How Benetton launched an omnichannel loyalty program with product recommendations based on machine learning and cross-channel communications

18 Sep ‘19

My name is Andrey Medvedev, and I automate marketing. I’m going to tell you the Russian divisions of the United Colors of Benetton brand launched the Color Club omnichannel loyalty program. The loyalty program operates in 17 offline points and online with multi-channel product recommendations based on machine learning, 19 automated email campaigns and SMS channels, as well as virtual wallets for Android and iOS devices. With the help of Color Club, they earned several million rubles of additional revenue over three months relative to the control group. Get ready for the long read! 🙂

We are proud that the Russian team became the first world’s first United Colors of Benetton division to launch an omnichannel loyalty program that works simultaneously online and offline. Opinions on the work done are shared by the Ecommerce Director of United Colors of Benetton Russia, Alexander Vologodsky, and his colleagues.

United Colors of Benetton

BenetonUnited Colors of Benetton is a clothing manufacturer from Italy. They hold six thousand stores in 120 countries. In Russia, United Colors of Benetton has dozens of retail locations. Its online stores are based on «Bitrix», the back office on «1C».

Backstory

A year ago, the marketing of our colleagues at United Colors of Benetton was a bit under the weather. Purchases in offline stores were anonymous, so marketers did not know a thing about purchase histories, interests, and preferences of such clients. It was preferable to measure offline deals statistically, but it was unclear how to approach this. Additionally, without a loyalty program, it was impossible to calculate a customer’s Lifetime Value, the number of orders per person, as well as the purchase frequency.

Benetton wanted to reward their dedicated customers with gifts and recommend appropriate new goods that match their preferences. But without purchase histories, this was impossible. A part of the information could be gathered from their online store, but client behavior in offline differs. Additionally, not all offline buyers like to shop online.

We wanted to find a technological solution that would centralize customer data, store purchase data, and set up personal promotions and automated communications in a single window. Moreover, all of this with a reliable measurement relative to the control group.

In other words, colleagues from United Colors of Benetton were looking for a marketing platform that:

  • Could be used as a single hub on customer data for segmenting an audience based on behavioral data in order to run automated communications and personal offers.
  • Can create personalized offers in off and online based on a client’s purchase history and preferences.
  • Can make personalized recommendations based on online and offline sales data.
  • Can be used to set up automated communications through different channels: email, SMS, and virtual wallets.
  • Can measure personal deals relative to the control group.

We stopped on the CDP of Mindbox. Prior to moving over to Mindbox, United Colors of Benetton did not have a loyalty program in place, as well as automated communications. All mailings were sent manually, and it was impossible to segment clients based on offline and online data. Thus, everything was done from scratch.

Results

This is a spoiler section for those who only care about the end results. United Colors of Benetton has several business indicators: share of revenue from direct communications relative to total revenue using the last paid channel method and the added revenue relative to the control group. More on the metrics.

Share of direct communications revenue relative to total revenue from the last paid channel

One of the key features of the CDP for United Colors of Benetton is direct communication via email and SMS. Communication efficiency is measured as a share of the brand’s total revenue. For United Colors of Benetton, direct communications earn 20% of the total off and online revenue. Data from the Mindbox mailing list summary report, attribution is for the last paid channel.

Revenue share from newsletters for period
(relative to all revenue for the period)

Share of newsletter revenue for the period

Added revenue relative to control group

To reliably measure the benefits of a loyalty program, United Colors of Benetton uses Mindbox’s internal control group report. The report shows the difference in added revenue from direct communications regarding customers who do not receive direct communications. The control group was set up in March with the following conditions:

  • The control group contains 10% of the United Colors of Benetton audience.
  • The client has been in the control group for at least 3 months.

The results regarding the online control group (online store) in the segment of the loyalty program participants, demonstrated several million rubles of added revenue with a confidence level of 95%. The share of direct communications revenue is ~ 32% of total online revenue.

The difference in revenue relative to the control group is provided by a higher average customer revenue (ARPU) and greater conversion per order. Please note that even where there is no statistically significant difference, newsletter recipients (main group) are conditionally better than those who do not receive newsletters (control group). The graphs below. As per the client’s request, absolute figures are not published.

