Vitamin retailer Australian NaturalCare receives healthy boost from SAS®
Australian NaturalCare Products knew it was sitting on a gold mine with its 24 years of customer data, but was finding it increasingly difficult to harness the value in the data.
We went from having no analytic capabilities to building models within four weeks of implementation. This has had a direct impact on our entire business.
Head of eCommerce, Australian NaturalCare
The retailer is now using SAS to dramatically improve its marketing campaigns, and is taking advantage of the insights gained from an earlier move to online retailing and recently launched customer loyalty program.
Australian NaturalCare Products (ANC) is a medium-size online retailer of vitamins and supplements with an active database of 120,000 customers – those who have made a purchase within the past 12 months.
Lack of standardised data
ANC realised that while it had a lot of information about its customers, it didn't have the right tools to be able to make cross-references for informed decision making. Its Head of eCommerce, Maurice Cicero, says previously the company used only Access databases and spreadsheets with multiple data sources.
"We didn't use any analytics, so we couldn't easily look at the buying trends of our products," he says. "There were no finite sets of reports to analyse the data, and staff had different versions of data on their desktop. The volume of data we were receiving was getting too much to do anything with."
In mid-2012, ANC decided to find a solution to its data challenges and approached SAS for assistance.
ANC chose SAS® Enterprise Miner™ to help reach its objectives. “I knew there was much we could learn from the data, especially around the product life cycle, and from this we could produce propensity models with SAS,” Cicero says.
Increasing conversion rates and time savings
Propensity models are used to identify customers most likely to respond to an offer, or used to focus retention programs on customers most likely to churn. A model can be applied to a company's database to score all customers and select those who are most likely to display the predicted behaviour.
"A key capability has been identifying the product buying cycle across the life cycle of the customer," Cicero says. "If a customer buys a product, we can identify likely future trends associated with that product and use this information to suggest a related offer to the customer. This enables us to use our data to cross-sell or up-sell, which we couldn't accurately do before."
Cicero says the models allowed ANC to quickly realise the effectiveness of its campaigns. “One cross-sell campaign previously had a 5.8 percent conversion rate, and in the first campaign using the analytical propensity models we were able to increase that to 8.35 percent – a growth of 43 percent in the conversion rate,” he says.
Staying power of SAS®
Another service that ANC offers customers is the ability to sign up to a regular delivery program. By joining the program and locking into a regular delivery, customers benefit by receiving discounts. Cicero says this program is important for ANC as it provides the company with assumed revenue.
Using SAS, ANC built an analytical model to identify customers that might be likely to leave the program.
"In January 2013, we predicted 1,065 customers were likely to cancel out of the program, so we built a retention campaign for those customers," Cicero says.
"We contacted 394 in the first week, and 360 took up an incentive to stay with the program. That's a success rate of over 90 percent."
The impact of this campaign was clear when 114 of those identified customers who hadn't yet received the incentive call cancelled from the program that week.
There have been other benefits since the implementation, including the replacement of all previous reporting methods with SAS. Cicero says there is now one set of reports used across the business so everyone is looking at the same data, which he says in itself has translated into resource savings.
"Previously it used to take a couple of days to produce the end-of-month reports, but now it is automatic and almost immediate," he says.
Outcomes in 4 weeks
According to Cicero, the implementation was very straightforward.
"We had training with a SAS trainer and this enabled us to overcome any challenges or uncertainty we had about having never used analytics before," Cicero says. "Within four weeks we were building analytical models that were having a direct impact on our marketing campaigns."
He says one of the key benefits since implementing SAS is that ANC can better understand its customers and can tailor messages that are specific to them.
"Our promotions are now customer-specific and around trends and seasons," he says. "We can also cross-sell as well as up-sell to customers and predict if any are likely to churn so we can take measures to prevent it happening."
The level of support from SAS is also something that ANC is happy with.
"If we ever have an issue we get an instant response from them," Cicero says. "We have taken the results we've been getting from SAS to board level to report on the wins and everyone is pleased. We went from having no analytic capabilities to building analytical models within four weeks of implementation. This has had a direct impact on our entire business."
Australian NaturalCare Products needed an analytics solution to better understand its customers, determine what additional products to offer, customise marketing messages and prevent customer churn.
SAS is enabling ANC to provide tailored messages to each customer to cross-sell and upsell additional products. Customer churn has been reduced because of proactive retention campaigns seeing up to 90 percent success rates. Using SAS, ANC has saved time and improved accuracy in its reporting.