May 20, 2010
Case Study

How Segmenting by Best Customers Raised Revenue 300%

SUMMARY: Although economists see the recession waning, the recovery is expected to be long and slow. In this environment, email marketers need programs that maximize the revenue potential of customers who are spending again.

Read this classic Sherpa case study to see how one team boosted email-generated revenue 322% by targeting recent big spenders in their database. They created a new segment based on purchases, developed a preferred-customer program, and created post-purchase offers to generate additional conversions.

"We didn't want to be the service that says, 'Here, buy a ticket and you'll never hear from us again,' " says Mark Hodes, SVP, Customer Marketing, "We wanted to be viewed as the provider of the entire experience."

In short, Hodes realized that his firm needed to do a much better job of using their inherent chances to communicate with top customers -- not just before the sale but also at key junctures leading up to the entertainment event -- and after it.

Hodes and his team had built a large national database of customers for sports, theater, film and musical events, but their email campaigns were underperforming. So, early last summer, they began thinking about ways to shake up the program.


"We redesigned to make our email more representative of the playfulness of the brand," Hodes says. "We cleared up the call to action and got rid of stock photos in favor of images we had commissioned ourselves. Then, we had to also make our [targeting] more effective."

Tactic #1. Segment best customers

Hodes wanted to create more targeted versions of their general newsletter, called Insider. After performing an RFM analysis (recency/frequency/monetary value) in July, they developed the InCrowd program.

Frequent customers who spent $1,000+ in the prior 12 months were placed into three groups:

o Reserved ($1,000 and up)
o Club (at least $3,000)
o Skybox ($8,000 per year)

Tactic #2. Incentivize best customers

Next, they sent these customer groups a notification email informing them that they could be elevated to an exclusive group for special offers:

- Reserve members -- free overnight shipping
- Club members -- free shipping, along with access to an exclusive toll-free customer care number for specialists, who were billed to aid in the "perfect entertainment experience"
- Skybox members -- all options mentioned above, plus "first-class" 24/7 concierge services for all travel and accommodation needs

Tactic #3. Target the big spenders

To maximize the new segments, they added an algorithm-based program that cross-referenced static and fluid elements. This meant that recipients received offers based on what InCrowd group they belonged to, past purchases and clickthrough behavior. Insider customers were also targeted, but they received different products/services/content opportunities.

For instance, if an InCrowd member from any of the three tiers and an Insider member bought the same-day ticket for a Chicago Cubs game last year and again this year, they both received emails after their latest purchase: the InCrowd member received an offer for box seats to future games, while the Insider got a ticket in his/her typical price range.

Tactic #4. Pre-event messaging

Hodes and his team also programmed the system to send occasional offers after the time of purchase leading up the event. Not only were they looking to increase sales, but also to heighten customer dialogue. Most customers received three emails, depending when they made their purchase:

- Immediately after purchase -- basic order confirmation
- Two to four weeks before the event -- reminder offering dinner reservations, hotel rooms, concierge service, limos and T-shirts featuring the band/performer
- Two days before -- similar add-on offers as in the email that went out a month before, plus weather forecasts, driving directions, parking information, pictures of the venue, seating chart and, perhaps, a link to a positive review of one of the group's prior performances

Hodes wasn't afraid to use free resources, such as and Google Maps, for some of these features, but they also struck affiliate partnerships with, and other sites, as well as regional/national limo and concierge services.

"It wasn't overly difficult to organize content and upsell partners because of the nature of the Internet. But, really, we were much more interested in the [CRM] aspect of this program to begin with."

Customers who bought a ticket less than a month before the event received only two messages.

Tactic #5. Viral + reviews - post-event follow-up

TicketsNow also segmented according to preferred genres in music, movies and theater shows and favorite sports teams. So, naturally, post-event messaging offered an opportunity to get customers involved as a community.

Within 24 hours after each event, both InCrowd and Insider customers received "Remember & Share" emails, letting them read user-generated reviews in the text box and click through to contribute their own. They were also encouraged to forward the content to friends, an element designed for CRM and viral reasons.

"We wanted the customer to share their experience with our Web community as much as possible," Hodes says.

Evidently, TicketsNow's best customers enjoy their preferred status.

Since putting Skybox, Club and Reserved files into play, revenue generated from email is 322% higher compared to earlier campaigns. Repeat customer numbers have noticeably jumped month after month.

"We have grown our email marketing program without a lot of high-end sophistication," Hodes says. "InCrowd has been performing at a higher level for clickthroughs and sales conversion when compared to less targeted and relevant email communications."

Complaints and/or opt-outs have been nonexistent in reaction to the Skybox, Reserved and Club memberships. In fact, members must be spreading the "Remember & Share" emails because their subscriber list has grown 87% in the last year.

"We are getting customers to become more and more engaged all of the time," Hodes says. "We've basically been able to use them [with permission] as testimonials about the specific benefits of InCrowd."

They’re also seeing the CRM and engagement effects they were looking for. On average, 20% of those who read customer reviews in the email or on the website add comments of their own. That rate is experiencing an upward trajectory as more people learn what is included.

"I think it proves that more [targeted] email can only help keep people engaged and keep them more active as repeat customers," Hodes says.

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