Impact

• Effective deployment of personalized promotions – An estimated $10M in annual incremental revenue was unlocked


- Customized storefront promotions resulted in promo spend savings


Problem Statement and Challenge

A global entertainment company wanted to increase the yield in transactions every time a customer visited their retail rental store. They wanted to achieve this by displaying personalized promotions instead of the same offer value, as the existing non-customized solutions often indicated potential revenue loss.

Approach

TheMathCompany worked with the client to personalize basket stretch offers. Rental stretching offers were shown only to relevant customers, and customers who would transact these offers even without the promo did not receive these recommendations at the time of transactions. 

Solution

To target customers with personalized offers,

• Binary classification of customers was undertaken, with the entire customer base divided into two main groups: Single disc and Multi disc renters

• Patterns were identified among multi disc customers to create different buckets and tie back to the exact specific behaviours shown by these customers

• In addition to classifying multi disc customers, single disc renters who were similar to multi disc-renting customers, based on historical patterns and transactional behavior, were identified to expand the customer base

• Renters were then shown customized promo values based on the highest propensity to rent extra discs – ‘Basket Stretch’ (cross-sell) or increase extra nights and ‘Personalized Multi Night Pricing’ (up-sell)

• Customers were shown different offer combinations – the Solo offer (either of the Basket Stretch or PMNP offer) or Dual offer (choice between Basket Stretch and PMNP offer), thereby exposing high-propensity valuable renters to different offer experiences and allowing them the freedom to choose

• A weekly refresh of the model was done by capturing the recent behaviors of renters as well as by allowing the flexibility of movement of customers to multi disc buckets


Conclusion

A revenue management approach at the storefront enabled different offer experiences for relevant customers who visited the storefront, which in turn helped the organization increase its revenues and save on promo efficiently.

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