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Optimizing a Direct Marketing Campaign

The Company

A top 5 North American cable company that historically relied heavily on direct marketing campaigns to cross-sell additional products to existing customers

The Challenge

The marketing team tried two versions of a direct mail program: high-frequency and low-frequency, but could not determine if the higher frequency campaign was worth the added cost.

The Solution

The cable provider turned to APT’s Test & Learn™ software to help isolate the impact of the high-frequency program. Customers receiving the high-frequency version were deemed “test” customers and customers receiving the low-frequency program were deemed the “control pool.” Test & Learn™ matched test customers to a customized group of customers in the control pool.

The software showed that customers receiving the high-frequency campaign had 1.5 more adds per 1,000 customers contacted than the customized control group. Next, Test & Learn™ automatically segmented the results across thousands of dimensions to determine with which customers the high-frequency campaign was most profitable.

The client was surprised to see that a large majority of the incremental adds came from just a small percentage of customers. By targeting the high frequency campaign to the top customers, the company had minimal revenue loss and significant profit improvement. Across ten campaigns per year that the client ran, this first component of the go-forward strategy recommended by Test & Learn™ generated $2.7MM in annual incremental profit for the client.

Going beyond targeting, Test & Learn™ also identified opportunities to tailor the program based on message and offer type. One message proved to generate an additional $1 in ARPU in the 6 months after the campaign was launched – focusing on this message going forward generated an additional $1.5MM in incremental annual profit.

Finally, Test & Learn™ showed that that the higher-priced offer did not have a statistically different response rate than the lower-priced offer; offering the higher price point would drive $2MM in additional profit for the client.

The Results

The client generated over $6MM in annual incremental profit by targeting and tailoring its direct mail efforts. The company continues to use Test & Learn™ to improve offer type, frequency, and messaging.
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