Since the growth in Internet buyers has dropped into the single digits, companies are looking to e-mail to provide a greater lift in online sales and conversion. This requires marketers to look beyond e-mail blasts or even simple segmentation campaigns, instead creating a more individually relevant e-mail program.
To be relevant, the offer should contain products or content based on that individual customer’s purchase history. It takes a personalization rule to determine what is relevant for each of your hundreds of thousands of customers.
A December 2004 comScore survey found that 65 percent of consumers say they want a personalized shopping experience. If you are not using personalization rules, you have not made the leap to marketing on a customer-centric basis.
Building personalization rules. Before I tell you why you should use rules, let me explain what rules are. Personalization rules are algorithms that are developed by analyzing a company’s data about its customers to identify the key drivers of customer value.
Each rule has two to four variable data elements. By adjusting the data elements in the rules, thousands of unique rules can be generated. And by choosing the appropriate set of rules, you can generate the desired objectives for your campaign.
The first step in building such a rule is to decide on a campaign’s objective. Next, you need to develop rules that will accomplish the objective by matching the right products to each customer.
These rules have three common elements. First is a method to target customers either by brand, sub-category, product affinity, individual products purchased and so on. Next are the criteria for classifying customers by latest product purchased and average order value. Finally, you have to select the appropriate products to be used with the rule, such as best sellers or new products.
For example, a product affinity rule would populate an e-mail with products having a high affinity to each customer’s most recent purchase. Such a campaign could use 200 to 500 products in thousands of combinations.
Staples reminds customers to “stock up” on replenishable items they have previously purchased. Using more than 7,000 replenishable SKUs, the company helps customers avoid running out of key items. This type of campaign is usually received as a customer service and provides a strong increase in sales and lifetime value.
HSN Improvements increased sales by sending products with the highest affinity to those purchased by each individual customer. If you bought the barbecue fork, you will receive offers for the grill squares and grill cleaner. These campaigns are important for companies with a low number of annual purchases per customer in order to increase frequency.
Customers are telling you what interests them when they buy or click. Companies should use this information with their personalization rules to include types of merchandise relevant to the individual customer in their online communications.
A customer-centric approach commitment. Building a personalized e-mail program requires analytical resources to design and execute the appropriate personalization rule for each campaign. In addition, personalized campaigns require a closer integration with merchandising as these campaigns might require hundreds of products versus a blast campaign, which may use only six. Finally, technology is required to deliver a campaign that may have more than 1 million variations of products within it.
Though resources are required, the rewards are significant. The use of personalization rules has shown the ability to increase sales per order, order frequency and lifetime value. And with concerns about spam and deliverability, consumers have shown to be more responsive to communications they perceive as relevant to them. This combination makes a customer-centric approach to e-mail the best way to achieve online sales increases as the number of buyers continues to plateau.
