Sam's Club Drills into Data with Targeted Offers
New York — As technology continues to drive increased consumer expectations of retailers, Sam’s Club found an opportunity to both satisfy its members and boost revenue by leveraging its unique data capabilities. “Every single transaction that happens in the club or online, we know about,” Adrien Fung, vice president of online engagement at Sam’s Club, said in March during a presentation at the Shopper Marketing Summit. “Because we’re a membership organization, our members know we have all of this data, and they expect us to do something with it.”
Pointing to a survey from the CMO Council, Fung noted that utilizing personalized and enriched content results in stronger response and engagement rates – factors that ultimately affect loyalty and retention.
Although the retailer was reaching a mass audience through its Instant Savings program – a periodic mailer containing several hundred exclusive offers – it couldn’t consistently present the most relevant offers and items to key members through the print medium. “We wanted to figure out how to tie all the capabilities we have in terms of data personalization and the different ways of reaching our members to an actual incentive,” Fung said.
This insight led Fung and his team to turn to Chicago-based Triad Retail Media, which already had an 11-year history creating digital and personalized content for the retailer, such as its Sam’s Club Kitchen live video program. Working together, and with the help of suppliers, they created a program dubbed “targeted incentive offers.”
The program uses the first-party data collected from member trips or online visits and aggregated on the Walmart Exchange (WMX) platform to define audience segments such as look-alike members, new members to a category, or those lapsed in a category.
Suppliers can then utilize an optimized digital media mix, including email, web and mobile, to send these groups of members specific incentives intended to drive key purchase behaviors. With such a targeted audience, the incentives can often be deeper while avoiding what Fung called “passive redemption.”
In one case, frozen food manufacturer Foster Farms sought to gain buyers from a recently discontinued brand, while Sam’s Club hoped to keep its members from looking elsewhere for the product. To incentivize purchase of Foster Farms items, the retailer sent purchasers of the old brand a $3 off coupon. The offer saw a higher-than-average 7% redemption rate and a 38% repurchase rate within three months.
“We saw repeat purchase behavior, which drives the loyalty component.” Fung said. “We got them to try it once, and they came back and kept buying it.”
The retailer also worked with Unilever to target lapsed buyers – individuals who had purchased its product in the past year but had stopped in the last 90 days. In addition, the manufacturer wanted to build affinity for its other brands. To achieve both these goals, Sam’s Club sent target members a $1.50 coupon on a portfolio of brands using its website, email and mobile. This offer led to a 47% repurchase rate and a larger basket size for the retailer because multiple brands were involved.
Ultimately, the offer drove $3.2 million in incremental sales over a three-month period with a campaign spend of just $90,000. “That’s a huge ROI, and a massive win for the supplier,” Fung said.
Fung said monitoring the results of these campaigns was essential to its success and that the retailer continually optimized the media mix used and the members targeted to maximize the impact of the offers.
“As we continue working at Sam’s Club, we’re constantly thinking about all the digital experiences we have, and how we can maximize these experiences both to satisfy member needs but ultimately also to drive the types of behaviors we want,” Fung said.