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Objectives, Messages, and Incentives

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Objectives, Messages, and Incentives

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Objectives, Messages, and Incentives

  1. 1. S Objectives, Messages and Incentives Abby Rudd Anchie Chen Jane Flis Prakarsh Gupta
  2. 2. The Popcorn Factory • Founded in 1979 • “Specialize[s] in fresh- popped popcorn in a variety of exclusively designed tins and packaging…” • “Provides crowd-pleasing gifts and great-tasting snacks…” • Online purchasing platform • Part of the 1-800-Flowers Family of Brands
  3. 3. Business Problem • The Popcorn Factory is experiencing declining revenues of -8.7% over the two-year period contained in the database. $4.30 $4.40 $4.50 $4.60 $4.70 $4.80 $4.90 $5.00 $5.10 Year 1 Year 2 Millions Revenues -8.7%
  4. 4. Overview of B2B vs. B2C Customers B2B Customers Number of Customers 6,195 Average Length of Relationship 311.74 weeks Average Recency 56.98 weeks Average Frequency 2.22 Average Revenue Per Customer $389.35 Total Revenue $2,399,949.36 B2C Customers Number of Customers 93,805 Average Length of Relationship 170.78 weeks Average Recency 56.04 weeks Average Frequency 1.65 Average Revenue Per Customer $76.38 Total Revenue $7,138,255.84
  5. 5. Marketing Objective S The marketing objective is to increase the Popcorn Factory’s revenue by 5% in the next four quarters. S Current (Year 2) Revenues – $4,551,996.66 S Desired (Year 3) Revenues – $4,779,699.86
  6. 6. S B2B Cluster Analysis Review We selected our target segments from the cluster analysis we completed. The cluster analysis segments allow us to find more nuanced information about our customers based on commonalities among customers as opposed to commonalities among variables (revenue and recency). The following slides provide a review of our cluster analysis.
  7. 7. B2B Cluster Breakdown
  8. 8. B2B Clusters Year-Over-Year Change in Revenue 2012 vs. 2013 • Declining Revenue • Cluster 1 – -95% • Cluster 4 – -66% • Top Performers – - 8% • Increasing Revenue • Cluster 2 – 235% • Cluster 3 – 61% • 2014 revenue is not for full year Top Performers
  9. 9. B2B Cluster Analysis Summary B2B 1 B2B 2 B2B 3 B2B 4 Top Performers Number of Customers 796 2,306 1,490 1,553 19 Total Revenue $498,980.81 $181,263.56 $1,361,515.07 $82,941.29 $275,248.63 Average Revenue $626.86 $78.61 $913.77 $53.41 $14,486.77 Average Recency 91.87 weeks 36.27 weeks 35.42 weeks 90.38 weeks 50.56 weeks Type of Customer Inactive Customer Higher Value Active Customer Lower Value Active Customer Higher Value Inactive Customer Lower Value Top Performers Note Regarding ‘Summary of Clusters’ Chart S Active Customers – Defined as a customer who last purchased in the time period less than the mean (57 weeks) S Inactive Customers – Defined as a customer who last purchased in the time period greater than the mean (57 weeks) S Higher Value – Defined as a customer whose average revenue exceeds the average B2B customer revenue ($389.35)
  10. 10. S B2C Cluster Analysis Review We selected our target segments from the cluster analysis we completed. The cluster analysis segments allow us to find more nuanced information about our customers based on commonalities among customers as opposed to commonalities among variables (revenue and recency). The following slides provide a review of our cluster analysis.
  11. 11. B2C Cluster Breakdown
  12. 12. B2C Clusters Year-Over-Year Change in Revenue 2012 vs. 2013 • Declining Revenue • Cluster 2 – -53% • Cluster 4 – -72% • Increasing Revenue • Cluster 1 – 174% • Cluster 3 – 1095% • Top Performers – 49% • 2014 revenue is not for full year Top Performers
  13. 13. B2C: Summary of Clusters B2C 1 B2C 2 B2C 3 B2C 4 Top Performers Number of Customers 24,022 21,981 34,501 12,903 53 Total Revenue $3,871,685.42 $602,583.43 $1,145,951.60 $1,383,849.11 $134,186.28 Average Revenue $161.17 $27.41 $33.22 $107.25 $2,531.82 Average Recency 33.99 weeks 90.77 weeks 36.74 weeks 89.43 weeks 51.3 weeks Type of Customer Active Customer Higher Value Inactive Customer Lower Value Active Customer Lower Value Inactive Customer Higher Value Top Performers Note Regarding ‘Summary of Clusters’ Chart S Active Customers – Defined as a customer who last purchased in the time period less than the mean (56 weeks) S Inactive Customers – Defined as a customer who last purchased in the time period greater than the mean (56 weeks) S Higher Value – Defined as a customer whose average revenue exceeds the average B2C customer revenue ($76.38)
