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Background
A major pharmaceutical company, saw a negative impact on its store sales after reducing marketing spend on catalogues. The group wanted to understand the revenue gained through a letterbox campaign and use the results to encourage franchisees to invest again in catalogue advertising.
Summary
A major pharmaceutical company, saw a negative impact on its store sales after reducing marketing spend on catalogues. The group wanted to understand the revenue gained through a letterbox campaign and use the results to encourage franchisees to invest again in catalogue advertising.
Challenges
  • To understand the revenue gained through a targeted letterbox campaign.
Solutions
  • A/B testing for a trial letterbox distribution increase.
Outcome
  • A $8.14 return for every dollar spent on catalogues and a 1.5% increase in sales for the seven participating stores, demonstrating the value of letterbox marketing.
Our client, a major pharmaceutical company, provides healthcare products and services Australia-wide, across their individually owned and operated stores.

Background

To inform customers about their upcoming offers and promotions, the group distributes fortnightly flyers, leaving to each individual franchisee the choice on the volume of distribution in their respective area. However many franchisees, sceptical about the value of those campaigns, recently reduced their distribution volumes without investing in other marketing channels.

The Challenge

Our client saw letterbox distribution volumes drop by 30%, which had a negative impact on its sales. The group aimed to reverse the trend by encouraging franchisees to invest again in letterbox campaigns. To do so, they wanted to understand the incremental revenue gained through an increase in letterbox distribution, and use the results to educate franchisees on the true return on investment generated by this type of campaign. Salmat was commissioned to find the best methodology for the research.

The Solution

Salmat proposed a two-month long trial increase in letterbox distribution to examine franchisee revenue potential using a third-party research agency.
 
The research consisted of an offline A/B test, analysing the revenue evolution of 14 stores: seven of them increasing catalogue distribution, and seven of them maintaining normal activity. Those stores were matched using factors such as demographic, geographic, volumes of catalogue distribution, total store turnover, and sales of vitamins and fragrance.
 
Firstly, to set a benchmark, the sales patterns of all 14 stores were tracked for 13 weeks. After that period, seven stores increased catalogue distribution by 30% over two months.
 
The results were evaluated against three specific criteria: total store revenue, fragrance revenue, and vitamins revenue.

Outcome

A 30% increase in catalogue distribution drove a 1.5% increase in sales for the seven participating test stores. The results showed a $8.14 return for every dollar spent on catalogue, demonstrating the value of letterbox marketing. The research was also valuable in providing in-depth insight into consumer behaviours and the company’s return on investment when it comes to marketing distributions.

To learn more about letterbox marketing, contact us today on 1300 725 628.