Success stories
August 16, 2021

Tom Tailor: How to Encourage Offline Customers to Buy Online

  • Goals Turning offline customers into online ones
  • Boost revenue shares through direct marketing
  • Solution We launched an omnichannel loyalty program
  • We added item returns, reservations, and try-on options at brick-and-mortar stores and launched other steps to encourage customers who buy offline to buy online instead
  • We have launched targeted and behavior-based trigger mailings for both online and offline customers
  • Results Compared to the total revenue attributed to 9 months of online and offline sales, 8.93% was the maximum share of revenue achieved through mailings
  • Revenue from triggered mailings increased by 3 times via last-click attribution
  • 54 new triggers
  • Participants Head of Marketing and E-commerce and Senior CRM Manager at Tom Tailor; Head of CRM Marketing, Profitator Agency — Kokoc Group; ERP and website Developers; Mindbox Manager
  • Term8 months
  • IT CRM and Cash Desk, website, Mindbox
  • Business size 57 stores in Russia and 1 million leads in the customer database

Originating from Hamburg, Tom Tailor sells casual clothes all over the world. The company was established in 1962, and his total revenues reached 623 million Euros in 2019.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce at Tom Tailor

While still supporting their long running and well established retail chain, Tom Tailor continues to grow its e-commerce marketplace. Its goals are to increase its share of online sales in total revenues and to improve the omnichannel customer experience. Encouraging offline customers to buy online instead of offline is one of the ways to achieve these goals. Elena Lozhkina at Tom Tailor, and Yulia Somova-Goltsvirt at Profitator Agency, Kokoc Group shared their experience:

  • why offline and online customer bases should be combined and how the omnichannel loyalty program plays a part.
  • why the 54 or even 100 triggers introduced don’t feel like spam.
  • what would be more attractive to customers than discounts with insights from our hypothesis testing.
  • when offline customers will be ready to switch over to online, if at all possible.
  • what issues retail customers have that may stop them from buying online.

Results of the marketing automation and omnichannel loyalty program

Revenue from mailings attributed to identified sales vs. the total revenue of the online store and the retail chain.

Data from the summary report generated on the mailings launched with Mindbox

Data from the summary report generated on the mailings launched with Mindbox.

Revenue from tailor-made trigger scenarios:

Data from Google Analytics (last click attribution)

Data from Google Analytics (last click attribution)

54
triggers were activated
8.93%
was the maximum share of revenue from direct communications (attributed to identified sales) compared to the total 9-month revenue

3
times more revenue from last-click trigger mailings

Tom Tailor’s Feedback

Why Mindbox? Our online store and brick-and-mortar stores have always operated separately. We have always had a problem when trying to combine our online and offline sides of the business; combining the two sides was impossible with our last CRM contractor, resulting in each side operating separately. The main focus behind choosing Mindbox was the chance to combine customer bases and build a shared communications network through both channels. This year, our major task was to encourage offline customers to buy online. Mindbox enabled us to follow online and offline customers’ actions and their journeys.

Email Channel Modernization. We have changed the visual template of our mailings a lot and are more than happy with everything currently related to our communications. With the last mailing system, we had template issues as well as limited capabilities. Generally, it was a stand-alone tool with limited features that were incapable of giving an overall view of data from both channels. However with Mindbox, we can now view online and offline purchases as well as break down and evaluate the details to see who our customers are and what they prefer. For this reason, we are now getting clearer and deeper insights that we can be happy with.

Challenges. It has taken a lot of hard work to merge the two customer bases. It is difficult for me to name the exact reasons for the challenges we faced. For example, the cleansing process took us quite a while before we could proceed with the joining of the two bases. From time to time we still come across some details that were somehow missed by the platform. I cannot be sure where exactly the problem lies, whether it be with the platform or with our system. However, such problems have happened far less over the past 6 months.

Although the Mindbox manager we work with isn’t as accessible as our own full-time employee, we are happy with our level of communication, leadership and personal approach. However, we have been short-handed and would have appreciated 40% more of his time during the initial 3 to 4 months since the project’s inception. It would have considerably boosted the launch’s success.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce at Tom Tailor

We can view online and offline purchases and break down the details to see who our customers are and what they prefer.

