Study Data for Better CampaignsTo prepare for last year's holiday buying season, online retailers spent millions of dollars on media with one goal in mind: customer acquisition. The radio was filled with advertisements for dot-com this and dot-com that. The print publications were turning away advertisers for their holiday issues. Billboards were booked months in advance. And shoppers came. But getting them to buy was another challenge -- one that no amount of media spending could affect.
To convert browsers into buyers, retailers must communicate directly with customers with relevant information and offers.
In a last-minute crunch to generate holiday sales, retailers turned to e-mail marketing. Few retailers had dedicated budgets for e-mail marketing, so they pulled from online advertising and direct mail to test the idea of communicating with customers via permission-based e-mail. The hope was that they could leverage their established base of customers to increase sales in a short amount of time. Partnering with e-marketing providers for personalization and delivery technology, retailers sent offers of 10 percent off and free shipping to their customer lists.
Most retailers were pleasantly surprised with the results of their e-mail marketing campaigns. Not only did they know who received and opened their messages, but they also could tell who clicked on their offers and who made purchases. Marketers were in heaven. Add to that double-digit click-through and conversion rates, and suddenly people got the picture: Customer retention and loyalty e-mail marketing campaigns are a fast, cost-effective and measurable vehicle for maximizing sales and lifting profits.
With the return on investment of e-mail validated, retailers moved quickly to include ongoing customer communication campaigns as a fixture in their overall marketing mix. The success of generic holiday offers like free shipping gave retailers confidence that they could increase ROI even more with specific offers to targeted customer segments.
So retailers began looking at customer click stream and buying behavior with a new set of lenses. They had always studied this information to make decisions about merchandising, storefront and site design, but now they wanted the analysis for a new purpose: to determine how to target e-mail campaigns to the right customers, at the right time, with personalized offers online. The more retailers know about what pages customers visit, the items they view, the products they buy, and even what they put in their carts but don't buy, the better prepared they are to send targeted e-mail campaigns.
During the past year, many retailers have taken customer analysis very seriously. They invest in studying their customers to generate scientific knowledge about lifetime customer value. And they use that knowledge to create consistently profitable campaigns.
For example, if you know that 20 percent of your customers generate 80 percent of sales, wouldn't you want to know who belongs to that 20 percent and what they typically buy? With this information, you can minimize waste and optimize your e-mail campaigns to yield the highest ROI.
Armed with the experience and customer data collected during the past several months, the question is what will retailers do differently this holiday season to generate sales?
For one, more planning.
In place of last year's frenzy to yield results in December, many retailers are scheduling e-mail campaigns months in advance. Rather than bombarding customers with messages in December, they're implementing best practices for e-mail marketing by optimizing their communication over several months: planning and "wish list" messages will go out in November; "order now" campaigns are set for delivery in early December; and January discounts are planned for the new year. All of these campaigns can be managed and implemented right from the desktop using campaign automation tools.
Along with more advanced planning, e-mail campaigns are more personalized than ever. Retailers that sent generic free-shipping messages last year have since teamed up with e-mail technology providers to deliver targeted, one-to-one campaigns. Retailers who invested in customer analysis and ongoing online communication will reap the rewards this holiday season. They are the ones who know what offer to send, to which customer and at what time.
Finally, retailers will invest more heavily in e-mail marketing this year. Rather than pulling from other programs for funding, retailers will make e-mail marketing a line item in their budgets.
Gone are the days when a marketer could justify a multimillion-dollar media campaign for customer acquisition without generating a measurable, incremental increase in sales. Awareness and clicks still matter, but retailers can't afford to guess anymore. They need customer data and scientific knowledge about what customers want so they can deliver it quickly and effectively.
• William Park is chairman/CEO of Digital Impact Inc., San Mateo, CA. Reach him at firstname.lastname@example.org