Optimize Customer Retention Strategy Resulting in $2M Incremental Revenue
Vitamin Shoppe was using a flawed customer targeting model for its direct mail marketing campaigns. The model used poorly designed independent variables and an unsophisticated tree-based classification schema for audience selection. Classification resulted in creating three target classifications, but no integrated selection criteria to produce an optimal selection for the overall mailings. Utilizing direct marketing retention programs based on this solution, customer interaction increased by 4% resulting in $2 million of incremental revenue. In addition, the cost of customer retention programs decreased by 46% through improved communications targeting high-potential value customers.