Keynote Email In A Downturn

© 2008 e-Dialog, Inc. All Rights Reserved.

Arthur Middleton HughesSenior Strategist

Using e-mail to survive in a down economy


How to survive

With the recession putting marketing budgets under ever more pressure, brands will inevitably be forced to be more creative with their e-mail campaigns and distribution

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1. Be prepared to defend your budget

2. Think of new ways to expand your email lists

3. Look after your loyal customers

4. Fine tune your e-mail frequency

5. Automate revenue-generating programmes

6. Test your programmes for good measure


Be prepared to defend your budget

E-mail is measurable, predictable, profitable and cost effective


E-mail lowest cost media

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Lowest Cost Per Order

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E-mail’s Role Not Understood

In many companies, e-mail is not recognized as the marketing powerhouse that it is

It is somewhere off on the side, producing Web sales which are about 3% or less of total sales. Budgets are often based on online sales alone.

That may be the perception, but companies that think that way are missing the boat

Here is the reality…

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E-mail Influences all channels

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E-mail Offline Sales 4 Times Online

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How to survive

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Expand your email lists

To expand your marketing, expand your audience


Vital: more e-mail subscribers

You can’t get the benefits of e-mail marketing unless you have a large number of subscribers.

You are always losing subscribers: they unsubscribe, they change their e-mails, they stop opening.

There must be a regular programme designed to gain more subscribers week after week.

To do this best, there has to be something in it for the subscribers – and also for your customer contact staff.

To start with, find out what an e-mail subscriber is worth…

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Determine the value of subscribers

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.

Lifetime Value Typical Airline Relevance Score 2.4 Rates Acquisition Year YearCampaigns Per Year 36 Year 2 3Subscribers 2,700,000 2,278,800 1,923,307 Unsubs and Undelivers Monthly 1.30% 421,200 355,493 300,036 Emails Delivered 89,618,400 75,637,930 63,838,413 Percent emails opened 22% 23% 24%% Reservations/ open (Psgrs / reservation)_ 1.3 1.5% 1.6% 1.7%Online Passengers due to e-mail 384,463 361,852 338,599 Phone/Desk Flights due to e-mails 90% 346,017 325,667 304,739 Total Passengers due to emails 730,480 687,519 643,338 Revenue: Average Order: £260.00 £189,924,690.38 £178,754,816.47 £167,267,876.53

Variable Costs of Service 50% £94,962,345 £89,377,408 £83,633,938Subscriber Acquisition Cost £12.00 £32,400,000 £0 £0Transaction Emails 3.00 2,191,439 2,062,556 1,930,014Email creative and delivery £6.00 £550,859 £466,203 £394,611DB, Segmenting & Marketing £2.00 £5,400,000 £4,557,600 £3,846,614Total Cost £135,504,643 £96,463,767 £89,805,177

Gross Profit £54,420,047 £82,291,050 £77,462,699Discount Rate 1.00 1.16 1.35 Net Present Value Profit £54,420,047 £70,940,560 £57,379,777Cumulative NPV Profit £54,420,047 £125,360,608 £182,740,385Subscriber Lifetime Value £20.16 £46.43 £67.68£ Per Delivered £2.12 £2.36 £2.62


Multi-Channel Buyers More Valuable

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JC Penney US Data


What is Acquitention?

Acquitention The art of acquiring email addresses and permission from

other channel purchasers. You will find email is a far cheaper and quicker way to

communicate with these loyal contacts. You will also be able to be far more targeted in your offers. Acquitention Touch Points

• All online marcomms inc. website

• POS

• Loyalty Cards

• Catalogues

• Operational emails (Avis eg.)


If you want them to register, you must promote the idea on the website, in transactions, in print and direct mail and catalogs. Go all out.

Give them a reason for registering.

Compare these two approaches One is tiny and hard to find. The other gets results. Which do you use?

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Acquitention - Website


Acquitention - POS

Borders UK set up their POS system in May 2006 to collect e-mail addresses at the cash registers.

The POS system sent data every night to the Borders ESP. This triggered welcome messages to everyone who signed up the day before.

The messages included a discount voucher to prompt a second visit.

Results: 38% higher transaction values for e-mail subscribers compared to other members.

13% voucher redemption rate E-mail subscriber base increased 630,000 in 17 months.

