E-Mail Strategy

Which of the following three strategies would you recommend to management?

Strategy #1:

• Two e-mail marketing campaigns per week, untargeted, delivered to the entire list, no promotions or offers (THIS IS THE CURRENT STRATEGY).
  
• List Size = 100,000.
• Average Sales Per E-Mail = $0.10.
• Average Opt-Out Rate = 0.25%.
• Average New Subscribe Rate = 0.35%.
  
• Average Weekly Demand = $20,000.
• Average Weekly Profit = $7,000.

Strategy #2:

• Two e-mail marketing campaigns per week, untargeted, delivered to the entire list, each with a free shipping offer.
  
• List Size = 100,000.
• Average Sales Per E-Mail = $0.20.
• Average Opt-Out Rate = 0.20%.
• Average New Subscribe Rate = 0.40%.
  
• Average Weekly Demand = $40,000.
• Average Weekly Profit = $9,000.

Strategy #3:

• One e-mail marketing campaigns per week, untargeted, delivered to the entire list, no promotions or offers.
  
• List Size = 100,000.
• Average Sales Per E-Mail = $0.15.
• Average Opt-Out Rate = 0.15%.
• Average New Subscribe Rate = 0.30%.
  
• Average Weekly Demand = $15,000.
• Average Weekly Profit = $5,250.

Strategy #4:

• One e-mail marketing campaigns per week, untargeted, delivered to the entire list, each with a free shipping offer.
  
• List Size = 100,000.
• Average Sales Per E-Mail = $0.25.
• Average Opt-Out Rate = 0.15%.
• Average New Subscribe Rate = 0.35%.
  
• Average Weekly Demand = $25,000.
• Average Weekly Profit = $5,625.

Strategy #5:

• One e-mail marketing campaign per week, ten versions highly targeted only to the "active" e-mail list of 20,000 addresses, with free shipping offers given only to the 10,000 who like free shipping offers.
• List Size = 20,000.
• Average Sales Per E-Mail = $0.50.
• Average Opt-Out Rate = 0.10%.
• Average New Subscribe Rate = 0.20%.
• Average Weekly Demand = $10,000.
• Average Weekly Profit = $2,500.

Which of the five strategies would you employ? If you chose strategy #5, describe why you would choose this strategy.

E-Mail Marketing And Geography: Multichannel Opportunities

In e-mail marketing, we obsess about simply getting a marketing message to first arrive in the inbox of a customer, then to get the image to render properly. Assuming we can accomplish these challenging issues, we focus on the offer and subject line text, trying to maximize click-through and conversion rates.

Seldom do we tailor the message based on geography.

This is a map of the greater Seattle metropolitan area. Green zip codes are those that perform best for this brand, while yellow zip codes perform worst.

The magic of e-mail marketing is that separate messages can be created, based on geography.

The customer who lives in Easton, sixty miles southeast of downtown Seattle in the Cascade Mountains, is not likely to shop in your store --- heck, in winter, this customer simply cannot get across the mountain pass. Why advertise a store message to this customer?

Conversely, the customer living in Belltown has close to a thousand shopping opportunities within ten miles of her home, and can easily walk to several hundred stores. How might the marketing message be different for this customer than for the customer living in Easton?

What about the customer living in Bremerton, just ten miles west of Seattle ... but a two hour trip due to the wait to get on to a ferry to get to Seattle? Maybe buy online / pickup in store is an option, given that this customer works in Seattle?

Zip code data is FREE! You maintain the information for every customer who purchases from your online and phone channels, and in many cases, you have this data for retail purchasers as well.

Each zip code can be classified across different dimensions.

• Urban, Suburban or Rural.
• High Spending, Average Spending, Low Spending Zip Codes.
• Distance From Closest Store.
• Store Preference.
• Channel Preference: Phone, Website, Store

E-Mail marketing strategy is crafted for each categorization. You're likely to see a ten or twenty percent increase in e-mail marketing performance based on versions of e-mail campaigns targeted to customers having different zip code characteristics.

