Home Retail & Consumer How One Retailer Used AI to Reach Out to New Customers

How One Retailer Used AI to Reach Out to New Customers

When founding RedBalloon, an online-based gift retailer that focuses on selling personal experiences, Naomi Simson was the first to venture into the category in Australia. Armed with a $25,000 personal investment and a home-based small office in her arsenal, she stated gathering sales leads and aggressively getting customers through traditional marketing methods such as yellow page advertisements. During this time (in 2001), online adverting was still in its infancy stage. In fact, Google AdWords had just launched, and Internet Explorer was the foremost Internet browser in the world.

With only a cost of 5 cents for customer acquisition, Simson’s traditional advertising technique was generating a remarkable return on investment. Also, the business was setting the pace for impressive gifting experiences such as concert tickets, wine tastings, spa treatments and outdoor adventures. By 2015, RedBalloon was delivering over four million clients to companies all around New Zealand and Australia, especially those that provided experiences. Although Simson was not overconfident, she felt like she was conversant with every audience for experiential gifts that were available in the market as well as the ideal ways of reaching them.

In 2016, RedBalloon had invested almost all its brand advertising in traditional media outlets such as pop-up retail stores, billboards, print and radio. Also, the company’s cost of acquiring new customer had increased from 5 cents to $50. Although RedBalloon enjoyed wide brand awareness, the increasing customer acquisition costs were interfering with its margins. What’s more, the traditional audience for experiential gifts had lost emotional connection with the brand. With that and more, Simson knew RedBalloon had to transform its marketing techniques in a bid to make media purchasing decisions more efficient and autonomous.

Later in 2017, Simson and her marketing team leveraged c, an AI-powered digital marketing platform that works across YouTube, Google, Facebook and other earned and paid media channels. She met the team behind Albert while conducting resist on various technologies like data-driven marketing technologies, AIU and machine learning for her book dubbed Marketing, Interrupted.

At RedBalloon, Albert processed the company’s, massive database of transaction history and customer interactions. This allowed the platform to identify and buy over 6,400 keywords to boost performance across RedBalloon’s campaigns, especially in the first 24 hours of operation. Thanks to Albert, the company’s total cost of customer acquisition across channels dropped by 25% in less than a month.

Albert was able to find new audiences that RedBalloon had not previously considered despite Simson’s belief that she knew all the buying audiences in New Zealand and Australia. For instance, the AI-powered platform spotted a group of men aged above 65 years in Melbourne who love skydiving.

This was possible through trying out thousands of text-image combinations, particularly on small micro-segments. Albert observed the audiences that responded along with the particular combinations that stimulated their responses. After recognizing the micro-segments that were performing well, he expanded his efforts to broader audiences and provided them with hyper-personalized messages that were based on what had been proven to work with relatively smaller groups.

Source HBR

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KC Cheung
KC Cheung
KC Cheung has over 18 years experience in the technology industry including media, payments, and software and has a keen interest in artificial intelligence, machine learning, deep learning, neural networks and its applications in business. Over the years he has worked with some of the leading technology companies, building and growing dynamic teams in a fast moving international environment.
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