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Rewarding POS Staff and Subscribers

Once you know the value of an e-mail you can afford to incentivize subscribers and employees .

If each e-mail address is worth £67.68, you can give a subscriber £5.00 for her e-mail address.

You can give employees £5.00 for getting each new e-mail

When the new e-mail is entered, a welcome e-mail is sent out right away, asking the subscriber to click that she really wants to receive your e-mails.

If the e-mail is new, and valid, and she clicks “yes” you give the reward to the employee and to the subscriber.

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Aquitention – Loyalty Cards

If you have a loyalty programme:• Boots Advantage Card

• BA Miles

• Tesco ClubCard

• HiltonHonours

Use every touch point, every mailing, every POS promotional opportunity to gather the email address and permission.

Use loyalty points to encourage engagement

Use email as a cheaper channel to communicate statement information.


Catalogues are expensive to produce and distribute. Think of ways to use the catalogue engagement

cycle to capture an email address:• Incentivise catalogue phone reps to capture email addresses

• Use pages to promote ‘email only offers available’

• Also ‘hear first about latest deals – don’t wait for the catalogue’

• Use Order Form to ask for email address.

• Send Order and Delivery Confirmations to an email address

• In actual package – enclose leaflet promoting the benefits of email.

Aquitention – Catalogues


Oakley Sun Glasses

Oakley packs a return post card in every retail product.

The returned post card gives benefits to the customers in exchange for name, address and email.

Their entire database is built from these post cards.

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Transactions Gain Subscribers

Avis Budget Group enrolled tens of thousands of customers into its e-mail newsletter by having its call-center reps ask if customers would like to receive an e-mail confirmation of their car rental reservation. The transactional messages yielded an 87.1% open rate, and CTRs for permission for further e-mails ran as high as 61.6%.

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How to survive

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Look after your loyal customers

Focus on quality and service

Have a conversation with your customers about their lives, their interests, and how you can work with them to make their lives better and better.

How can you give them what they need, when they need it and reward them for their custom

Changes in consumer behaviour will likely mean you need to revisit your current customer segmentation strategy.

Let’s say customers in your top segment typically spend £500 a year; now assume that the economy forces these customers to cut back and spend only £400 a year. Those £400 spenders are still loyal customers – tightening their belts, but still worthy of VIP status.

Adjusting your parameters will be critical in order to avoid alienating your core customer base.

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Cold Stone with 1,700 locations created a birthday club “Receive FREE Ice Cream on Your Birthday!” .

In two years, 2,000,000 signed up for e-mails. Birthday e-mails have open rates 62.5% higher than

other e-mails. Click throughs are 350% higher . Franchisee survey: “Overwhelmingly positive

response… drives people into the stores… people don’t come in by themselves.”

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Look after your loyal customers


Ask them what they want Most e-mail marketers think that everyone is looking

for bargains. Some people definitely are. But others look for quality, helpfulness and service. To send daily e-mails saying SALE! SALE! SALE! may

turn some subscribers off. Look at what Sears asks their web appliance buyers:

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How I feel about brands: 1. I typically buy top-of-the-line brand products. 2. I buy name-brand products at a moderate price. 3. I am always looking for a bargain. I will try any brand if the price is right.

How I feel about technology:

1. I buy products with the latest features and technology. 2. I buy products with mainstream features and technology. 3. I am not interested in technology. Keep it simple for me.


Banks, insurance companies and other financial institutions know more about their customers than almost any other industry. Use that knowledge.

Example: Next Best Product. Use analytics to determine for each customer what her NBP is:• Auto Loan, Home equity loan, credit card

• Savings account, Certificate of Deposit, Interest Bearing Checking

Results of one company sending communications based on the NPB: • The top decile of scored households had a sales rate of 68% higher than the

overall average, and 195% higher than the bottom decile. Two thirds of all sales came from the top 50%.

• Households sent the next best product messages had a sales rate 11% higher than those who got the regular "product of the month" communications.

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Travel and Finance – good with data


Segment your audience by what you know about them.• Are they business or leisure travelers? International or Domestic?

• Travel alone or with others? Where do they usually go? Home airport.

How one airline segmented their travelers:1.GOLD COASTER: 45+ years, not traveling with children 15 years or under.