Share of revenue from mailings

Share of revenue from mailings

Conversions to orders

Conversion to orders

ARPU growth relative to control group

The increase in ARPU relative to the control group

Offline results are similar. A statistically significant difference in revenue relative to the control group was achieved in only one of six months. However, in the direct communication recipient group, order conversions are significantly higher, with a 95% reliability probability.

Conversions to orders

Conversion to orders

How marketing was automated at United Colors of Benetton

Over the past year, we launched a loyalty program for online and offline, dozens of automated campaigns, connected several communication channels – email and SMS, set up personalization’s of the site and connected personal product recommendations based on machine learning to letters and the site. Product recommendations take into account online and offline customer behavior and make personalized machine learning based collections.

To disclose each block of work in detail, several articles would be required 🙂 Therefore, I will simply go over the omnichannel loyalty program launch, automated campaigns and multi-channel product recommendations based on machine learning. You can read about the personalization of Benetton’s online store in our second article – I will post a link at the end.

Alexander Vologodsky
Alexander Vologodsky,
Ecommerce Director of United Colors of Benetton Russia

«It is important for us to understand who our clients are, what motives them to become our clients, and what can push them away. This is critical for building a brand. Therefore, our main priority for the last two years was to digitize interactions between the client and brand.

This knowledge will help us reconstruct the formulation and procurement processes in terms of collections, more accurately choose an audience and position products, build precise communications and provide additional services to club members. Thanks to the Mindbox team, we as a brand have come closer to our customers.».

Launching the Color Club Loyalty Program

Before launching the loyalty program, United Colors of Benetton marketers drafted the basic rules for the Color Club loyalty program:

  • 1 point = 1 ruble.
  • 500 points for joining the Color Club.
  • Up to 50% of the purchase price can be paid with points.
  • 5% of the purchase price is returned in the form of points.
  • Personal offers for Color Club members.
  • Points can be spent and saved at the same time as part of a single order.
United Colors of Benetton loyalty program rules
United Colors of Benetton loyalty program rules

After drawing up the rules, the launch of the Color Club program was divided into two stages: first offline, and then offline.

Offline loyalty program launch

To start processing the loyalty program and personal promotions in Mindbox, the following was first required:

  1. Integration of Mindbox processing into Diebold Nixdorf cash register software.
  2. Setting up promotions for customers in the interface.
Integration of Mindbox processing into Diebold Nixdorf Cash Register Software
United Colors of Benetton stores
United Colors of Benetton stores
United Colors of Benetton stores

United Colors of Benetton stores

In store cash registers use Diebold Nixdorf software. The integration was carried out by Diebold itself; the whole process took three months, including a pilot launch and bug catching.

United Colors of Benetton register interface screenshot
United Colors of Benetton register interface screenshot

After the integration, United Colors of Benetton marketers were able to set up personalized offers for various customer segments through the Mindbox interface without involving IT specialists. Personal offers are made taking into account previous purchases, as well as models, styles, colors, and sizes.

Setting up promotions for clients in the interface

Prior to launch, we set up the basic loyalty program, altogether we set up 7 promotions at the start: several types of point write-offs for different groups of goods and basic point accruals. Everything is configured via the interface, along with direct communications, which I will discuss below. The screenshots below show Color Club settings within the Mindbox interface.

Basic accrual of 5% of the online purchase costs
Basic accrual of 5% of the online purchase costs
Write-off of up to 30% for a segment consisting of 110 products
Write-off of up to 30% for a segment consisting of 110 products

In total, 17 United Colors of Benetton stores began participating in the Color Club loyalty program. Client authorizations at cash registers, either by mobile phone or virtual card on iOS and Android wallets.

