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Ace Hardware pinpoints $183 as lifetime value of mobile opt-ins

February 28, 2014

Ace Hardware uses an in-store offer to build its opt-in database

Following efforts to build a database of mobile opt-in users, hardware store chain Ace Hardware has been actively remarketing to the list, helping it determine that the lifetime value of these customers is $183.60.

While a growing number of merchants are leveraging SMS opt-in programs for delivering offers to loyal customers, the best practices when it comes to frequency and type of offer are still being determined. Ace Hardware has been at the forefront in this area, serving as the first retailer to test a new program last summer for tracking mobile coupons from discovery to redemption, resulting in a 49 percent redemption rate.

“The marketer wants to figure out how do they grow, engage and convert and measure their mobile audience,” said Adam Lavine, CEO of FunMobility, Pleasanton, CA. “Growth is all about effective incentives for your particular customer to build that list.

“Engage is what are the sort of offers or experiences you want to send to them,” he said. “If you want to have a brand conversation with your customers that is not all about, ‘Hey, buy this,’ it is fine to send them offers that are of interest and relevant, but it is also important to engage them so you have a conversation with somebody and not just a sales pitch.

“Then it’s about what offers convert the best and how do you measure the effectiveness of those conversions.”

FunMobility powered both the initial pilot program that run last summer as well as the remarketing strategy that has been running since November of 2013.

Deeper engagement
Following the pilot program, Ace Hardware wanted to build its opt-in list even more as well as go deeper on engaging customers in the store and driving them back to the store using mobile.

To accomplish this, Ace Hardware delivered an in-store mobile circular offer starting in November that gives customers a way to swipe between different offers. Included is a coupon offer of between $10 and $25 off a $50 purchase as an incentive to opt-in.

For the analytics, FunMobility focused in on three stores in particular that all offered a $25 coupon, finding that the strategy drove an average of 503 new subscribers per location per month.

The promotion has been running for the past four months, with the average cart size jumping from between $18 and $20 up to $93 during this period.

When Ace Hardware then remarketed to these opt-in customers, they spent an average of $45.

Timed mobile coupon
The remarketing strategy featured a new timed mobile coupon that includes a count-down clock to give customers an added sense of urgency.

An offer was presented only to the opt-in mobile list for 50 percent off a $30 purchase. It was sent at 4 p.m. on Friday, Jan. 24, and expired on Sunday, Jan. 26, at 5 pm.  Recipients had 12 hours to use a coupon once they activated it.

Since not all Ace Hardware stores were participating, recipients could also click on a button below the coupon to view a store locator showing the nearest location where the coupon was valid.

Out of all the people who received the promotion, 11.2 percent clicked on the offer, and 5.9 percent of these went into the store and redeemed the offer.  Additionally, 2.9 percent of recipients opted-out.

FunMobility determined that the campaign revenue per opt-in was $2.70 by looking at the total revenue generated and the number of subscribers.

Based on the churn rate, FunMobility extrapolated that the average lifetime of a customer in the program is 34 months. From there, it multiplied $2.70 by 34 by two – the number of campaigns per month – to come up with a lifetime value of $183.60 for customers opted in to the program.

“Here the best practices are to provide incentives to grow your list and then send promotions that the customer finds engaging and relevant,” Mr. Lavine said.

“Assess the effectiveness of that through some typical metric like click-through, but also look at coupon redemption rates, opt-out rates and the value of subscriber and try to grow that over time,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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