In a recent conversation with a chief technology officer, he asserted all digital technology changes in his organisation were being led by IT and not by marketing. It made me wonder: How long a marketing function like this could survive?
Building repeat customers is a big challenge for every retailer, particularly given the ease of sourcing products digitally today. But thanks to a commitment to customer lifetime value, data smarts and some savvy digital marketing, it’s something US-based fashion jewellery retailer, BaubleBar, has firmly in its sights.
BaubleBar is an online retailer providing low-cost costume jewellery, and was established in 2011 by two friends from the banking and private equity communities. As well as a sole focus on jewellery products, the retailer differentiates itself by quickly responding to trends in the latest styles through a dynamic, data-driven merchandising strategy.
Over the past 12 months, the company has doubled in size, fulfilling more than 1000 orders per day, and raised US$10 million in a series B funding round last July.
BaubleBar vice-president of digital marketing, Amy McDowell, joined the company a year ago after spending the past five years as a marketer in various startups. She is responsible for customer acquisition and retention strategy across all digital media channels including SEM, SEO, display, affiliate and email.
McDowell will discuss the way BaubleBar uses data to drive decision making, particularly around product innovation and customer retention, at the forthcoming Ecommerce Conference and Expo in Melbourne in March.
In an interview, she told CMO one of the most successful applications of data in digital marketing so far has been its ‘buried bauble’ program. The activity was launched as a way of driving repeat visits to the site by better engaging customers.
Every Monday and Friday, the company marks down an item to $10 and $20 and ‘hides’ it on the site. It then emails registered customers with a ‘clue’ to finding the discounted product.
While bringing more people to the website was an obvious benefit, McDowell said there were initial concerns about training customers to look for discounts, rather than buying full-priced products. Using customer behavioural data helped changed the way these programs were shaped, she said.
“There were big questions about the impact on our reputation long term,” McDowell said. “So we set up rigid KPIs we could observe from the data to understand how customers buy.”
Questions that needed to be addressed included whether customers only bought the discounted product, or if they then shopped for other products. McDowell noted jewellery is a highly personal product and an impulse buy, something BaubleBar is also trying to incentivise.
The program proved a “trial by fire”. “With a startup, you don’t have the luxury of a four-month analysis; you see what it does to the business quickly, and grow the program or drop it,” McDowell said. “We had very specific actions and KPIs we were looking to affect.
“It was a question of getting customers to the site first, then getting the right thing to the right person. We didn’t want to sell millions of that discounted item, but lead to that person buying another product at full price.”
From the outset, our founders knew we had to be data-driven to be successful
It paid off, and McDowell said the buried bauble program has proven the most successful digital marketing program done so far.
In all, 10 per cent of BaubleBar’s customers are engaged in the buried bauble program. These customers have a 20 per cent higher lifetime order value than those not interacting with the program.
“It got people through the door and excited about our products and is one of our many engagement efforts,” she said. More recently, BaubleBar extended this to a 12-day buried bauble campaign at Christmas.
“This also goes back to our mission of making jewellery a lifestyle purchase and augmenting your existing wardrobe, as it gives people a reason to come back and shop with us. And they’re more likely to come back to us again and again.”
BaubleBar is now planning to extend the program to mobile devices. As part of plans to launch an iOS mobile app later this year, it will look to use push notifications to drive customer behaviour, McDowell said.
“Email is still king, but we recognise how a mobile push can affect consumer behaviours,” she said. More widely, BaubleBar is ramping up its efforts to use data to inform more personalised experiences and content.
“Email is the easy part – for example, we can identify if you like bracelets and personalise content to show more bracelets; or pierced versus clip on earrings,” McDowell said. “There’s so much information from a customer’s purchases and browsing behaviour, it’s a matter of time as to how much further we take that.”
Data driving the startup ship
According to McDowell, startups have to be data-driven to steer the ship in the right direction. But with so many ways of utilising data today, it’s important to single out the key things that matter to your business.
To help, BaubleBar deployed an RJmetrics analytics platform. The tool pulls in data from different channels such as email, advertising and website data, and optimises information through specific dashboards, including merchandising, customer behaviours, and lifetime value.
“We are very thoughtful about what teams get what access to this, because you need to provide this information to the business managers driving these KPIs every day,” McDowell commented. “From the outset, our founders knew we had to be data-driven to be successful.”
BaubleBar is also using data to inform merchandising, breaking out which SKUs are doing well and looking at ways to extend their popularity by adding new colours, lengths, or metals, for example.
“We have more than 2000 SKUs on the site at any one time, but inventory of these is really low,” McDowell explained. “Buying cycles in traditional retail can takes months, but we can change styles in weeks. It’s an exciting and different component to our brand.”
In addition, data is fuelling BaubleBar’s advertising strategy. As well as a substantial investment in SEO, the company spends a large portion of its advertising dollars on Facebook advertising, utilising detailed audience data to inform the hundreds of products it showcases each month. It’s also what will inform a growing TV advertising investment, she added.
Customer lifetime value
Whatever the activity, the ultimate objective for BaubleBar is extending a customer’s lifetime value, McDowell said. To help this charge, the company is also offering free shipping and returns.
“Experimenting with jewellery should be easy, so this is about reducing the risk for the customer,” she said. “Sure it’s a short-term hit for us, but it encourages customers to experiment. We can then build that relationship over time.
“Jewellery is an emotional concept about making you feel happy, and it should be a positive purchase. So we make sure that’s part of the experience too.”
With fashion always changing, it’s vital for a brand like BaubleBar to build customer loyalty and long-term relationships, McDowell said.
“Fashion jewellery is not meant to last 20 years, so the concept of repeat customer and loyalty is so valuable to us,” she said. “We’d prefer fewer customers that stay with us a long time, than to have a lot of customers just coming to us once.”
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