Text message code for authorizations at United Colors of Benetton cash registers
Text message code for authorizations at United Colors of Benetton cash registers
Launching an online loyalty program

The launch of the online Color Club program occurred a few months following the launch of the program offline. To do so, the following was required:

  1. Synchronize and deduplicate offline and online databases.
  2. Integrate Mindbox processing into the back office of the online store.
  3. Create the Color Club site interface: personal accounts, rules, a menu for confirming contacts, etc.
Sync and deduplicate offline and online databases

Prior to integrating Mindbox, United Colors of Benetton stored customer data online only. The Mindbox CDP has become a united repository of customer data: purchase history (offline/online), actions pertaining to newsletters, website activity history. The data is used for personalized promotions and communications.

Data deduplication in Mindbox occurs automatically. Deduplication refers to the automatic cleaning and reconnecting of data. For example, if we’re talking about offline, the date of birth of the client is known, and in online the email, then when downloading info to Mindbox, the platform will automatically merge the date of birth and email into a single client profile.

How United Colors of Benetton uses the Mindbox platform to personalize customer communications
How United Colors of Benetton uses the Mindbox platform to personalize customer communications
Integrating Mindbox processing into the online store back office

The integration of Mindbox processing with the United Colors of Benetton online store was done by OneWay. The integration took about two months. After that, Color Club members were able to earn and spend points online or, for example, accumulate points for offline purchases and spend them in the online store.

Processing provides a data exchange between the online store and Mindbox at all order stages, including the shopping cart. For example, in the shopping cart, a client sees how many points can be spent on the order, and how many there are to earn.

Creating the Color Club site interface: personal accounts, rules, contact confirmation menu

To make it convenient for clients to take advantage of Color Club features, true experts drew and set up the site’s interface: authorizations by phone number, personal accounts with point balances, information about point accruals and deductions.

Color Club point information in the shopping cart
Color Club point information in the shopping cart

In addition to notifications about points in the shopping cart, within the profile of a registered Color Club member, one can see additional information, such as available points, gains, and point usage.

My test Color Club card within my personal account profile on the online store
My test Color Club card within my personal account profile on the online store
Test account accrual history
Test account accrual history

After launching the Color Club loyalty program in offline and online, United Colors of Benetton customers received an omnichannel loyalty program with a unified personal account on the site, a virtual card, authorizations via SMS and the ability to accumulate and spend points anywhere. The United Colors of Benetton team in Russia was able to get to know their customers better, started tracking offline repeat purchases, setting up automated campaigns and personal promotions to increase repeat purchases.

To make participation in the Color Club interesting and convenient, it’s simply not sufficient enough to operate by basic rules: one would want to run personal offers and deals for clients via email, SMS, website and virtual cards, depending on the preferences of individual clients. I am smoothly moving on to the next stage – the launch of cross-channel automated communications.

Ilya Turkin
Ilya Turkin,
United Colors of Benetton Loyalty Program Manager

«For United Colors of Benetton, the loyalty program is not just created to grant privileges to club cardholders, but to provide a whole range of measures to build mutually beneficial relationships with customers in all channels and points of contact between the brand and its clients.

In this regard, it is important for us to get to know our customers as closely as possible in order to develop personalized interactions with them based on purchase histories, interests, communications, and sales channels that are of priority for clients.

We understand that obtainment of this knowledge will allow us not only to increase the LTV of our loyal audience but also offer them the services and privileges that will allow us to build a strong emotional connection between our brand and buyers. This is exactly what UCB is striving for in all regions where it is present.

I am sure that the experience of Mindbox in the field of communication personalizations will allow us to build an effective dialogue with our clients.».

Automated cross channel communications

During the year in which we worked with United Colors of Benetton, 64 automated campaigns were deployed via email, SMS, and virtual cards for iOS and Android wallets were deployed. It makes no sense to dive into each deployment, so I’ll give you a few examples of the automated campaigns from different channels:

  • Email newsletter with points and a QR code for a virtual card and a curious reactivation letter.
  • SMS mailing with a notification about the expiration of a saved order with United Colors of Benetton.
  • Wallet card in a virtual wallet.

Email newsletter with points and a QR code for a virtual card and a curious reactivation letter

A client registers with Color Club, following this, a welcome letter with welcome points for the first purchase and a QR code are sent for the quick set up of a virtual card for smartphones hits the clients e-mail.

