Xerox 1:1 Lab Case Study: STAPLES Business Depot

STAPLES Business Depot1:1 Lab Case StudySTAPLES Business Depotmakes an offer its businesscustomers can’t refusewith Xerox 1:1 Labmarketing solution.

STAPLES Business DepotThe Business Depot Ltd. was founded in Toronto in 1991. It is Canada’s largestsupplier of office supplies, business machines, office furniture and businessservices for the small business and home office customer. The company isan everyday low price retailer. The chain operates stores in all provinces acrossCanada under the banners STAPLES Business Depot and BUREAU EN GROS . Thecompany has over 11,500 employees serving customers through more than 245office superstores, catalog and e-commerce. STAPLES Business Depot is committed tomaking shopping easy by offering customers three ways to shop – online, by catalogueand in-store.The ChallengeTraditionally, direct mail pieces from STAPLESto its business customers included addressing asingle coupon offer, regardless of the customer’srelationship with STAPLES. The coupon wasattached to a single-sided form letter from thevice-president of STAPLES’ loyalty programs.STAPLES wanted to re-engage its customers whohad either made minimal or no purchases withinthe past six months. It also aimed to increasethe amount of money each customer spent ona purchase by cross-selling and up-selling to thecustomer based on past purchase history.The company also wanted to leverage thecustomer information it had obtained throughits Enterprise Credit Card and Dividends Loyaltycustomer programs.2“ While we’ve quadrupled our directmarketing efforts in the past year, wewere still looking to increase our walletshare within the market. We hopedby customizing the messaging, andsending out the right offer at the righttime to the right people, we could geta lift in response.”– Caroline Quinn, directorDirect MarketingSTAPLES Business Depot

The Xerox 1:1 Lab: Demonstrating thePower of Data-Driven MarketingSeeking to increase the amount of money itsbusiness customers spent in its stores, and tore-engage customers who had not placed anorder with STAPLES within the previous sixmonths, STAPLES became a participant inXerox Canada’s unique 1:1 Lab.Xerox’s 1:1 Lab, a veritable testing ground forXerox customers, demonstrates the power andaccessibility of data-driven one-to-one marketingand has accelerated its adoption by themarketing community.The 1:1 Lab provides a learning environment totest and compare the results of data-driven oneto-one direct mail marketing campaigns withtraditional direct mail methods.The 1:1 Lab is equipped with state-of-theart equipment and software including theXerox iGen3 Digital Production Press, a110 impression-per-minute digital color presswith image quality comparable to offset.Terminal Van Gogh Ltd. (TVG) provides strategicconsulting on data-driven marketing campaigns,builds the 1:1 Lab participants’ program, repurposes existing creative to function withinthe data-driven environment and develops themetrics in the data to gauge results.“In our direct marketing program, wewanted to send out the right offer at theright time to the right people.”– Caroline Quinn, directorDirect MarketingSTAPLES Business Depot.1:1 Lab marketing pieces for STAPLESBusiness Depot3

Data-Driven 1:1 Communicationsin ActionHighlights customer’soffer—dependent on pastpurchasing historyIndicates customer’sloyalty card programHighlights other STAPLESloyalty programHighlights other STAPLESloyalty program if relevant tocustomerText provides details ofSTAPLES offerIdentifies customer’spresent/past purchasingbehavior4

