COOP Estonia (Coop Eesti), which is 100% owned by Estonian consumers, is the oldest and largest group operating together in the field of retail trade in Estonia. There are 19 independent regional consumer cooperatives under COOP Estonia that supply nearly 330 stores, 6,000 employees and 75,000 customer owners. The first consumer cooperative was founded in 1902 in Antsla, then in Sindi, and after that similar cooperatives were established successively all over Estonia. In order for regional consumer cooperatives to cooperate better with each other, they founded Coop Eesti Keskühistu (central association) in 1917.
What did we solve?
The retail company with the largest customer base in Estonia has two very important resources at its disposal – customer contacts of the entire group (A and O, Konsum, Maksimarket, COOP bank) and also marketing and distribution channels. How to make the most of these resources for the benefit of the group and display the most suitable product recommendations to customers in a real-time channel (e-mail, bank, scanning console, e-COOP) by applying a recommendation system?
How did we solve it?
We tested five different shopping cart personalization algorithms and selected the algorithm with the best results for the COOP Estonia recommendation engine. The created solution can perform A/B tests with different settings, which in turn allows the accuracy of recommendations (based on purchases from the three most visited COOP stores) to find the most effective business rules (including “recommend it”, “do not recommend”). The solution generates personal recommendations for the customer in his weekly channels.
What are the benefits?
Using a referral system in e-mail marketing allows each customer to be sent a personal newsletter or promotional letter, which more likely brings them to the store and increases the likelihood of opening newsletters in the future. At the same time, customer loyalty is growing, because by receiving information about special offers for preferred products, he will most likely make his next daily purchases in COOP. Increasing the purchase frequency of one customer in turn also increases the profits. All in all, it is possible to better target advertising products and thereby increase customer loyalty and business profit.