Case Study: Segment of One in Apparel Retail

Apparel retail presents an excellent example of the problems and opportunities for n=1 personalization.

A key problem for apparel retailers is that products change every season, so it’s especially difficult for legacy systems to make smart suggestions, due to sparse data, especially at the start of each new season.

Another problem is: Let’s say a male visitor bought only one item so far (a blue shirt). This doesn’t mean that’s all he’s interested in is blue shirts. (Practically every man in every apparel database owns at least one blue shirt.) So in effect, you still know practically nothing about that customer.

Another problem is that many customers buy only once, or maybe twice, and then never come back again, so data is sparse about their preferences, and lifetime value is stunted.

Yet another problem is that many apparel brands have unintentionally trained their customers to wait for sale events, so not enough products are sold at full price.

But the opportunities from n=1 personalization (aka. hyper-personalization, aka. Segment of One) are very great. Here’s an example. . .

We were working with a well-known apparel brand a few years back and provided evidence to them that better-targeted suggestions improve conversion and basket size, so they let us do a test.

The CRM team knew that their best-converting send time was Friday afternoon, and their second-best time was Saturday morning. Also, their best-performing message was a discount offer.

They didn’t want to gamble too much on the test, so they proposed to send their discount offer on Friday afternoon, and they let us use Saturday morning for our message, provided that we not include any kind of discount in our message. In other words, we had to compete solely on relevance – on showing products that their customers would likely find interesting.

So in sum, we were given the second-best day, competing against the best day. And we had no discount, competing against a discount offer.

The result?

We achieved a 10% higher conversion rate than the discount offer, even though we had to compete on the second-best day.

That’s when the Board of Directors got interested, I can tell you. Imagine the double profit impact of converting better at full price!

The technology that fueled all this is SOLUS.ai which was a first mover, and is currently a market leader in the AI-First category of customer engagement software. Notably, SOLUS has been able to implement the aspirational goal of Segment of One – acting as a system of intelligence that sits between users’ existing data sources and their existing engagement channels, generating individual customer-level nudges that combine recommendations, propensity scores, and stacked models, rather than broad segments or static rules.

In apparel retail, the response boost from smarter messaging is 20-30% vs. segment-led efforts. And the topline impact is 7-10%, even for brands with very sophisticated technology in place already. And the combination of better conversion at higher margins, drives 25 to 40x ROI (incremental revenue vs. cost of SOLUS), so the solution pays for itself in the first 30-60 days.

As you might imagine, numerous retail brands now use SOLUS, including Tommy Hilfiger, Calvin Klein, VanHeusen, The Collective, Peter England, American Eagle Outfitters, Louis Philippe, Allan Solly, Vero Moda, Jack & Jones, Reebok, Only, Selected, Pantaloons, WROGN, the Blue Group and Planet Fashion. Brands that have adopted SOLUS range in size from 50,000 to over 100 million customers. In each case, SOLUS acts as the core intelligence system, driving all CRM and loyalty efforts, enabled by downstream integrations to each brand’s preferred systems that orchestrate email, SMS, app, website and communication within physical stores.

One key use case for Segment of One in apparel retail is recommending products at the n=1 level. (This case study.) Another key use is customer lifecycle management – automated always-on nudges from onboarding, to frequency, to cross sell, to churn prevention, to win-back. SOLUS is also frequently used to enable smarter product recommendations in online retail environments, replacing other types of methods that underperform vs. Segment of One.

So if you’re responsible for CRM or loyalty in apparel retail (or in any retail segment that’s faced with sparse data about new customers or new products), then feel free to get in touch, and let’s do a test!

AI Master Group is a B2B channel partner for SOLUS. Full implementation takes one week.