THE HIGHLIGHTS
‘A £5m opportunity’: How Studio Retail used data to transform its media mix
Looking to accelerate its transformation from a reliance on catalogues to a fully digital ecommerce approach, Studio Retail used data and modelling to discover how customers could be more effectively reached through digital and TV marketing.
One of the powerful benefits of digital marketing is how the data it produces sheds a light on changing customer behaviour, so that campaigns can be adjusted to reach different groups of people using the most effective mix of media channels at the appropriate time.
That was the message from Chris Chalmers, marketing director of Studio Retail, speaking to delegates at the Festival of Marketing about its move to digital from a reliance on catalogue shopping, working with the agency Jaywing.
Jaywing’s managing director, Catherine Kelly, started the session on the Festival’s ‘This Much I Learned’ stage by reflecting on how difficult times often prompt marketers to start questioning whether they are using budgets efficiently. Getting the right answer to that fundamental query requires an evidenced-based approach, which challenges assumptions so a new course can be plotted based on data and insights.
“The past few years have been extremely turbulent; with inflation growing and price challenges, there are more and more questions for marketers with regard to what they should be doing with their marketing spend,” she said.
“During this time, the question we’ve been asked by our clients is ‘Have I got the right strategy? Am I targeting the right kinds of customers?’”
Sponsored by jaywing
Studio Retail's Chris Chalmers on the perils of Black Friday
Getting the media mix right
This was certainly the thrust of what Chalmers needed to know when he engaged Jaywing. Studio Retail’s roots are in catalogues, but the company knew digital media channels had to play a bigger role. The question was, what would be the right mix of print and digital, as well as TV? He revealed that, as those questions have been addressed over the past four years, the company has dialled down investment in print catalogues from 70% of its marketing spend to 25%. The shift in media strategy was not just about saving budget, but rather working with Jaywing to establish the optimum marketing mix.
“We wanted to have data-driven creative strategies, targeting the most valuable customers and allocating budgets to the right channels to drive efficiency, to deepen our understanding of customer touch points and reduce our reliance on DM,” he said.
“The model developed with Jaywing was able to tell us that the best way to get to a new customer was to be on TV and to make sure that we feature our homewares products.”
The data helped the business decide “an accelerating reduction” in catalogue spending was the right course. Modelling revealed only around 40% of its traditional customers were being influenced by media campaigns; the remainder were likely to carry on buying from the brand anyway. This led to a strategic decision to use catalogues to reawaken lapsed shoppers who had not made a purchase with the company in the past year. At the same time, a mix of TV and digital were established as ideal partners for bringing in new customers or introducing existing customers to new categories.
Testing digital in the media mix
To further test how important digital is, the business took the bold step of turning off Google investment to see what happened. The result was quickly apparent.
“We switched off Google for two weeks… and we got some amazing insight,” he said. “It led to a significant impact on revenue and new customer volumes. We were able to lean on the models as we started to test so we could learn to make more strategic investments.”
Listening to the data has not only allowed the business to find new customers, it has also empowered it to understand which types of activity bring in the most loyal type of shopper – those who open up an account with its brands and carry on shopping throughout the year. The big finding here was that Black Friday was not the unmissable promotional event of the winter shopping season that previously seemed.
“We found customers came aboard but didn't stick. They shopped in the promotional period of Black Friday, and we never saw them again,” he revealed. “They didn't transact in the way that we would like, through opening a credit account and then building loyalty with us. They just had a single cash transaction. We just didn't see the behaviours that we wanted and yet we were paying a premium to advertise in that time. So, we stepped away from some of that investment in Black Friday.”
Data provides evidence for C-suite decisions
The upshot of taking a data-driven approach has been a more efficient media mix that has enabled the company to establish how best to reawaken lapsed customers, find new shoppers and also introduce existing customers to new shopping categories. The latter discovery on its own was summed up as a potential for a £5m sales uplift.
Just as importantly, for Chalmers, it also enabled the marketing team to have conversations at board level that were led by data and insight, rather than gut feeling.
“If you’re around the board table being challenged to reduce spend, you have to have the evidence and the fact-based science to get it done,” he said. “And that's where the conversation really does start to change, because we have become far more evidence-based, rather than just hypothetical.”
The Festival of Marketing session drew to a close with Chalmers encouraging marketers to take a data-led approach to customer and marketing-mix insights. And when they do, they should not expect instant results from every test activity; they need to accept that not every project will bear fruit.
“Marketing is science, it demands investment that allows you to prove efficacy and develop measurement criteria,” he concluded. “The truth is 80% percent of the value will come from 20% of the initiatives.”
Kelly agreed with the sentiment, urging delegates to not expect amazing result with every experiment. A constant dedication to continual improvement is what is needed, because those who limit themselves to a low number of projects, expecting revelations at every turn, will be disappointed.
“A really good way to think about think about the way you approach marketing, and the way that you improve it, is around marginal gains,” she summed up.
“It doesn't always have to be about a big change in strategy, or a pivot. Actually the way the Great Britain Olympic cycling team prepared for London 2012 was to improve every part of riding a bike by about 1% and the aggregate of that was extraordinary. So I think it's really similar for marketing. It's actually looking at what we're doing and how we improve each part, whether that's targeting or timing or the right content.” ◆