Mindbox’s Review, Feedback, Opinion

We agree that the first 3 to 4 months are always the most important. During this period, a select manager studies a customer’s technology stack. Usually we need 3 to 5 days in order to prepare the terms of reference (ToR) along with all the planned mechanics. After that, the client’s development team will get involved. However, the teams have limited resources so they are not always able to add a large number of unique details and planned workflows quickly in the beginning. To facilitate a launch we recommend:

— Highlighting project priorities and breaking up the integration into various steps. Once at least one milestone or a part of ToR has been completed, the project can bring value. At the same time, the team should prepare to activate new mechanics and train for future integration.

— Before project launch, the company’s IT department and/or service vendor(s) should study sample ToRs and prepare for integration. This way, the team can resolve or be ready for most of the potential issues at introductory meetings.

— Syncing timeframes with the integration team to understand and plan when the project can be started. It is very important to carefully monitor the internal queues as well as the development sprints, especially since desynchronization in the first stage can shift or change the timing of the entire launch.

Valentin Moskalev

Valentin Moskalev, Lead Manager

Supporting the Decision to Automate Marketing

Problem Solution
Brick-and-mortar stores and the online store operated separately. As the marketing activities and metrics were different, it had been too complicated to combine the two channels. Therefore, no single approach to customers could be applied. To align online and offline databases with the marketing automation platform and to offer a single management tool for both, and to create reports for all the commands in only one window.
Online and offline promotions had their own unique rules, in turn making promotion combinations and their rules difficult to understand. To launch a loyalty program that tracks online and offline behavior of customers and syncs promotions of both.
Revenue growth had slowed because there was no process to test new ideas and launch marketing campaigns. To use the platform to launch and test new ideas and boost revenues from new marketing campaigns.

Tom Tailor’s Opinion

In general, we are happier with Mindbox. We are able to collect much more data on customers and their actions and launch more automated triggers rather than delay in case something goes wrong. We are now able to run A/B tests in order to test our mechanics.

We are glad that the trigger scenarios are now integrated into the platform. We are happy the platform has introduced scenarios now based on triggers. However, we would like to have a simple analytical tool in order to investigate mechanics in a chain. We need to understand how our mechanics work as a whole at every stage, as in where and at what point we lead a customer, why they have bought certain items, etc.

The only Mindbox drawback is they have a pretty weak Business Intelligence (BI) module. We decided not to wait for Mindbox to improve it and took on the analytics ourselves instead. We decided to get the raw data from the Mindbox data warehouse and then load the results into Microsoft PowerBI.

Denis Panin

Denis Panin, Senior CRM Manager, Tom Tailor

Implementing the Platform

It took 8 months to implement the platform, and launch the online and offline loyalty programs, triggers and new mechanics. All the integrations were performed in parallel so that Tom Tailor could use the platform features as soon as possible without slowing down business.

Connected the Mindbox Platform

Specifics Considered During Integration:

Customers’ bonus points and statuses had to be transferred from the current loyalty program. Tom Tailor’s current loyalty program used to run on a legacy system. To retain the bonus points and statuses, the team integrated the customers’ personal accounts as well as integrated POSs and the website. It took a few weeks to prepare for this data transfer which was worked on at night to make sure operations still ran smoothly during the day.

Independent promotions for the online and retail channels. Items and discounts can be different in the online and offline channels. The loyalty program had to account for these differences. Added to this was about 50 promotions that had already been running against the recently made rules. The new loyalty program was aligned to cover those promotions so they were ready at launch.

Click and collect orders with segmented items within a single payment. With the click and collect model, a customer can order online and pay at a brick-and-mortar store. By default, the platform recorded orders like this as online ones attributed to the point of order placement. If a customer bought extra items at the ‘collect’ store, their online promotion would not be applied to these extra items. This was seen as a problem. So, a special feature was developed to separate items on the bill. It would apply online promotions to an original order and then apply offline promotions to the cross-sale items. The platform now marks items specifically to ensure that BI gets the correct information by points of sale and promotions.

Omnichannel features for customers. Mindbox is the master database for contacts and bonus points. However, it stores only bonus points for retail customers, whereas contacts are stored by the website. For this reason the online and offline bases could have different details for the same customer. To fix this issue, a feature was added. If a customer changes their data at a brick-and-mortar store, once online, they get a pop-up message asking to update their data on the website next time they visit the website.