E-Mail Marketing Gurus: Your Thoughts On Williams Sonoma

The e-mail marketing blogosphere has been buzzing lately, suggesting that we minimize campaign based blasts in favor of targeted, relevant, personalized messages that the customer eagerly anticipates. Sounds good to me!

And then a few weeks ago, Williams Sonoma mentioned that they have eighteen million opt-in e-mail addresses, across all of their brands.

So my question to all of us who share a belief in relevant, targeted e-mail marketing is this: How would we accomplish this feat for eighteen million unique customers who have multiple relationships and multiple e-mail addresses across multiple brands and multiple channels and multiple stated preferences?

And if we can answer the question effectively, how do we do this when we don't have the systems infrastructure to do what we want to do? It's really easy to blast big brands for their silly practices. How would we solve the problem when faced with real life constraints?

Discuss.

Profit Week: E-Mail Marketing

Might it be time to completely rethink the concept of e-mail marketing?

Think about this medium for a moment. We celebrate the outstanding ROI of a marketing medium that inspires one out of every seven hundred recipients to purchase something.

Seriously. We celebrate a 0.15% response rate. We celebrate a medium that only one in five individuals bother to even open. We celebrate best practices that improve e-mail response rates to 0.20%.

Maybe we should judge e-mail marketing on its ability to get a customer to visit a website, to "engage". Maybe the goal of e-mail marketing is to train customers to regularly visit our website.

If the purpose of e-mail marketing is to train a customer to interact with us, we would re-think e-mail marketing, wouldn't we? We wouldn't gouge our customer when the economy was good, then offer free shipping when we were desperate to generate sales, would we?

E-mail marketers might market the company blog, encouraging the loyal customer to interact with the brand.

E-mail marketers might educate a customer about how to use the products and services the brand offers, offering planting tips for the seed marketer as an example. The goal isn't to sell seeds ... the goal is to tell somebody how to be successful with the seeds they purchase.

E-mail marketers might share stories about the loyal employees who serve loyal customers.

E-mail marketers might share stories about loyal customers, helping loyal customers feel special. Instead of selling product, sell the loyal customers who buy merchandise.

The goal of e-mail marketing could be about making people feel special. This could generate word of mouth, generating sales with minimal incremental cost. This could also generate reasons for customers to visit your website.

Of course, all of these ideas could be worth garbage.

Conversely, one in seven hundred customers are buying what we have to sell today. What do we have to lose?

Growth Strategy

Your forecasting analyst suggests your telephone sales will decrease by ten percent next year, while your online sales will increase by ten percent next year, yielding flat corporate growth.

Your CFO is unhappy with this projection, and demands that the business grow by ten percent next year.

There are many ways you could grow the business. Here's a sampling of opportunities:

• Catalog Strategies
• Add catalogs to the mail plan (currently at 30 in-home dates each year).
  
• Add pages to each catalog.
• Remail catalogs to the same customers.
  
• Increase circulation in each catalog --- either customer acquisition or reactivation.
• Other ideas?
  
• E-Mail Strategies
• Increase e-mail contact frequency from one per week to two or more per week.
• Increase the number of targeted e-mails from five versions per contact to ten or more.
• Other ideas?
• Online Marketing Strategies
• Improve natural search opportunities.
• Spend more on paid search, or be smarter about paid search.
• Increase affiliate partners.
• Spend money on portal advertising.
• Start a corporate blog.
  
• Other ideas?

Prioritize the top three ways you would try to grow sales, and describe why you would use the techniques you chose to employ? Which strategies do you think drive the most incremental sales, at the lowest cost?

6 In 10 E-Mail Campaigns Compete On Price?

Chad White must not have a lot of free time.

Host of the popular RetailEmail blog, Chad does the work we don't have time to do --- he subscribes to most business-to-consumer e-mail programs, then shares what he observes with his audience.

Chad compiles many of the e-mail campaigns in a feature called the "Subjectivity Scanner". He lists the subject line of each e-mail campaign he chooses to feature in this section.

I analyzed the subject lines from October 2006 and February 2007. I purposely omitted November, December and January, months that are highly promotional in nature.

