’t got a clue about how to speak to a customer.”
When your sole customer touchpoint is an email address, it’s only natural your marketing strategy will rely heavily on digital marketing. So for Hoyts Kiosk, investing in a comprehensive and customised email marketing platform was not only a no-brainer, but a decision that has boosted customer acquisition and retention, and helped to drive rapid growth in the company.
Hoyts Kiosk was launched by two entrepreneurs in 2005 under the Ooview brand, taking its cue from the successful kiosk DVD rental service provided by Redbox in the US. During that time, it has grown from 30 machines in Sydney and five staff to 500 kiosks across Australia and 20 dedicated employees, and will complete a national rollout by entering South Australia mid-2013. The business was acquired by cinema giant Hoyts in 2009 and rebranded in 2012.
“The business is built on the premise that you place a machine in high-traffic locations, where people are going about their everyday shopping, and they will come to you,” Hoyts Kiosk marketing and communications director, Karli Smith, told CMO. “Once they use you, and as long as we market and remarket to them successfully, then these customers will keep coming back.”
Because of its focus on impulse and convenience, Hoyts Kiosk chose not to have a member-based system and relies on a user’s email address for personalisation.
“The kiosk is almost like the perfect one-night stand – we don’t ask for any personal details or information,” Smith said. “People don’t necessarily want to be standing in a supermarket queue giving you all that information. To keep things simple, all we store for records is an email address and the last four digits of a customer’s credit card. These form the basis of a customer profile in our user system.”
Each time a customer then hires a disk, a unique RFID tag is assigned to that user ID, allowing Hoyts Kiosk to undertake customer segmentation, remarketing and other user-defined marketing activities via email communication.
Initially, Hoyts Kiosk used a free email marketing management service, but quickly found itself limited by latency issues connecting to the kiosk software and user information system based in Sweden, as well as an inability to create customised email templates.
Its second choice of platform, an off-the-shelf solution, lasted for 12 months and opened up more segmentation opportunities, yet failed to deliver results that matched the team’s projections. Hoyts Kiosk also faced additional external costs to produce campaigns, and remained hamstrung by inefficiencies in getting to market.
“We went from doing virtually no emails to being able to do a monthly newsletter and welcome email to customers, but our results weren’t improving,” Smith said. Of particular concern was the 50-60 per cent of users who lapsed after 12 months, and the average rental visit (once every 2.8 months).
“I think what we’ve all realised is that you shouldn’t start with the software but always with the business needs, then tailor the software to suit those needs,” Smith added.
Third time lucky?
Hoyts Kiosk’s decision to source a third email marketing platform solution was based on three needs: to become self-sufficient in creating and managing templates and coding; to completely automate remarketing and retention campaigns; and to generate unique promotional codes and dynamic content.
Hoyts Kiosk opted for ExactTarget’s email platform, working with the vendor on a tailored solution that united its local marketing templates and communications with the customer data residing in Sweden. Hoyts Kiosk boasts of 250,000 active customers and a database of over 650,000 email addresses.
“After having looked at our business needs, ExactTarget actually partnered with another company, Chain Builder, which built a bespoke technology which plugged into the ExactTarget base platform to enable and automate the communication between our local and Swedish software systems,” Smith explained.
She also flagged ExactTarget’s 3sixty online user community and face-to-face networking sessions as another positive, opening up the opportunity to hear from other customers and like-minded marketers who are also utilising the technology.
In the first year, Hoyts Kiosk has seen average email open rates lift from 27 per cent to 32 per cent, and a 97 per cent increase in consumer touch. In addition, it achieved a 68 per cent rise in year-on-year customer retention.
“That’s because we were having more relevant and timely conversations with our customers, as per their request when we surveyed them,” Smith said. “We were also able to start sending out ex-rental emails, which is when we go out to customers who rented a particular title and let them know that ex-rental stock is available to purchase as we replenish the stock in the system.
“This triggered a 30 per cent increase in ex-rental sales year-on-year.”
Importantly, Hoyts Kiosk reported a 30 per cent increase in revenue over the same period. “I can’t credit it all to email marketing because we do have a presence in the retail precinct to encourage people to use the machine on impulse, but given email marketing is one of the few marketing tools we do use, we can attribute a lot to the email marketing piece,” Smith said.
Having an automated and dynamic offering has also saved up to 16 man hours per month, and the incremental costs in deploying the system were paid off in two months. The company claims to have made a 60 per cent savings in cash outlay per month.
Smith also attributed Hoyts’ decision to rebrand Oovie to the results driven by the technology. “It has enabled us as a business to grow more rapidly, and helped convince Hoyts to invest more Capex because they believe in our business.”
The next step for Hoyts Kiosk is to take advantage of the cinema group’s wider customer database of 2.2 million unique customers to better market its offering. A mobile app is also on the cards.
“We can’t rest on our laurels – we’ve seen initial results from using the system, so now it’s about how we ramp up things to the next level,” Smith said. “We’re looking to get someone to come in who understands the technology back front and can use it to do the many other things we could do using the automation studio tools for example.
“It’s almost like you need your own IT person within your marketing department.”
Longer term, Smith is seeking better ways to integrate marketing systems across the business units. Further opportunities will arise later this year when Hoyts launches its new Streaming service.
“In terms of what that [marketing program] will all look like, I’m not sure yet,” Smith said. “What I would say is that we as a business unequivocally support email and database marketing, and the technology supporting our business to do what we need to do.
“It’s about being clever and innovative in the way we talk to people.”