Case study: Running Buddy Assignment 1 2016 IDM Professional Certificate in Email Marketing (Cert EM) © 2016 The Institute of Direct and Digital Marketing. All rights reserved Page 2 of 4 Background Running Buddy is a UK company selling sports products and accessories for the amateur and semi-professional runner. The company started out in 2010 and has benefited from the rise in interest in running as a hobby. Jogging/running is accessible to many men and women of all running abilities, cheaper than joining a gym and more sociable. It is popular all year round although the spring and summer months see an increase when evenings/mornings are lighter. The seasoned runner will own clothing, accessories and trainers / running shoes (possibly several pairs) which they look to replace every 6-12 months. There are several running magazines (e.g. Runners World) and social media running groups have a strong following (e.g. parkrun UK) where runners swap tips, ask and answer questions, share advice, anecdotes, photos, viewpoints etc. Running Buddy has an ecommerce website and 4 stores around the UK. The website has a responsive design and good conversion rates. Postage and packing is free for orders over £20. Average order value in-store is £75 with a lower AOV of £60 online. There are several online competitors including Amazon, eBay and discount sports suppliers, but the Running Buddy stores offer a much better customer experience than other chain sports stores. Staff employed in-store are all active runners themselves; therefore passionate and able to advise customers well. Staff can provide product demonstrations, and up-sell and cross-sell effectively. Running Buddy has many satisfied customers, and they rely heavily on word of mouth to promote their website and stores. At times, however, the stores are fairly quiet, particularly mid-week. Store managers organise weekly (free) runs which they advertise in-store. The product range includes many major brands. Product categories are:
Trainers and running shoes (when purchased in-store they are specifically fitted using state of the art running analysis technology – which is a free service to customers and takes less than 60 minutes) £75-200 GPS watches £65-300
Clothing (jackets, vests, leggings, shorts, socks etc.) £15-60 per item
Electronic equipment such as headphones £12+ Accessories such as water bottles, phone/ipod straps, belts, hi-vis stickers and running snacks (high energy bars) £5+ IDM Professional Certificate in Email Marketing (Cert EM) © 2016 The Institute of Direct and Digital Marketing. All rights reserved Page 3 of 4 Current marketing activity and customer insight Customer data is held on a central database and is captured at point of sale when an online purchase is made. There are 22,000 contacts (who have opted to receive email communications).
Details that are captured are:
Name including gender
Date of birth
Value of product(s) bought – returning customers are recognised so their purchase history is recorded Running Buddy has a Facebook page and Twitter account, and posts a few sporadic updates, but could do more with these platforms. There are PPC ads and the website is well optimised for search engines. Running Buddy has some budget set aside for sponsoring running events taking place in the vicinity of their 4 stores. All products are promoted to the database through email marketing but they tend to send ‘one size fits all’ communications, showing products they want to push and sale/clearance items. The current average response rates are as follows: Open rate 15% Clickthrough rate (clicks/opens) 2% Conversion rate (sales/clickthroughs) 5% Unsubscribe rate 1% It is felt that all these results could be improved. A list broker has approached Running Buddy to offer well-matched lists, although nothing has been actioned so far:
List A: 50,000 email addresses at a cost of £100 per thousand (minimum spend £500). The list can be segmented by gender (35,000 are male and 15,000 are female). List B: 60,000 email address (and physical address/location) at a cost of £200 per thousand (minimum spend £500).The list can be segmented by spend (10,000 spend over £200 a month on running products; 20,000 spend over £100 a month on running products; 20,000 spend £50 a month on running products and 10,000 spend less than £50 a month). IDM Professional Certificate in Email Marketing (Cert EM) © 2016 The Institute of Direct and Digital Marketing. All rights reserved Page 4 of 4 Your task The CEO of Running Buddy would like to invest in consultancy to improve their email marketing, to increase sales (revenue) online and in-store. You have been asked to write an email marketing communication strategy for the next 12 months. The budget is up to £20,000. The strategy should be developed with a longterm view and address the following:
Segmentation strategy to send relevant communications to different customer groups (40 marks)
Recommendations to grow the email marketing list and reduce unsubscribe rates (30 marks)
Details of the type of content that could be produced to engage prospects and customers (30 marks)
Make any necessary assumptions, stating these clearly as part of your answer.