  14. 14. Target Markets S B2B 1 – High Value Inactive Customers S These customers have experienced declining revenues from 2012 to 2013; this is due to their inactivity with the company. S It is believed that if these customers can be brought back to the company that they can be just as, if not more, valuable than before their hiatus. S Goal: Bring these customers back; get them to purchase again. S B2C 3 – Low Value Active Customers S These customers have experienced revenue growth resulting in 2013 revenues being 10 times those in 2012. S It is believed that there is an opportunity to increase the average spending of these active and newly acquired customers. S Goal: Get these customers to spend more.
  15. 15. Current (Years 1 and 2) # of Customers 796 Average Order Amount $626.86 Average Amount Per Order $368.74 Frequency 1.7 Total Cumulative Revenue $2,399,949.36 Total Year 2 Revenue $1,039,282.07 Achieving the Marketing Objective Through B2B Customers At End of Next Four Quarters # of Customers 796 Average Order Amount $626.86 Average Amount Per Order $368.74 Frequency 1.96 Increase in Revenue $76,329.42 Total Cumulative Revenue $2,476,278.78 Total Year 2 Revenue $1,115,521.49 We will get 26% of B2B 1 customers to purchase one more time in the next four quarters (one year), which increases the frequency for these 207 customers to 2.7.
  16. 16. Behavioral Objective B2B 1 S Increase the frequency or purchases by one for at least 26% of B2B customers in Cluster 1 (796 customers) over the next four quarters. Because the average revenue per purchase for B2B Cluster 1 customers is $368.74, this will yield an increase in revenue of $76,329.42
  17. 17. Communication Objective B2B 1 S To increase by 10% the belief that gifting popcorn to your clients/customers and your employees can increase your business as measured by the company’s annual customer survey. S To high value inactive customers, the Popcorn Factory is the leading provider of premium popcorn products that offers the widest variety of corporate-gifting popcorn arrangements because of the creative and custom packaging designs, fresh ingredients, and variety of flavors.
  18. 18. Message and Incentive B2B 1 S Email campaign encouraging for customers to purchase themed gifts (towers, popcorn, samplers) because B2B customers purchase for events such as internal meetings/celebrations, employee appreciation and holidays as well as client-relationship maintenance. S Promotional offer giving free shipping on purchases between October and January (peak holiday season). S Deliver promotional code with order confirmation guaranteeing customers 10% off on purchases made within 30 days.
  19. 19. Current (Years 1 & 2) # of Customers 34,501 Average Order Amount $33.22 Average Amount Per Order $25.55 Frequency 1.3 Total Revenue $7,138,255.84 Total Year 2 Revenue $3,512,714.59 Achieving the Marketing Objective Through B2C Customers At End of Next Four Quarters # of Customers 34,501 Average Order Amount $42.00 Average Amount Per Order $32.31 Frequency 1.3 Increase in Revenue $151,463.78 Total Cumulative Revenue $7,289,715.23 Total Year 2 Revenue $3,664,178.37 We will get 50% of B2C 3 customers to purchase one more time in the next four quarters (one year), which increases average revenue for these 17,251 customers to .
  20. 20. Behavioral Objective B2C 3 S Increase the total spending per customer by $8.78 for at least 50% of B2C customers in Cluster 3 (17,251 customers) over the next four quarters, yielding an increase in revenue of $151,463.78
  21. 21. Communication Objective B2C 3 S To increase by 10% the belief that popcorn is the best gift for special and everyday occasions as measured by the company’s annual customer survey. S To low value active customers, the Popcorn Factory is the leading provider of premium popcorn products that offers the widest variety of popcorn arrangements because of the creative and custom packaging designs, fresh ingredients, and variety of flavors.
  22. 22. Message and Incentive B2C 3 S Promotional offer granting customers free shipping on orders above $100. S Free tin or packaging personalization on one item with orders of $55 or more. S His and hers bundles offered in the month of February and promoted through email campaigns. S Message: “Make every occasion a special occasion.”
  23. 23. Total Revenue - Years 1 & 2 + Next 4 Quarters Total Revenue – Year 2 $4,551,996.66 B2B Revenue – Year 2 $1,039,282.07 B2C Revenue – Year 2 $3,512,714.59 Total Increase in Revenue – Next 4 Quarters $227,793.20 B2B Revenue – Next 4 Quarters $76,329.42 B2C Revenue – Next 4 Quarters $151,463.78 Total Revenue $4,779,789.86 Achieving the Marketing Objective Percentage Increase 5% of Year 2 Revenue $227,599.83 4-Quarter Increase in Revenue Over Year 2 $227,793.20
  24. 24. Summary Remarks • Cluster analysis allowed us to see the commonalities among customers in each cluster. • Using this data, we were able to establish different behavioral (increasing frequency or increasing revenue), communication objectives as well as messages and incentives for B2B 1 and B2C 3. • By achieving these goals, we can achieve our marketing objective of increasing revenue by 5%.

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