Retail finance strategy for international DIY retailer
The retail finance partnership was up for renegotiation with this DIY retailer and they were looking to get a better understanding of the performance and the customer benefits it was providing.
They asked us to run a data analytics exercise to investigate the historical performance and profitability of finance customers and recommend future strategies that they could include in their requests to potential new partners.
What we did
Using historical finance and transaction data we compared the profiles and profitability of customers who used retail finance against the rest of the base.
A significant finding was that whilst initial basket sizes were larger as a result of the finance offer, repeat visit rates and subsequent large purchases were much lower. Comparison between the finance and non finance customers suggested that there was substantial opportunity to bring these two groups into parity.
As a result of the findings we worked with the retailer and their current finance partner to initiate a collaborative communications and offer approach utilising contact permissions set up through the finance deal.
The communications strategy was designed to work on a personalised level along the time frames of each customers individual finance agreement and credit availability. This would kick in at the appropriate time as the original loan was being paid off and new credit therefore became available to spend with relevant offers to stimulate store visits.
Initial tests saw 12% of customers whose credit deal was drawing to a close make new project based purchases through renewing their credit agreement.