Tea Forte is distinctive within the tea industry in both its business model and its use of B2C business-to-consumer and relationship management (CRM) technology. These work together and provide some general messages for tea retailers, whether they are store-based or online sellers. The main one is that business success increasingly rests not on “selling” and “product marketing” but on building repeat business. The correlate is that a priority in B2C is to bring together every data item about customers, both actual and potential. Tea Forte shows how this can be done and the payoffs.
The firm is noted for the luxury nature of its offerings. These are heavily targeted to gift givers and sold through such stores as Nieman Marcus, Fortnum and Mason, and Saks. That initially limited the firm’s brand awareness and distribution. Tea Forte has been successful in extending its market reach through Amazon, while maintaining its premium image – and price.
Building profitable relationships
Here’s a summary of the logic of Tea Forte’s adoption of a B2C/CRM package:
“We’re best known for our samplers and our gift boxes. These perform really well during the holiday times. A lot of the products people buy are often sampler packs of 20 or 40 of our pyramid tea infusers. People bring that to a party and open it up at a dinner. There’s kind of a wow factor when you open up the box and we’ve found this niche with gift buyers, and then we work on acquiring the recipients as customers themselves.
We look at these samplers and if there’s 12 infusers in there, there’s an opportunity to acquire 12 customers.”
The firm constantly explores multiple options to reach customers, through knowledge of their behavior. By merging sales and customer data into one technology architecture, it can personalize via real-time data, analytics and cross-channel knowledge of the customer. Examples include:
Boost relevancy of email campaigns: e.g., launch in parallel three messaging tests: (1) no special offer, but a brand “sentiment” builder, (2) a loyalty type communication, and (3) a small discount of 10-15%. These each employed several modes of presentation, ranging from a light, white scheme to a high contrast, dark and “mysterious, luxurious kind of feel.” The results produced some surprises and insights, resulting in an entirely new welcoming campaign.
Track margins and financial dynamics: the analytic tools in the system make it easy to go beyond looking at just revenues, product profitability and gross margins: dollars per email sent, response rates for individual customer segments, Facebook ad interactions, etc. The main metric for Tea Forte is dollars per site visit.
Behavioral segmentation for campaigns: communication to non-openers versus, say, “final day” emails to those with items in their carts but who have not checked out. Bounce-backs send immediate special offers to one-time buyers to convert them to repeat customers.
Cross channel coordination: syncing to Facebook, etc. to add a nudge to targeted customers, using reviews on Amazon reviews to trigger automated marketing routines.
Growing sales and customers
One effective way in which Tea Forte has used its technology infrastructure is in building a productive relationship with Amazon. Its own analytics mainly help build repeat business but it needs to attract new ones. Many firms fear that their brands and products will be cannibalized by Amazon. Amazon is limited in how much of the customer experience and personalization can transfer from the seller site and marketing. By establishing a third-party relationship with Amazon, Tea Forte’s sales team controls all the images, enhanced brand content and pricing information on Amazon. This helps prevent the commoditization that marks more and more consumer markets.
And control of margins, too. One of the major lessons from the e-commerce dot com boom and bust was that the profit is in the customer relationship, not the product. Customer acquisition is very expensive and heavy discounts for new buyers and what might be termed give-it-away.free.com can make high volumes of “clicks” a drain on profits. The plethora of great deals that are easy to locate online puts constant pressure on prices and/or net margins. Tea Forte vice president for e-commerce and digital, Jorgen Nebelung, observes that “Once you use control of price, you lose control of brand and its perceived value.”
Customer data platforms
Tea Forte’s system is sold on a volume-pricing basis by its developer Zaius. It’s well-reviewed and inexpensive given its powerful and extensive features and automated links to other resources, apps, social media, and other Web sites. The starting cost is around $1,000 a month. Other leading providers include Optimove, Lytics, Segment, Listrak, Oracle, and IBM. The term CDP – Customer Data Platforms – is emerging as the generic term.
These systems are not plug and play. They demand a lot of organizational work and new skills. Most firms have a mix of systems that cannot talk to each other or share data: email systems that are standalone, customer records that don’t link to inventory and product data, transaction systems using differing structures and definitions and, most of all, information about and from customers that is not stored or accessible. The underlying core of CDPs is to organize data around the customer view. The truism about building the customer experience and the need to know your customer needs sharpening. You need to know your customers’ behaviors not just profiles.
The payoff from CDP has been substantial. It claims a 20 time return on investment from its ability to do target marketing.
Can we afford this?
There have been four widely covered instances of tea sellers using technology effectively for business innovation: Teabox’s adoption of a system to streamline the delivery of tea to customers across the world, cutting time and ensuring freshness, Chai Point’s point-of-sale customer service innovations that have included AI face recognition, Unilever’s implementation of a blockchain that integrates the end-to-end logistics chain and includes Uganda small growers, and Tea Forte. They are not the only ones moving ahead nor necessarily the best, but they offer blueprints for any tea company to consider in answering two questions: How much benefit can we and our customers gain? Is this best practice now but likely to become standard practice that we must be part of to succeed in an increasingly competitive market?