E-mail marketing is not a magic formula that churns out profits, online marketers are learning. A study of the top 50 Web sites by San Mateo, CA-based Rubric Inc. shows marketers are missing several opportunities.
One is the chance to take advantage of the medium’s strength: interactivity. E-mailers are not embracing one-to-one marketing and building relationships with customers, says Hal Steger, vice president of marketing at the customized Web software developer (www.rubricsoft.com). The result for many is poor conversion and high attrition of customers.
The Rubric study, released in July, examined how sites try to hold onto their customers. To find out, Rubric hired 50 customer decoys to purchase one thing at each site. Of the 50, only eight sites sent follow-up messages within 30 days of the purchase. Only two of those were personalized, and in both there was an error in the personalization. One decoy said the experience was like using an online vending machine.
Steger remarks, “It’s one thing to collect a name; it’s another to do something meaningful with it.”
DMers already know that, which gives them an advantage over non-DM Internet firms, says Chet Van Wert, vice president of music club sales promotion at Columbia House, New York. These new marketers, he adds, “measure success by amount of traffic to their site; DMers measure success by amount of profit.”
Indeed, the Rubric study concludes that there are five improvements sites should make:
– Proactively market to customers.
– Apply the principles of database marketing – targeting and segmentation.
– Personalize communications to make them more relevant to customers.
– Automate the marketing processes so customers can respond to opportunities.
– Implement a closed-loop marketing system in which responses and purchases are tracked.
Computer and electronics e-tailer Cyberian Outpost (www.outpost.com) discovered this firsthand over the summer when it switched from marketing through TV ads and bulk e-mailings to personalized targeted e-mail campaigns, Steger says.
Outpost targeted 1,400 people who had previously purchased a Palm Pilot electronic organizer from it and opted in (agreed to let Outpost send them offers by e-mail). The Kent, CT-based company sent each of these an e-mail mentioning the purchase and offering them a chance to buy an upgraded Pilot at a discount for a limited time.
Those interested clicked on a hyperlink, which pulled up a personalized Web page that greeted them by name, displayed a photograph of the product and listed reasons to upgrade and buy accessories. The customer clicked to indicate a desire to upgrade, which sent them to a shopping cart already containing the items chosen. A checkout form appeared, automatically filled in, and a checkout button – when pressed – finished the order.
Nearly 700 customers purchased an upgrade, a 49.5% response rate. The Palm Pilot campaign generated $190,000 in incremental income.
Outpost now does 30 similar campaigns a month and wins an average 22% purchase rate. The marketer is working toward 50 campaigns a month and a “lights-out interactive marketing model” in which e-mail touting additional products is sent out, Steger says.
The new strategy has paid off big time, rocketing Outpost from revenue of $50,000 a month to $10 million a month.
In addition to applying traditional DM methods to online selling, it’s important not to forget the effectiveness of traditional channels, Columbia House’s Van Wert warns.
“From a cost standpoint, marketers would rather do their transactions on the Web,” he says. “And it’s a better deal for the customer, too; there’s a lot more information available online.” Nevertheless, he adds, direct mail can enhance and support electronic efforts.
A piece that arrives by snail mail should educate the customer about what’s available online. For example, a 300-word artist interview sent by the music club may say: For a complete interview go to www.columbiahouse.com. “Just to say, `Go check out our Web site’ is not a compelling message,” Van Wert asserts. “You need to demonstrate on paper the cool content they can find when they go there.”
In e-commerce, the first time you’re putting anything in a new customer’s hands is with the initial product shipment. That package then becomes a “key marketing contact,” he says.
Slipping a discount coupon into a package is a good way to give a new customer incentive to buy again. It’s also a good way to build your brand.
Van Wert recalls a Barnes & Noble ad that compared Amazon.com with Wal-Mart. The claim rang false because of the premiums that Amazon encloses with its book shipments. These bookmarks, coffee cups and mouse pads are festooned with humorous literary sayings that “stick in your mind,” he says, and “position Amazon as so much hipper and smarter than Wal-Mart. So the Barnes & Noble ad really brought home to me that Amazon has positioned itself as a very literary company.”
Besides, a bookmark is inexpensive and does double duty promoting the Web site.
Just as important, paper can display more graphics and more text than one would want to see on a screen. Direct mail is also a good vehicle for keeper promotions, such as recipes or gardening tips. “Paper touches your customer in a more personal way,” Van Wert says.
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