As response rates decline in the face of increased competition and overmailing, more e-mail marketers are starting to use the good old gauge of recency/frequency/monetary value (RFM) to target their most recent, most frequent, highest-spending customers.
Online retailer Discount Beauty Center worked with Listrak to create a modified RFM model to reactivate customers who had not made a purchase in at least 30 days. Analyzing records on its e-mail file led the merchant to break purchasers into three segments: those who had not made a purchase within 30 to 60 days, those who had not bought in 61 to 360 days, and those who had not made a purchase in more than a year.
Discount Beauty then applied what Listrak CEO Ross Kramer calls a discount ladder. Those who had ordered most recently — the 30- to -60-day group — were sent an e-mail offering them $5 off a $25 purchase. The next segment received an e-mail entitling them to 10% off their order. The coldest group, those who hadn't bought from Discount Beauty Center in a year, were e-mailed a code good for 15% off their next purchase.
While monetary value wasn't a factor in this model, type of product was, so the e-mails referred to the types of items the customers had last bought. For instance, if a customer's previous purchase had been a Ralph Lauren fragrance, the e-mail's messaging included links to Ralph Lauren products.
Discount Beauty Center sent a follow-up e-mail to those who did not respond to the initial message. Although the subject line was tweaked, the message creative and the offer remained the same, which Kramer says kept the cost of the redeployment to a minimum.
The average click-through rate for Discount Beauty Center's e-mails is about 1.5%, according to Kramer. The click-through rate for the initial e-mails sent to the coldest segment was 2.8%, with 12.0% of those who clicked making a purchase. For those who hadn't bought in 61 to 360 days, the click-through was 4.4%, with 21.3% of those making a purchase. And among the most recent of the nonbuyers, those who hadn't bought in 30 to 60 days, the click-through was 8.9%, with 13.6% of those responders making a purchase.