Testing. There were extra subcontractors to combine the online and offline databases together. The results needed control and testing, which again was an additional workload for the team.

Tom Tailor’s Feedback

The Mindbox team are very enthusiastic about platform development. They are always ready to consider client demands, even irregular ones coming from client specifics. Many clients are unwilling to change their business processes to fit a CRM module and instead expect the vendor to adjust their CRM module requirements or to add features, just as it was in our experience.

For example, the retail chain and the online store keep their own books for warehouse inventory. Accordingly, the two channels might have different items in stock and different discounts. To fix this, Mindbox implemented an additional feature to track what the store sold or cross sold to the customer as well as any items they may have decided not to buy.

The team was able to integrate everything we planned. Whenever new demands come up, new integrations are put in place. For example, POSs had to be adjusted to support filling in of missing emails for long-standing retail customers. The joint Tom Tailor & Mindbox team worked hard together to debug and test the necessary features.

We never stop working with the customer, we keep engaging our customers and implementing additional capabilities. Specifically, we are now adjusting the feature that encourages customers to type their feedback for their current brick-and-mortar store on a global map application, such as Google Maps.

Denis Panin

Denis Panin, Senior CRM Manager, Tom Tailor

We never stop working for the customer and keep engaging our customers while implementing additional capabilities.

Activating the Triggers

Tailor-made trigger scenarios were used to automate communications with customers and plan as many engagement scenarios as needed. The first task was to automate communication with clients and provide the highest interaction possible through multiple scenario testing, and trigger mailings helped with this. In total, 54 trigger-based mechanics were activated with a plan of activating 100 by the end of 2021.

A marketer develops the reasons for the trigger behavior in the communication map and then sets it up on the Mindbox platform. Priorities help avoid sending spam to customers while at the same time supporting a large pool of different triggers. So, if an abandoned cart chain is enabled, the other triggers will then be disabled. As another example, customers that are in the process of ordering or with a recent history of purchasing will not receive promotions. This rule, however, does not apply to transactional and service messages.

Kokoc Group’s Feedback.

Our main rule: if a mailing requires a lot of work hours for a layout designer, copywriter, etc. or needs more idea elaboration, we plan to send it manually. If it brings value, we then plan to automate it. So, a promotion plan is converted into trigger-based communications. Such automations ensure profitable mailings and help save resources on otherwise personally tailored emails.

Yulia Somova-Goltsvirt

Yulia Somova-Goltsvirt, Head of CRM Marketing, Profitator Agency, Kokoc Group

Let us investigate our most remarkable mailings:

Seasonal mechanics make selections based on weather, winter or summer categories, or a favorite category. Today, mailings like this address narrower product categories such as textiles, denim, outerwear or accessories. Next, we plan to cover all categories which will bring an increase in revenues across the board from these types of mailings.

Seasonal mechanics
Seasonal mechanics
The special mechanics will auto-generate any seasonal mailings with catalog items and send emails when scheduled or when an event occurs.
Seasonal mechanics
Seasonal newsletters
Seasonal mailings are separated by gender. The loyalty program collects data and awards bonus points for filling in data sheets. A customer can spend them online as well as offline in a store.

Cost-Based Selections. At Tom Tailor, the average order value is $50. To create a suitable plan, cost-based selections were created and then split into two categories: items that cost up to $30 and items that cost up to $50. Interestingly, the order conversion rate for both mechanics proved to be twice as high as that of promotions. This method of categorization saves resources that may have been spent on discounts and in turn keeps profits high.

The marketer can initiate an automatic selection that takes into account gender specifications and price of goods. For example, a selection can be made for items close to the average order value, without cheaper accessories or items below the average purchase amount. These types of mailings will reactivate inactive customers, while active ones or those with much higher or lower order values will not get these types of messages.

Cost-based selections
Cost-based selections help reactivate inactive customers and avoid issuing unnecessary discounts. There is twice the conversion rate with cost-based mailings compared to promotional mailings.

Leveling Up in the Loyalty Program. A customer receives a message letting them know the amount of the next order that is required to upgrade their ranking in the loyalty program and invites them to make a purchase. These emails proved to bring the highest revenue per email (RPE). Note that the conversion rate outscored the abandoned cart rate, which had previously shown the best conversion rate.

loyalty program upgrades
loyalty program upgrades
The loyalty program upgrades a customer’s status based on the total amount of their purchases. A message that informs the customer of the amount left until the next level is a good tactic to increase the customer’s desire to order.

