Stuck Between a Rock and an Inbox. Maybe Not…

Email has historically been a marketing marvel for ecommerce. It is the most efficient revenue driver and can extend merchandising off site to the inbox. Unfortunately, a few years ago everyone started running the same email marketing playbook and now consumers are being bombarded with retailer emails. As a result of this deluge, the KPIs for email have slowly eroded (click thru rates, revenue per email, etc.).

While email is still a very effective channel, email marketers are forced to choose the lesser of two evils when addressing declining results – send more or segment more.

Send More
As consumers, we typically experience the former approach; send more. For proof of this “send more” approach, look no further than the promotional tab in your personal email. You’ll notice some brands are averaging an email per day! When you look at it from the customer’s perspective, the downside to the “send more” approach becomes apparent. First the relevance of those emails quickly diminishes. Brands are challenged to have a sale or promotional message every day (lord knows, many try), so they send out a variety of branded messages and merchandising that is usually generic and often off-target for the recipient (e.g. a multi-gender apparel brand sending female merchandising messages to men who have only bought men’s clothes). As the relevance diminishes there are cascading problems for the brand, including:

  1. Recipients are less likely to open emails since there is a high chance for irrelevant content.
  2. Recipients question their relationship with a brand (brand doesn’t demonstrate it knows the recipient as an individual).
  3. Response rates decline.
  4. Unsubscribes grow.
  5. Retailers respond by sending even more email!
  6. Rinse and repeat. (see #1)

This vicious cycle provides short term lift but also encourages a highly transactional experience and more often than not, discount-centric messaging. Discounting generates the strongest response and is increasingly employed to protect falling response rates. But before a retailer realizes it, they’ve created a price integrity problem (“I’ll wait for the sale, paying full price is for suckers”).

There is one more problem with this approach. How else might you respond to increasing unsubscribes? More on site pop-ups to capture emails? Yes, but this approach invites a host of engagement issues for shoppers. We’ve all been on ecommerce sites where you get multiple pop-ups during your shopping session – it’s annoying and frustrating (especially if you’re already on their email list).

So, in an attempt to serve this hungry email marketing engine, we’ve potentially created a price integrity issue for our brand, a user experience nightmare with pop-ups and are spamming our customers inbox with an ever-growing number of email.

Segment More
The other option to combat declining email performance is to increase relevance by segmenting the email file into ideally similar groups (e.g. Elite Empty Nest, Established Professionals). While this may sound like a logical approach, there are distinct downsides to segmentation. First there is a significant added expense. Not only do you need to identify and manage the new segments, you also need to determine the products that are most relevant to each group. In addition to this incremental database and merchandising work, there is a great deal of new creative work that needs to be completed for each segment in the email campaign.

The big question is, “Does all of this additional work and cost provide an ROI lift in response rates?” Unfortunately, more often than not, it doesn’t. The relevance is directionally better but static, segment-based product merchandising only promotes the most popular products for that segment – not the individual. It’s important to understand that “most popular” for a group of thousands doesn’t mean it’s relevant to more than 50% of the people. It simply means that of all the items available, these have proven most interesting to the group. At best, they’re interesting to 20% of the segment.

A Better, Third Option
There is a third option that actually achieves the goal of increasing response rates with increased relevance. Individualizing content in promotional emails. What this means is that while the promotional message can be generic (e.g. Get 30% off Winter Boots) the merchandise promoted is different for each individual based on their preferences (e.g. men’s boots, women’s boots, work boots, cowboy boots, etc.).

If you can make the merchandise in the email hyper-relevant to the expressed interests and intent of each individual, you can drive increased results.

And the data backs it up – brands that implement individualized content in emails are increasing conversion rates and revenue per email by upwards of 20%!

In addition to increased response rates, brands that implement individualized content don’t have to send more emails (they might even be able to send fewer) and they also don’t need to increase the costs of creative, database and merchandising to achieve better results.

Instinctively, many people think this must be harder to execute than either option, but in truth, it’s easier. By listening to each visitors shopping behavior (clicks, searches, add to carts, purchases. etc.), it is easy to understand what the shopper is most interested in. Even if it’s a category they haven’t shopped for, you can understand their preferences for brands, materials, colors, sizes, etc. Instead of the merchandise being static, it actually fires when the email is opened. That means the content is dynamic – as an email is opened, merchandise which reflects the most recent shopping behavior of the recipient, as well as what is currently available in inventory, is immediately selected and presented.

The last, and arguably most important, benefit of this approach is customer focused. By sending relevant content to each shopper, you improve their experience and engagement with the brand. By demonstrating to customers that you value and respect their time (and inboxes), brands can lower unsubscribe rates and build deeper, more lasting and profitable relationships with each individual customer.

Kurt Heinemann

Kurt is Reflektion’s CMO. His resume includes CMO positions at Marketwired and Monetate. He’s also held senior executive positions at Priceline, Time Warner and Walker Digital Companies. Despite living in Yankees territory, Kurt is a die hard Tigers fan.