2.FAMILY: All adults traveling with children.

3.OLDER INDEPENDENTS: 35-44, not traveling with children.

4.YOUNGER INDEPENDENTS: 25-34, not traveling with children.

5.HIGH SCHOOL STUDENTS: 16-18, not traveling with children.

6.COLLEGE/UNIVERSITY STUDENTS: 19-24, not traveling with children.

• Individual marketing programmes were created for each of the six segments. The top10 %: 43 % of total revenue. Lodging and rental cars: top 20 %

• Communications retained and expanded the most profitable segments

• Higher return on investment from marketing than ever before.

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Travel and Finance – good with data


How to survive

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There will be plenty of temptation (not to mention management pressure) to ramp up the frequency of your email. Increasing frequency is fine, as long as you are intelligent about it.

More emails equal more sales BUT More emails also lead to high unsubscribes. Look at

this case study

Fine tune your e-mail frequency


Possibly reduce the frequency Some e-mailers have found that increasing their

frequency increased revenue but reduced profits.

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How to survive

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Triggered emails boost revenue Implement automated trigger-based email

campaigns, these are campaigns that send out messages based on actions taken by a recipient. Triggered e-mail messages offer a two-fold advantage.

First, because they are automated they enable cost-effective programme management.

Second, they ensure contact with customers at the most timely points in the relationship and buying cycle, thus delivering consistently high ROI results.

In fact, it is not unusual for a triggered message to deliver upwards of five times higher revenue when compared to a standard broadcast e-mail.

Automate revenue-generating programmes


And the Winners Are…


The Top 5 programme Opportunities

Reactivation

Birthday/ Anniversary

Welcome Sequence

Click Targeting


Abandoned Cart Provide relevant messaging to users who abandoned

their shopping cart

Results: 15x lift in revenue per net delivered


Welcome Sequence programme Send a sequence of welcome messages to

new subscribers to enhance the initial brand experience

Results: 8% lift in incremental purchases over sending only one

welcome message


Birthday and Anniversary programme

Recognize customer milestones such as birthdays or anniversary of programme signup

Goodwill message as the focus

Results: 2x lift in revenue per net delivered e-mail


Use email to promote catalogue arrival. Miles Kimball tested 20,000 catalogs in three mailings

with a simultaneous e-mail: ‘Look in your mailbox’ Also sent identical catalogs to 20,000 others without the

e-mail. Those with the e-mail produced 18% higher sales. E-Mails get people to do what you want them to do at

very little cost.

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Direct Mail Support


Reactivation programme Target lapsed buyers with a

reactivation campaign to stimulate purchase activity

Tactics to include within the e-mails are:

Special offers

Surveys

Different content

Results: While not out-performing active buyer

segments, generates 23x over the cost of the email

Think of this as “found money”


Transactions: your most powerful e-mails

Today promotional e-mail open rates are falling as consumers receive more and more e-mails.

Most are below 20%.Transaction e-mails (“Your order was shipped today”)

have open rates of more than 60%Here is an ideal opportunity to promote additional

sales – because customers are reading them.Many companies do not take advantage of this.Their transactions are in text, not HTML, and often say

“Do not reply to this e-mail!”What a mistake!

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Microsoft Blows an Opportunity

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Why don’t you make a note of this easy-to- remember number

So you can enter it here!

And read this easy number over the phone to them here!


How to survive

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The only way to improve is to run tests Without testing, you will never learn anything Times are tough, and you may be tempted to discard

with your testing programmes in order to save budget.

Testing against a control will help you identify which programmes are yielding the greatest return on investment, and how you can enhance them.

Test your programmes for good measure


Don’t want to steal Sharon’s thunder. She will be talking about:• Short

• Medium and

• Long term strategies for testing

And what you should be thinking about in this economic environment.

Test your programmes for good measure


Summary: Prosper in the recession

The downturn in the economy tells you: “Now is the time to do a better job with your e-mails”

Focus on the following 6 key areas

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And my final piece of advice . . .


Some bedtime reading . . . Batch and blast e-mail is in distress. It

no longer performs. It is like hunting for sales in the wilderness.

Better solution: put your subscribers on a database and create targeted interactive e-mails. It is like farming, where you study and care for your farm animals.


Thank you very much

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Keynote Email In A Downturn

Technology