If the client does not spend the 500 welcome points, a letter will arrive asking him to take a survey. The point of the survey is to assess the quality of UCB service and to figure out why he did not spend the points.

Welcome letter with points and QR codes. I covered it up a bit so that you won’t be able to download someone else's card.
Welcome letter with points and QR codes. I covered it up a bit so that you won’t be able to download someone else’s card.
If the client has not spent the welcome points, he will be met with a survey letter
If the client has not spent the welcome points, he will be met with a survey letter

SMS mailing with a notification about the expiration of a saved order with United Colors of Benetton

Since Mindbox monitors order status changes, transactional mailings are configured on the platform. For example, a reminder mailing about the expiration of a saved order: if the client did not pick up an order 4 days after the transition of the order to the «Ready for delivery» status, we notify the client of this via text message.

Text message example of an expiring order
Text message example of an expiring order

Virtual wallet card

Each member of the Color Club loyalty program receives a link (in an email or text message) for a virtual card that can be installed into a wallet for iOS or Android. Using it, you can log in at the register, receive personal push notifications, see your number of points and current level in the loyalty program.

My Color Club loyalty card. The QR code is blurred
My Color Club loyalty card. The QR code is blurred 😉

Thus, United Colors of Benetton sets up communications through customer-friendly channels using an interface that strips the need to involve developers.

Multichannel product recommendations based on machine learning

Mindbox machine learning product guidelines are a cool thing. They can be shown at the register, website, in letters, and any other channel. Product recommendations are calculated for each customer based on his or her interests, purchase history, viewed products, and the behavior of similar shoppers. Moreover, the algorithm takes into account sales in all channels, offline and online.

Additionally, the algorithm can be tuned at will. You can limit the selection of goods by key characteristics such as price or collection, recommend a category to another one, suggest related or similar products.

United Colors of Benetton utilizes product recommendations over two channels, in letters and on their website. I’ll tell you a little bit about each.

Email product recommendations

Recommendations are based on products that are of interest to the client. For example, in the automated «Abandoned shopping cart» campaign, we provide personalized recommendations for products that a customer previously added to his cart.

Recommendations

Product recommendations on the United Colors of Benetton website

The online United Colors of Benetton store utilizes several algorithms for product recommendations:

  • Best-selling products are recommended on the main page and product category page.
  • Personal recommendations are shown on the main page.
  • Related products are displayed in the product card.
  • Similar products are displayed the product card.

All algorithms for product recommendations are configured through the interface and take into account the popularity of products in both offline and online.

Product recommendations
Product recommendations
Product recommendations
Andrey Burenichev
Andrey Burenichev,
United Colors of Benetton Marketer

«Together with Mindbox, we solved the problem of combining data related to the loyalty program and launching segmented text message and email communications. We also started working together on testing the possibilities of personalizing the site and individual customer offers, which allowed us to attain great conversion results relative to the target action».

Conclusion

Over a year of collaboration, we launched an omnichannel loyalty program with personal offers, automated campaigns over three communication channels, site personalization’s and product recommendations with a bunch of algorithms for the site and newsletters.

As a result, automated communications and personal promotions increased the average revenue per customer and order conversions among loyalty program participants. This brought in at least several millions of rubles of additional revenue relative to the control group, with a statistically significant result and a confidence level of 95%.

The story about site personalization itself did not fit well into this material. Therefore, If you would like to know how United Colors of Benetton personalized their site and drew revenue from that, I invite you to read our previous Mindbox blog post on the matter: «Benetton: how a personalized product card increased order conversions by 10%».

This story would not have been possible without these people:

Alexander Vologodsky

Alexander Vologodsky,Ecommerce-директор United Colors of Benetton
Andrey Burenichev

Andrey Burenichev,United Colors of Benetton Marketer
Ilya Turkin

Ilya Turkin,United Colors of Benetton Loyalty Program Manager
Andrey Medvedev

Andrey Medvedev,Project Manager
Philip Volnov

Philip Volnov,Lead Manager and Author
Ilya Tsyrulnikov

Ilya Tsyrulnikov,Loyalty Program Product Owne
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