Mobile app lets jewelry retailer test in-store discounts

By Stephanie Overby, CIO |  Mobile & Wireless, geofencing, mobile apps

Alex and Ani, a jewelry retailer best-known for its single-charm bangle bracelets, operates 36 physical stores, an 1,860-account wholesale business, and--most recently--an online store.

"We have large ambitions to do multichannel the right way," says Ryan Bonifacino, the company's vice president of digital strategy. But the company credits its repeat purchase rate of 50 to 60% (customers collect the bracelets "like Beanie Babies," says Bonifacino) in large part to its high-touch in-store experience.

The company piloted Swirl, a smartphone app that delivers deals and information to customers when they are near a store, to better understand point-of-sale behavior and make use of that online. Alex and Ani's visibility within the app could also expose the brand to a new audience.

First Steps :: Bonifacino piloted the app at the Boston store (because it's a good indicator for the rest of New England) and the New York store (because it's the fastest-growing). Swirl installed Oreo-sized sensors that detect customers with the mobile app; alpha testing took place from May to July. "Once back-to-school [season] hits, we don't come up for air until Mother's Day," says Bonifacino. "The only time we have to plan and test is summer."

When a Swirl app user nears the Newbury Street or Soho stores, a timed deal pops up. Alex and Ani generally does little discounting, says Bonifacino, because demand tends to outpace supply, so the company offered its normal "bangle of the month" deal. Typically the in-store offer is $5 off; on Swirl, it's a 20% discount--a slightly better rate.

There was little training required for store associates other than learning to enter the discount source and code in Alex and Ani's homegrown point-of-sale system. After three months, Alex and Ani's Swirl results outperformed those of other retailers on all counts. Users spent 12-15 minutes in the store, 84% saw the mobile offer, and 32% redeemed the offer. A beta test, incorporating lessons learned, starts in the fall.

One of the lessons: Customers weren't thrilled about getting the same deal as everyone else. They like exclusivity, so Bonifacino is working with Swirl to identify high-value customers and create better offers just for them. He'd also like Swirl to figure out how to retarget users who saw the offer but didn't redeem it.

The biggest concern is whether Swirl can continue to bring in new customers at the rate that Alex and Ani is doing so organically; the retailer has grown from $4.5 million in sales in 2010 to a projected $160 million this year.

"We're adding a couple thousand customers every week. If they're not adding that, it becomes less attractive," says Bonifacino. "[But] if it's something that can truly scale, we'll open it up regionally to a dozen more stores."

What to Watch Out for : Don't be too quick to credit the success of a digital marketing endeavor to the new technology when you're the one offering the discount. "I always like to ask the vendor what kind of business they could drive on their own if we weren't offering anything," says Bonifacino.

Although the pilot often costs very little, the time and effort involved is valuable. Be rigorous when researching startup vendors. "We have a venture capital mind-set, and we look at it like an investment," says Bonifacino.

Stephanie Overby is regular contributor to CIO.com's IT Outsourcing section. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about mobile/wireless in CIO's Mobile/Wireless Drilldown.

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