Crocs is a world leader in innovative casual shoes for men, women and children, offering more than 300 footwear styles. All Crocs™ shoes feature Croslite™, a proprietary, revolutionary material that gives each pair of shoes soft, comfortable, lightweight and odor-resistant qualities.
Crocs has always had a data-driven, customer-centric approach to marketing. Since its inception in 2002, Crocs experienced incredible growth worldwide, selling more than 200 million pairs of shoes in more than 90 countries, and reaching $1 billion in revenue in 2011. Customers and transaction data grew at breakneck pace, as well as the breadth and complexity of Crocs’ marketing activities.
In 2014, the Crocs marketing team was given the mandate to transform Crocs’ online business by becoming less reliant on promotions and discounts. The team was excited by the opportunity to improve Crocs’ profitability. At the same time, the marketing team knew plenty other companies that reduced or eliminated promotions and were faced with customer dissatisfaction, increased churn, and shrinking revenue.
The Crocs team decided to take an analytical, test-based approach to promotion optimization. Early on, they realized that customer segmentation might hold the key to success, and set off to answer the question: How can Crocs reduce the reliance on promotions by reaching out to the right customer, with the right message, at the right time?
Crocs partnered with Custora to implement a gradual, data-driven promotion strategy. The team decided to start by testing and optimizing promotions aimed at customers who were showing signs of churn.
Crocs worked with Custora to chart a promotion testing plan, with the understanding that it was not possible to turn off the valve on discounts on day one. The goal was to test and find price sensitive (and insensitive) customer segments within the customer database, and communicate with them accordingly.
Using Custora, Crocs tested several messages across four different churning customer segments: From customers just showing initial signs of “fading away,” to deeply attrited, or “lost” customers. Some “win back” messages included promotions, while others did not. Custora integrated with Crocs’ email marketing platform to enable automated A/B testing and email setup for the different segments and messages.
The first round of testing discovered huge swaths of customers who were responsive to a relationship-based win-back messaging that did not include any promotional discount. These customers exhibited a lift of 2X in revenue per user compared to a control group that did not receive any email.
The tests also uncovered the optimal discount percentage for other customer segments, where offering a promotion resulted in positive ROI. The winning versions of these tests will be automated through email campaigns administered by Custora through Crocs’ email platform.
These campaigns have now been running for over four months, generating combined incremental revenue that represents a 10X ROI for Crocs.
Thrilled by the results, the team is now implementing the next phase in its quest to find the perfect promotional strategy. In this phase, Custora will create and maintain a “price insensitive” customer segment within Crocs’ email platform, to ensure these customers are not emailed promotions and discounts in any type of email campaigns, not just win-back.