Let’s say that you want to run an email marketing campaign. You know the importance of setting up an experiment, establishing a control group, and continuing with the holdout until the results have been validated.
But hold on a moment. How do you take that crucial first step towards actually running the marketing experiment — figuring out which customers to mail, when to mail them, and what message you want to reach them with?
For example, imagine that you believe you can stimulate additional repeat purchases by offering customers a 20% discount. One way to do it would be just to send an email to your entire customer base (minus the control, of course) with the offer, and see whether it results in a lift in repeat purchases.
We often hear this referred to as “batch and blast,” or, more recently, “spray and pray.” (This one time we heard “pow and chow,” but we couldn’t figure out what it actually meant.)
Anyway, here’s how an un-targeted promotion can be potentially risky:
-It’s costly. It’s true that a 20% promotion might help you reconnect with customers who have faded away over time — and stimulate some purchases that they might never otherwise have made. The problem is that plenty of the customers receiving this promotion would have made purchases anyway, with or without the discount. Giving them 20% off is just eating into your margins. What you would really like is a sharper way of targeting those customers who are fading away or at-risk — customers for whom any additional purchases will be incremental to what you have gotten without the promotion.
-It leaves money on the table. The flip side to sending a discount to a shopper who would have made a purchase anyway is missing the chance to send the most relevant promotion to a given customer. Your job is to connect with your customers with the right message at the right moment. It’s possible that all of your customers might be interested in a 20% discount regardless of their relationship history, purchase patterns, and current behavior. Possible...but unlikely. Ideally, you would want to figure out a way to email different customer segments with a message that is crafted to appeal specifically to them.
So how can we move towards a smarter approach to email marketing?
1) Tie email triggers to the customer lifecycle and your customers’ “temperature.”
Consider three customers: Jessica, who has bought jewelry from your website every month for the past five years; Vesper, who used to buy new shoes every half a year or so but hasn’t made a purchase in nine months; and Leanne, a new customer who made her first purchase of jeans last week. These customers don’t look too different at first glance. All three are female and have made purchases in the past year. But each is likely to be most responsive to a different kind of campaign.
For Leanne, a follow-up email at the 30-day mark — possibly with a discount — can help your brand remain top-of-mind and trigger a repeat purchase. Jessica, on the other hand, is an active customer who is “hot” and needs little additional prodding to buy; an email with a sneak peek at the new earring collection might be more meaningful (and cost-effective) for her. And Vesper is a customer who is steering of her normal purchase course — “cooling,” so to speak — and might need additional incentives to reconnect with your brand. A welcome-back message and special deal on shoes could help remind her why she loves you before she becomes truly “cold” (inactive and likely gone for good).
Tying email triggers to specific points in the customer lifecycle and aligning your email marketing efforts with your customers’ “temperatures” can help you serve up more relevant messages and offers.
2) Sharpen your messaging and offers with smarter segmentation.
One of the foundations of advanced customer analytics is the premise that your customers are all different — so they shouldn’t be treated the same. If you know that customers who reach your site through the Google adword “carburetor” are fundamentally different than those who reach you through adword “muffler” (different repeat purchase likelihood, different profit per order, and ultimately different customer lifetime value) consider running separate email campaigns with different messages and offers for each segment. It will help tie your marketing efforts to the real drivers of your company’s performance.
3) Keep on refining.
Email marketing is not “one-and-done.” It’s an ongoing and iterative process; today’s exciting new idea is tomorrow’s status quo. A/B testing — the idea of holding a bake-off between two or more competing ideas to see which produces the best results — is sometimes called the “champion-challenger” model when a new idea is being evaluated against an existing favorite. So make sure that you have a robust pipeline of challengers ready to go up against the current champion for supremacy. Observing that a 15% discount leads to revenue lift over an email with no promotional offer? Why not try a dollar-denominated discount instead or a buy one, get one promotion? Why not experiment with a new subject line or new creative? Effective email marketing is about continuous, incremental improvement rather than putting the “right” option on auto-pilot.
Ultimately, the promise of email marketing lies in its ability to enable a more personal, individual relationship with the customer. Acknowledging that customers are all different — and linking marketing efforts to the stage of their relationship with your brand — can help ensure that you deliver the right message to the right customer at the right time.
Learn more about customer segmentation by taking our free online Customer Segmentation course on Custora U.