Increased ROI is always in fashion: How thredUP increased ROI 128% by A/B testing intelligent direct mail
“When we started this relationship, we needed to get some postcards out to reactivate customers. In just a short amount of time, we've learned a lot. We know we’ll make direct mail a permanent part of our strategy moving forward.”
thredUP is a managed online clothing marketplace providing a range of fashionable, second-hand clothes. Founded in 2009, the company quickly grew into one of the world’s largest apparel resale platforms, connecting buyers and sellers of quality used clothing in a seamless resale experience.
thredUP had a group of churned customers that hadn’t purchased in the past year and wanted to reactivate these customers with an offer. thredUP ran a reactivation campaign along with an A/B test of two different creatives to different cohorts of its churned customers to see which creative would perform best and which cohort would be most responsive to the offer.
thredUP segmented its churned customer base into two cohorts; those who subscribed to email and those who had unsubscribed from emails. The team wanted to test to see if the additional touchpoint of direct mail would influence the email subscribers' propensity to purchase and, for the unsubscribers, serve as a way to reach the audience they could no longer email.
Using intelligent direct mail from Lob, thredUP was able to personalize and customize each direct mailpiece to its audience. thredUP used a direct mail postcard format in its reactivation campaign. Each postcard had the same front side and two versions of the backside.
Version A contained a letter from thredUP’s CEO
Version B contained three reasons to thrift
thredUP wanted to use this test to learn if its churned audience would respond better to the personalized message from its CEO or the value props of thrifting in version B.
Additionally, thredUP chose to use a 45% discount to match an offer its loyalty team was running.
For the control group, thredUP took another subset of the unsubscribed cohort and looked at its behavior over the same amount of time compared to the people who received the direct mailer and the number of orders, conversion rate, and profit to compare against the test cohorts.
The letter from thredUP’s CEO outperformed the three reasons to thrift making it the clear winner of the test. And, to the team’s surprise, the unsubscribed group outperformed the subscribed group for both creatives. In the future, thredUP will use direct mail to communicate with its email unsubscribers.
The team also looked at Average Order Value (AOV). AOV was higher for the direct mail group than the control group, and AOV was slightly lower for the subscribed group meaning the unsubscribed cohort beat subscribed in almost every metric.
The biggest takeaway is that direct mail worked well for the unsubscribed group, said Brittany Reano, Sr. Manager of Growth Marketing. The letter from the CEO was the top performing creative, and the unsubscribed group had a far higher incremental conversion rate than the subscribed group. So we predicted that in one year, we would more than break even from this letter creative.
thredUP immediately used the learnings from its test and sent another a month later. This time, the team used the winning CEO letter creative but tested the offer amount of 45% off vs. 30% off. They found the 45% offer was a clear winner as it had a 4x conversion rate over the 30% off offer.
thredUP plans to use direct mail as an essential driver of ROI and revenue as part of its overall marketing strategy.
When we started this relationship, we needed to get some postcards out to reactivate customers. Other than that, we didn’t know what our strategy was. In just a short amount of time, we've learned a lot. We know we’ll make direct mail a permanent part of our strategy moving forward, Reano says.
Testing, learning, and optimizing
thredUP has multiple tests planned to continue its learning and optimization process. In the fall, thredUp will test “on figure” imagery versus “lay flat” imagery. The team also plans to continue testing highly customized direct mailpieces triggered based on customer behaviors, including liked items, recent purchases, and abandoned cart items. Reano explains, “eventually, we want to improve our recommendations. One idea we had was if we were targeting recent customers, maybe someone who just made their first purchase, could we send a postcard saying, you picked this out; here are some items to complete the look. And then if she bought jeans, we're recommending a top and shoes and a handbag or something where it's complementary and gives her a reason to come back.”
Lob makes it seamless for thredUP to send automated, triggered campaigns that reduce manual effort and increase efficiency while generating better responses and higher ROI.
Lastly, based on the performance of the CEO letter creative, the team is also exploring testing more handwritten-looking creatives for the personal touch.
Lob’s mission is to connect the world, one mailbox at a time.
Lob is the only direct mail automation platform for the digital age. Lob's platform automates the direct mail execution process for enterprises at any scale - from creation, printing, postage, delivery, and sustainability with end-to-end analytics and campaign attribution. Over 11,000 businesses trust Lob to transform their direct mail into intelligent mail.
Founded in 2013 and based in San Francisco, Lob is venture-backed by Y Combinator, Polaris Partners, Floodgate, and First Round Capital.