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Published on: 3/1/2001
Last Visited: 1/23/2002
To try to get a realistic handle on the situation, the new senior vice president of marketing, Andrew Resnick, drew on his operations background from Blockbuster Video.
He defined "active members" as people who had used the service in 30 days.
To boost that number, Kozmo's previously mainly inbound 50-telerep call center began calling people who hadn't used the service in 30 days, offering them $5 worth of so-called Kozmo Points to use the service again.
"That worked phenomenally well," Resnick said, estimating the offer garnered a 30 percent redemption rate.
Resnick also estimated Kozmo drove its customer acquisition costs down to about $50 each by fall 2000 from $175 in July 1999.
He also slashed Kozmo's marketing budget from $40 million to less than $10 million.
"We went from burning $20 million a month to $1 million a month," Resnick said.
But Kozmo's homegrown technology created another direct marketing-related barrier.The company was unable to test promotions other than its standard free pint of ice cream to first-time buyers without manually circumventing its software.As a result, Kozmo was unable to bundle its products into special-event packs or try many of the gimmicks common to other direct marketing companies.
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"So when we tried to become less dependent on rental products, we couldn't even incent you to come in," Resnick said.Even the $5 reactivation campaign that had worked so well could only work on rental products.
Kozmo's technology also was reportedly incapable of database marketing."We had no ability to do that, or we absolutely would have," Resnick said.
Kozmo also reportedly did little to exploit its customer e-mail list.
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"Valentine's Day was probably our first really well-executed marketing event where the merchandising team, the marketing team and the e-commerce team really synched up," Resnick said."It was by far our biggest single business day, and I would say our first real success."
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"We inherited something that was going to be out of business in two months, and we got 10 months out of it," Resnick said."And we came within two months of probably being able to make it work."
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