Kokoc Group Feedback.

If you test lots of different strategies, you might get surprising results. Our status upgrade mailings are a good example of this. In order to send fewer communications but still get more revenues, we estimated the RPE (revenue per email) and the ratio between the number of mailings and the customer base.

Yulia Somova-Goltsvirt

Yulia Somova-Goltsvirt, the Head of CRM Marketing, Profitator agency (Kokoc Group)

Tom Tailor’s Feedback

Triggers have become a sensitive topic for us. Before migrating to Mindbox, there were eight triggers for the online stores and five for the retail stores. Now there are 54 of them that generate significant revenue. Recently, we had a technical issue where our triggers failed and stopped working. Within days the number of orders fell by almost a third.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce, Tom Tailor

Testing Hypotheses

In order to learn the most effective type of communication and maximize customer base involvement, we decided to test our hypothesis using A/B testing.

Recovering an abandoned cart: bonus points vs. discounts

We launched a trigger-based email chain for abandoned carts. The first message would remind the customer of their added cart items and the second one would offer bonus points or a discount, encouraging customers to complete their orders they had previously abandoned. We split the discounts vs bonus points tests between two groups to better understand exactly which feature works best. Group A was offered 500 bonus points and group B was offered a 5 percent discount. Reliability of the test was 95 percent, according to last click attribution.

The test results showed higher conversion and click rates for the bonus points compared to the discount. This was a surprising outcome since the bonus points can only cover up to 50 percent of an order. Applying the discount to a regular priced purchase/cart is actually more cost-efficient for the customer.

Relevant Item Selections vs Selections Covered by Bonus Points

Next we learned what will encourage customers to spend their bonus points on their next purchase. For this, we compared 2 types of emails:

  • Email A: A message with the amount of earned bonus points and CTA to buy items specifically selected using customer preferences.
  • Email B: Only items that could be paid for in full by using bonuses.

The reliability of the test was 95 percent, based on last click attribution.

The test revealed that personalization with a thoughtful approach towards our customers works the best.The B group showed higher click rates and a 7 times higher revenue boost.

personalized selections
personalized selections
To understand what kinds of messages are more engaging, we compared personalized selections of relevant items with those covered by bonus points. Surprisingly, the selections covered by bonus points were more efficient.

Addressing Customer Concerns for Offline to Online Migration

Once we had the capability to conjoin the online and offline customer bases and track customers’ actions in both channels, we then learned more about the behaviors of retail customers. It helped us to understand the reasons why customers chose not to buy online. See the results below:

  • 80 percent were afraid of choosing the wrong size and having to deal with returns.
  • 50 percent were not aware of the try-on option for online stores.
  • 30 percent have never shopped online because they could not return items offline.

We addressed each concern respectively. We have added order returns to brick-and-mortar stores and a free shipping option for some loyal customers. We then extended the return period to 365 days. Finally, we announced the try-on option at our online stores. We also launched targeted advertising for offline customers to tell them about the listed advantages.

Developing Omnichannel Customer Experience

Tom Tailor’s Feedback:

Originally only a small marketplace, Tom Tailor’s online store has set a goal for major growth. A small online store usually has a tight budget, which limits their resources in attracting customers with higher order amounts. Therefore, we decided to boost our revenues by developing omnichannel features such as taking a base of customers who have made purchases in retail stores, have bonuses and are loyal to the brand, and encouraging them to buy in the online store. Our target for this year and next is to turn as many offline customers as possible into online ones. This means that we could offer them two sales channels that a customer could choose from, depending upon which was more convenient.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce, Tom Tailor

We set a goal of doubling the share of omnichannel customers. To achieve that, we first analyzed the database. We took customer segments with an active email subscription, estimated how many of them are customers with omnichannel orders, and analyzed the actions of those who buy only offline. We learned that customers do read our messages but still prefer brick-and-mortar stores. To try change their mind, we developed and tested a few promotions:

A 50% discount on the first order as a motivator.

We chose a sample of retail customers who had visited our website and sent them messages offering a 50% discount on their first online order. We then compared those results with a control group.