Within the e-mail campaigns Chad listed for us, any time I saw the word SALE, % OFF, FREE SHIPPING, GIFT, or any other variation of a price promotion, I categorized the e-mail campaign as "Competing on Price".

After compiling the results, 59% of February E-Mail campaigns, and 58% of October E-Mail campaigns "Competed on Price".

Did we cause customers to demand rock-bottom prices, or are we simply responding to the fact that customers won't purchase online unless there is a huge incentive to do so? In our modern era of commerce, do we simply have nothing better to offer the customer than a low price?

Of course, I don't have the answers to those questions. I can share why business leaders continue to feed us discounted merchandise.

The table below illustrates possible outcomes of an e-mail test, comparing a normal e-mail campaign to one where the business offers 20% off all merchandise purchased by the customer.

As you can see, the promotion significantly improves open and click-through rates, causing at least thirty percent more customers to visit the website. In total, two-thirds more sales are generated.

And you need this level of sales increase to offset the discount you give to the customer. In this example, profit is very similar in both groups.

If you are a business leader, you can look good, and drive a huge increase in sales, at the same level of profit. Or, you can maintain your integrity, and fight your way through sales decreases. Either way, profitability could be similar.

Chad's data indicates that most business leaders decide to grow net sales. As a result, they have to offer promotions. When this is done over and over again, year after year, the business attracts a customer file that expects a deal. In essence, the customer is trained to expect something for nothing. Re-wiring customer expectations becomes very, very challenging.

Time for your thoughts. Pretend you are an executive. Are you willing to reduce your e-mail campaign productivity by forty percent, in order to build a long-term customer file that is willing to pay full price for your merchandise?

E-Mail Productivity: Regular Message Verses Off-Price
		Regular	20% Off
		E-Mail	E-Mail
E-Mails Delivered		100,000	100,000
Open Rate		23.0%	28.0%
Click-Through Rate		35.0%	39.0%
Website Visitors		8,050	10,920
Conversion Rate		2.0%	2.6%
Average Order Size		$200.00	$185.00
Total Demand		$32,200	$52,525
Net Sales	85.0%	$27,370	$44,646
Gross Margin	45.0%	$12,317	$20,091
Less E-Mail Cost	$0.003	$300	$300
Less Promo Cost	13.0%	$0	$5,804
Less Pick/Pack/Ship	11.0%	$3,011	$4,911
Variable Profit		$9,006	$9,076

E-Mail Marketing: Success Or Apathy?

Assume that your average e-mail marketing program has the following metrics:

• An open rate of 26%.
• Among those who open the e-mail, 30% clicked-through the e-mail to your website.
• Among those who clicked-through to your website, 2.8% purchase something.

When we multiply the metrics together, we learn that 0.26 * 0.30 * 0.028 = 1 in 458 customers who received the e-mail decided to purchase something on your website.

Considering that the marketing cost of e-mail is virtually free, the ROI of your e-mail campaign is utterly spectacular. Woo-hoo!

Let's take a second look at the metrics of your campaign:

• Nearly three out of four of the people who received your e-mail didn't even bother to open it.
• Only 0.26 * 0.30 = 7.8% of your list cared enough to visit your website.
• Just 1 in 458 customers purchased something, a 0.2% response rate.

Do you consider your campaigns a success, if it had a spectacular ROI, but was completely ignored by three out of four recipients, and only harvested one purchase among four hundred and fifty eight of your loyal customers?

What do you pay more attention to, the outstanding ROI, or the complete apathy of your customer base?

Saks Fifth Avenue E-Mail Campaign

Today, I received the following e-mail from Saks Fifth Avenue, sent to their e-mail subscriber list.

There were tabs above this image that the customer could click through to visit specific merchandise divisions. However, the title of the e-mail was "Presenting A Fresh New Face Of Saks Fifth Avenue", so the purpose of the e-mail was to specifically tell customers that there is a new logo --- "Presenting our latest logo, a classic script rendered with a fresh, new face".

Saks has been around for an awfully long time, so they obviously know what they are doing. I guess I am confused how I, as a customer, benefit from this announcement. I am also confused as to how Saks sells more merchandise because of this announcement. What do you think?