Coupon varies dependingon textBar code is specific toactual offer5

The Data Driven1:1 Marketing Planin ActionTVG, under the umbrella of Xerox 1:1 Lab,undertook the design of the 1:1 Lab testpackage, taking care to keep the overall lookas similar as possible to STAPLES’ traditionalmarketing piece to avoid skewing customers’responses and ensuring an objectivecomparison of results.Using existing customer data from STAPLES,TVG created a series of one-page 8.5" x 11"direct mail pieces that included a number ofdata-driven elements.“ The design process went well,” saidQuinn. “We managed to pick attributesthat would work with the variablemessaging – customers’ location,industry, employee size, thingslike that.”If the customer was a Dividends or Enterpriseprogram member, the membership wasnot only acknowledged throughout the textof the direct mail piece, but the customerwas encouraged to take advantage of theother program.In August 2005, approximately 37,000 directmail pieces were sent to STAPLES BusinessDepot customers.Overall, the rate of coupon redemption forthe 1:1 piece was 50 per cent greater – withoutany additional follow-up from STAPLESBusiness Depot.The 1:1 direct mail piece also indicatedknowledge of the customer’s purchase historyand offered thanks for ongoing, recent orpast patronage.The average purchase amount by customerswho received the 1:1 direct mail piece was18 per cent greater than the amountpurchased by customers who received thetraditional direct mail piece. As well, thecampaign’s cost, per coupon redemption,decreased by 13 per cent. With the 1:1 Labcampaign, profit per customer transaction was37 per cent higher than with the control piece.Depending on the customer’s programmembership and past purchasing behavior,one of three special offer coupons wasincluded in the 1:1 Lab direct mail piece:Impressed with the solid business resultsdelivered by the Xerox 1:1 Lab, STAPLESanticipates using 1:1 marketing in futuredirect mail campaigns. R eceive 10 off any purchase of 40or more R eceive 7 off the purchase of a case ofSTAPLES Business Depot high-grade multipurpose paper R eceive a free One-Touch Stapler with thepurchase of a ream of STAPLES BusinessDepot high-grade multi-purpose paper6“The design process went well,” said Quinn.“We managed to pick attributes that wouldwork with the variable messaging – customers’location, industry, employee size, thingslike that.”

Client benefits close-upProject Production Cost ComparisonSTAPLES Business DepotControl PieceCost PerPackageSTAPLES Business DepotNew 1:1 Lab PieceCost PerPackageData preparation, processing andset-up – Variable Print Ready FileProcessing (VPS)** 0.21*Printing – Package of 1 letter(8.5" x 11") – 4/0 process.Folded-perf 0.10*Digital Printing – Package of 1 letter(8.5" x 11") including a 100%variable coupon 0.30Project management, fulfillment,insertion and lettershop costs 0.06Project management, fulfillmentand insertion 0.06Outer envelopes printed 2/0.ref #10. window 0.05Outer envelopes printed 2/0.ref #10. window 0.05Postage media post 0.37Postage media post 0.37TOTAL production or future reprint 0.58TOTAL production or future reprint 0.99*Price per package evaluated on the base of 30,000 pieces** T his costing does not include or take into account creative changes, copy changes or any significant changes to the program as it was createdin the Lab. In the future, changes to the project would result in incremental costs.1:1 Lab One-Time Cost (TVG)1:1 Lab design and programming (one-time cost) Xerox Partner Terminal Van Gogh (TVG)Art direction and new design and re-purposing of existing creative 3,750Account service and administration of the lab coordination 3,750Programming original code 3,750Engineering of document in variable in Exstream software 8,250TOTAL design and set-up 19,500As a global leader in digital andvariable color printing technology,we are helping our customers leveragethe benefits of customized marketingthrough the Xerox 1:1 Lab.STAPLES Business Depot has gained significantbenefits since testing a one-to-one marketingsolution from Xerox: O verall coupon redemption rateincreased by 50 percentLab Program Results vs. Traditional CampaignCouponAcquisition Cost*CustomerAcquisition Cost**CustomerSpendingSalesProfit***-13% 2% 18% 23% 37%*Average cost / redeemed coupon**Including acquisition cost of customer, printing production and offer value (coupon cost)***Based on coupon value print cost, item cost (purchased by customer)The Xerox 1:1 Lab T he average amount of customers’purchases increased by 18 percent versusthe control piece 1 3 percent lower cost for STAPLESper redemption S taples gross profit per transaction increasedby 37 percent7

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STAPLES Business Depot is committed to making shopping easy by offering customers three ways to shop – online, by catalogue and in-store. STAPLES Business Depot “While we’ve quadrupled our direct . its Enterprise Credit Card and Dividends Loyalty