The total amount of orders placed was 73, with 62 of them being online and 11 of them offline purchases. The conversion rate of this mailing amounted to 0.4%. We realized that influencing customers to move from offline to online buyers was possible, but some customers would always prefer to buy offline no matter the discount offered to them.

50% Discount Promotion
The 50% Discount Promotion to Attract Retail Customers to Buy Online

Tom Tailor’s Feedback

For over a year, we have been trying to engage retail customers to find the best way to encourage them to buy online. However, there is a 0.4–0.5% conversion rate with retail customers in communication channels such as texts. Whereas the texting conversion with online customers is always over 1%. This shows us that most retail customers are not eager to buy, which makes it more difficult to influence and engage them.

As another example, since early May, new mechanics have been activated. We have been handing out flyers with the 50% online order discount at our brick-and-mortar stores. We have also been estimating potential value. In the end, we found that there were two challenges that needed to be fixed. The first was to ensure that our offline store teams handed out our flyers to customers, particularly with customers who weren’t interested in online sales that didn’t appear especially beneficial. The second challenge was to motivate customers to buy online. This promotion did not bring in that many orders, with the conversion rate being only 0.4–0.5%. We decided that this figure is the average offline to online conversion for our brand. In autumn, we plan to extend this promotion over the whole retail chain in every brick-and-mortar store we have.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce, Tom Tailor

Retail customers are not eager to buy and it takes great effort to engage them.

Click and Collect

The next major step was to implement the click and collect system. It simply means to pick up items that you order online, with the try-on option and payment available at a brick-and-mortar store.

Tom Tailor’s Feedback

As soon as we started our mailings, half of the orders were from retail customers who had never bought online in the past. Therefore, Mindbox helped us to see how a traditional email channel can influence both online and offline sales.

Elena Lozhkina

Elena Lozhkina, Head of Marketing and E-commerce, Tom Tailor

reserve online
The click-and-collect system helps retail customers to buy online while still sticking to their usual purchases.

Retail Customers Migrating Online. Example:

Migrating customers from offline to online is a long and continuous journey. The click-and-collect system may prove to be a crucial factor in helping to facilitate that journey. Below is an example of a real customer with their offline to online migration timeline:

2018. The customer buys items at retail stores. They are a regular retail customer with a rich purchase history.

January 2021. The customer joins the loyalty program at an offline POS and begins to receive tailor-made trigger messages:

migrate

February 2021. The customer reads their messages but continues buying offline:

migrate

The customer begins to visit our website from email notifications:

begins to visit our website

April 2021. Authorized on the website for the first time:

Authorized on the website for the first time

The first «click-and-collect» order. Thereafter, the customer placed two additional orders. This implies that the customer clearly enjoys the service and buying online:

The first “click-and-collect” order

The Omnichannel Customer Base Growth: Results

share of omnichannel customers

The share of omnichannel customers in the joined database of customers with specified emails. As new communication means and mechanics are introduced, the omnichannel part grows slowly but steadily.

Reason to Update the Loyalty Program Rules

At first, the loyalty program rules divided customers into the two segments: Standard and VIP. 95% of customers belonged to the standard segment and 5% belonged to the VIP one. VIP customers were the minority and were actively buying without any assistance or influence from us. However, the standard customers were rather inactive, wherein we experienced customer churn. So, the VIP baseline proved to be too high. To lower this line and create a new means of communication, we extended the program to include a third active tier.

To estimate the program productivity, we calculate the retention rate after some considerable time from the program’s debut and compare it with a control group.

The Rules of the Loyalty Program
The Rules of the Loyalty Program
Three loyalty program levels
Three loyalty program levels. The status depends on the total amount of purchases. Earned bonus points do not expire. However, a customer still has to spend a certain amount annually to retain their status.

Tom Tailor’s Feeback.

Our customers set the loyalty program’s rules and the status titles through their survey feedback. For customers, the transition was easy and simple. Customer statuses were gradually upgraded and transferred from their initial setting to a new segment. After transferring all statuses, we quickly substituted the segments, and we turned off the old segments and turned on the new ones.

In reality, nothing has changed for the customer. We do not inform customers directly about changes in the loyalty program to avoid a large volume of questions. Instead, we inform only active customers in pop-up windows whenever they visit our website or at a POS at one of our retail stores.

Denis Panin

Denis Panin, Senior CRM Manager, Tom Tailor