FUNBOY came to Tontine as part of an overall strategic change in direction — the brand wanted to be seen as accessible while still remaining aspirational, and reverse the years-long unintended evolution of inching upmarket (which had gradually hurt their brand perception since the core target demographic now felt like their products were out-of-reach). However, at the same time, FUNBOY had just signed a multi-year wholesale deal with Nordstrom — with strict MAPs in place, price testing had to be discreet and handled with extreme caution.
First, using the platform’s UTM parameters filtering, geofencing, and “fingerprinting” functionalities, Tontine’s experts ensured that the risk a Nordstrom shopper would be redirected to an experimental cohort during a price test is minimal. At the same time, armed with demographic and historical sales data from FUNBOY, Tontine’s experts presented a range of pricing options generated by PriceBot (a competitive benchmarking engine that aggregates and anonymizes data from other Tontine clients in the same vertical to produce laser-sharp recommendations). Once the lower-bound range of the price curve had been established, the focus turned towards establishing a complete price elasticity parabola — and there’s no better way to do so than using Tontine’s multi-armed bandit (MAB) test configuration. Ditching the usual guess-and-check process, the MAB test configuration allows Tontine’s experts to set a ceiling and floor price, and from there, the pricing engine will automatically create four price points (at the 25%, 50%, 75% and 100% point) and dynamically allocate traffic towards the winning prices, thus ensuring that at the end of the test, there’s conclusively and definitively one winning price.
FUNBOY’s management team were blown away by the results: initially, there was a persistent fear among the team that by going downmarket, they’d have to sacrifice brand perception, gross revenues, and profit margins. The initial price tests showed quite the contrary — conversion rates increased by more than 25% with even a 4-7% price decrease, and just as importantly, because they didn’t have to discount their products now to boost conversion rates, perception of brand value among the core target demographic was not diminished. FUNBOY also began testing their free shipping thresholds with Tontine, and that resulted in a 31% improvement in gross margins within 60 days.