The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Barneys customers respond to e-mails up to 10 times more often when messages are sent to lists segmented by Proclivity.
Upscale retailer Barneys New York Inc. has become the first announced client for start-up Proclivity Systems, whose technology helps retailers determine which customers are most likely to respond to certain offers. Barneys signed up with Proclivity after a three-month test showed customers were up to 10 times more likely to respond to offers when e-mail lists were segmented with the Proclivity Mail system, says Larry Promisel, vice president of e-commerce at Barneys New York.
The Proclivity Mail system collects data on customers, such as what products they look at, what they put into their shopping cart, what they buy and which e-mail offers they respond to. Barneys can then ask the Proclivity tool to create an e-mail list of customers most likely to respond to an offer on shoes, or those most responsive to mark-downs.
Promisel would not say how many customer e-mail addresses Barneys holds but says, as an example, if it had 100,000 names Proclivity might produce a list of 25,000 who are most likely to respond to a shoe promotion. “Then I can take the other 75,000 and say, ‘What’s the next best thing to send them?’ It allows us to spend our money intelligently,” Promisel says.
Barneys is charged for every thousand e-mails it sends, so narrowing the list saves it money. Promisel believes sending more relevant messages will improve the retailer’s relationship with its customers. While it’s too soon to see the effect since Barneys only began its test last summer, he expects over time he will see fewer customers unsubscribing and a higher response rate from the more targeted e-mails.
One example of how Proclivity boosted sales was to customers who want to buy baby and home products from Barneys. “It’s not a large part of Barneys’ business, but there are some really loyal customers online to those businesses, and I’m not sure I would have identified them without Proclivity,” Promisel says. “These products are definitely not relevant to our entire file, however for those who are highly engaged with it, it’s perfect. We’ll send them an e-mail at least once a month, and this is one example where we’re seeing a 10 times better response rate.”
Promisel hopes to use the Proclivity technology in other ways, such as helping to determine which products to recommend to customers viewing certain items online. Further in the future, he would like to refine the technology so that it could show the most relevant products to each customer based on which segment the customer falls into.
Proclivity charges Barneys an undisclosed fee per thousand names generated for e-mail lists, Promisel says. Previously part of Jones Apparel Group, No. 303 in the Internet Retailer Top 500 Guide, Barneys New York Inc. was sold in September to Istithmar PJSC, a Dubai-based private equity firm, for $945 million. Barneys has not disclosed its e-commerce revenue.
Proclivity Systems was established in 2006 by Sheldon Gilbert, former director of business intelligence and data mining at web-only apparel retailer Bluefly Inc., No. 131 in the Internet Retailer Top 500 Guide.