Endeavour Group has revealed it's adopted a Netflix and Spotify style approach to marketing.
The owner of Dan Murphy’s and BWS revealed details of the new strategy at Oracle Modern Cloud Day.
Held in Sydney this week, the conference focused on the future of cloud technology and digital innovation.
Guest speaker Andy Sutton, Endeavour Group head of data and personalisation told attendees that relying on predictive repeat purchases was no longer cutting it in an increasingly competitive market.
“Netflix doesn’t recommend the same thing to you over and over again," he noted. "If you’ve watched the film, you won’t get it recommended again.
“There are multiple ways you can classify things being the same. So, what we’re trying to do is bring up that Netflix or Spotify to wine and do something similar. That’s our goal.”
The change of direction was prompted when Sutton got a call from the CEO asking why he'd been downsold on an $80 bottle of wine.
Sutton recalled: “If people like the CEO were buying $90 bottles of shiraz, why did they receive the same $10 wine promotion as everyone else, essentially downselling them by $80 every time they received an email?”
Sutton said the company now targets its audience segmentation more closely, by “distinguishing between premium, mainstream and budget customers”.
“Just by implementing things like a price plans so that you’re selling within a certain range and certain [wine] varietals rather than across the whole spectrum of prices you could offer… it’s a dramatic uplift not just in the response we’re getting, but also in the customer experience,” he explained.
Endeavour also wants to bring new products to the notice of customers based on their preferences.
For example, Dan Murphy’s stocks approximately 5000 varieties of wine, which can make it difficult for customers to discover new products. The company's discovery engine bases suggestions not just on similar flavours and brands, but also grape varieties and wine regions.
Choosing a craft beer is also becoming increasingly complicated in a crowded market, not to mention craft spirits.
The strategy is being rolled out via email marketing. My Dan’s, for example, has 3.8 million members, with around 70,000 new customers joining each month.
New strategy already boosting sales results
Sutton says the company is already seeing an uplift in sales from collating drink recommendations each week from members.
“When we send emails with a model behaviour in them, we generate about 20 cents per email,” he said.
“When we send no model - just spam - we get more like six cents per email, which is three and a half times difference which has huge implications for us in terms of how we generate our revenue.”
Sutton said that around 80% of rewards members have signed up to receive emails, meaning a single automated, personalised campaign could potentially reap over over $600,000.
Noting when customers buy
The company also started paying attention to when people bought things.
“If you’re a customer and you buy a bottle of gin, then previously we would have promoted that to you every time a bottle of gin was on offer, which could be every week.
Now, if someone only buys one bottle of gin a year, they only receive promotions for gin once a year, “kind of on the anniversary of when you buy it”.
Additionally, there's a focus on the seasonality of products with marketing.
“Some of our products are very seasonal - so people tend to buy beer in the summer, they tend to buy wine regularly, red wine in the winter, they tend to spike at Christmas, Father's Day and Easter - and all of those things weren’t taken into consideration when we were building our [original] algorithm,” Sutton said.
The next frontier for Endeavour marketing
There are also plans to bring the strategy to its websites and also to have the engine work in real-time and in-store.
“Once we’ve rolled that out, we’ll roll it into other channels – into our online channels, we can personalise the online journey and ultimately into stores,” Sutton said.
“If you’re a customer and you walk into store, your phone triggers a beacon in the store then we can push you a recommended product based on what we think you’re going to buy next.”
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