The electronics retailer invested in direct marketing channels in its last financial year and moved away from TV spend, as it drove up new and repeat custom.
AO World increased spending on direct marketing channels at the expense of TV in its last financial year, as looked to drive up new and repeat customer numbers.
The electronics retailer has reported healthy results for the year ending 31 March, with B2C sales up 12% to £832m. Pre-tax profit rose 32% to £45m.
Spend on advertising and marketing increased to £44.4m in the year, from £40.5m a year earlier, but was flat as a percentage of revenue, which increased by 7% on a like-for-like basis.
In a statement announcing the numbers, the company said it had “chosen to invest in direct marketing channels and move away from TV spend”, adding elsewhere that there had been an increase in “direct acquisition costs with immediate transaction links”.
It did, however, state that there had been “continued brand investment across sponsorships, postal mail brochures and other media”.
AO accelerates shift from acquisition to long-term brand play
AO has been running the ‘AO, Let’s Go!’ brand campaign on TV for several years and has naming rights on the AO Arena in Manchester. It’s also a sponsor of netball team Manchester Thunder.
The retailer, which sells a large range of domestic appliances and consumer technology products, is looking to both acquisition and retention of customers to fuel growth. More than 650,000 customers used AO for the first time in the year to 31 March. Returning customers – which are “cheaper to acquire” the firm added – accounted for 60% of orders.
In a bid to attract and retain customers, AO added over 1,500 new products during the year and in categories it didn’t previously have an offering, such as fitness, drones, cameras, and health and beauty.
The business flagged its Five Star membership programme – which offers repeat customers discounts – as a reason for success in retaining customers and vowed to provide “customers more opportunities to buy” and keep “coming back”. No further details were given.
CEO John Roberts, who founded the business 25 years ago, claimed last year’s performance would be a springboard for further success.
“The really great news is that there’s so much more for us to go after, with a total addressable market of over £28bn. Given the size of that prize, the fantastic momentum that we’re seeing across the business and our awesome team of AOers, I couldn’t be more excited about the next 25 years. In many ways, we’re only just getting started,” he added.
