Merchant Innovation

How Cosabella Successfully Hit The Reset Button With An AI Assist

Cosabella is known among connoisseurs of fine undergarments as purveyors of luxury lingerie valued particularly for being well made and comfortable.  And, after 35 years in the game – the company had carved out a nice niche selling B2B to high-end retailers like Nordstrom – as well as direct-to-consumer over the web.

Things were going  well – until in 2016, they suddenly weren’t, and revenue started to fall, particularly in their direct-to-consumer channel.

What happened next was somewhat expected – somewhat not.  Cosabella fired their advertising agency, which made sense, since their advertising efforts weren’t working.

But Cosabella did not hire another advertising agency – or beef up their internal marketing efforts.   Instead, they hit the rest button in a bigger way –  departments were re-organized, core campaigns were re-written, and the firm made a big investment in AI technology to enhance their direct-to-consumer business  marketing.

“The way marketing was defined before the digital transformation, [the marketing department] was in charge of photos and catalogues and campaigns, but there was no technical side to it; no analytics or tying it back to ROI,” said Courtney Connell, Cosabella’s marketing director. “There [was] no tracking things from a digital perspective in a meaningful way. We were creating the material, but didn’t have the data to understand the best strategy.”

These days, Cosabella is powered by transparency – and an advanced AI engine named Albert.  The machine learning algorithm built by Adgorithms now centrally manages all of Cosabella digital market efforts across email, mobile, search, social and display.

Marketers in house set parameters like location, channel, target audience, budget and KPI’s – after which “[Albert] made every single decision,” according to Connell. Those decisions can include  including identifying  keywords, shifting budget between channels, finding fraud and executing buys.

And the results have been notable.  Without hiring additional in-house marketing staff,  Cosabella saw a 336 percent increase in return on ad spend. Revenue in Q4 was up 155 percent and the brand saw 1,500 more transactions year over year, 30 percent of which came from new customers. On Facebook, return on ad spend was up 565 percent within Albert’s first month. By the end of month three, Albert had increased conversions on Facebook by 2,000 percent.

And those increases came with falling costs – in Albert’s first month, Cosabella spent 12 percent less on marketing and increased returns by 50 percent.

“All of the big ideas, strategy and campaign creative is happening in-house,” Connell said, noting that Albert has better freed the team to pursue those avenues, and focus their resources better.

“They could throw something in there and trust the AI, and if it made money, it would get more budget, and if it didn’t, it would just get phased out,” Connell said.

And while Albert has been fundamental to that effort, Connell noted that restructuring of corporate structures have also been critical to the brands re-emergence.

“Our e-commerce team, our communications department and marketing were all totally separate and, sometimes, in different countries,” Connell noted of what the internal workings of the firm looked like when she arrived three years ago. “There was a lot of disconnect. We’d be trying to launch a product online and marketing wouldn’t have the images ready — some silly things like that.”

Cosabella spent  about a year combining all three departments, so they would receive the same information and be on the same page.

“Merging those departments broke down the walls of that data.”

It also allowed the various parts of the business – wholesale and direct-to-consumer, to focus on a single message around what the brand’s non-negotiable offers were, and who exactly the target audience was.  Things, Connell said, that everyone assumed they agreed one, until the walls came down and everyone “in the room says something different.”

Minus the silos – the firm was better able to move forward with its AI upgrades, and manage the human side of the transformation wherein their staff had to learn to work with and trust the AI.

“We went as far as having classroom sessions, talking to [the] team about how this was different,” Connell said, referring to the new digital marketing campaigns. “They were no longer creating a complete ad and passing that to an ad agency. Instead, they’re giving all image and copy possibilities to the AI, and the software will experiment.”

The transformation hasn’t been easy – and would have been impossible in the firm’s previously disjointed department environment, notes Connell – but with direct support from the C-Suite it was possible to “streamline our communications and goals.”

There are still functions to be figured out – along with Albert, Cosabella makes use of two other AI systems to manage customer outreach and those separate systems are still ironing out how to best interact with each other.

But the net result at Cosabella has been clear – the slump has turned around and the organization runs better parallel to the better technology – and also because of it.

“Once we cut ties [with the ad agency], we had three options,” Connell said. “We could hire a new agency, we could hire more in-house talent or we could take a look at the AI sector to see if it [was] mature enough to not be cost-prohibitive for a brand of our size, while also being mature in what it [could] do. We saw an immediate day-and-night change. We went from plateauing, to double-digit growth from the previous year.”

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