So far, the system has helped Oberweis improve customer retention in its home delivery business and increase store profitability and service times, according to Bruce Bedford, vice president of marketing. "We're blessed with tremendous customers who are brand-loyal, but it's also because we maintain an emphasis on the highest-quality foods, listen to their needs and respond quickly," he says. "In that effort, analytics tools have been tremendous."
Oberweis turned to analytics when it discovered a customer attrition problem in its home delivery business. The company reaches out to customers through direct mail, door-to-door visits and the Internet. Bedford says that many customers who signed up for home delivery in response to direct mail campaigns and door-to-door visits canceled the service after 180 days, but that was not the case for those who responded to Internet campaigns. The Internet was the only channel through which the company did not offer a $100 discount in the form of free deliveries for six months. The marketing team hypothesized that attrition rates spiked at 180 days because the value of the free-delivery offer had been depleted at that point.
To counter this trend, Oberweis devised a new promotion that offered identical savings of $100 but through a yearlong reduced charge of 99 cents per delivery. After determining that the response rates for the two offers were the same, the company tested their respective effects on customer loyalty. The results were dramatic: Among customers who responded to the 99-cent offer, there was a 35% improvement in the retention rate at the nine-month mark, "which is worth millions of dollars in incremental revenue gain," Bedford says.
Analytics also enabled Oberweis to speed service in its stores. "Customers were getting up to the cashier and not knowing what they wanted to order," Bedford says. The culprit, the marketing team determined, was the menu board. "We never designed it with the intention of getting people through the line efficiently," he says.
So last fall, the marketing team came up with four designs that led customers through the decisions of ice cream serving size, flavor and cone type, and featured images of six popular sundaes. The designs also highlighted products with high profit margins. "We didn't want to guide someone toward a simple sundae or traditional ice cream cone instead of our waffle cone, which is an upsell," Bedford says.
Using SAS modeling, the company tested the designs in several stores. When the best one was rolled out, Oberweis saw an average profit increase of 3% on fountain purchases and an estimated 30% improvement in service time during peak hours. "It's good for the customer because it's an uncomplicated and quick experience, and we've been able to drive incremental profitability," Bedford says.
