Shoppers have become more Web-savvy about researching and buying products online not to mention less tolerant of random e-mails. Many of them have stopped opening messages just because they have their names on it.
What It Means
Personalized campaigns are still in their infancy. In fact, 44 percent of merchants intend to add personalization this year compared to 33 percent last year according to a recent survey conducted by the e-tailing group. "Fewer respondents claim to offer a limited amount since they have found greeting by name does not suffice though current personalized message implementations are limited in nature," says Lauren Freedman, president of the e-tailing group.
Data segmentation is key to successful personalized e-mail campaigns. Retailers need to collect relevant customer data -- basic demographics, buying history and preferences -- as well as product information related to availability, pricing and quantities and then match the two data streams to develop winning messages.
"To make such messages meaningful, retailers need customer participation to gather the necessary information so they can match products more closely to their preferences," says Freedman.
LoveSac, a multi-channel alternative furniture retailer, implemented Campaigner Pro and got its customers on board by hosting contests to encourage new subscriptions while learning more about current subscribers. "With the new system, we also removed old contacts and customers who were not responding," says Mike Shelton, Web business manager, LoveSac.
"The major barrier to better data segmentation among retailers is their concern that it is labor-intensive and their doubts over whether it is worth the additional IT investment," says Freedman. "They are not sure how such campaigns would boost ROI."
To the contrary, early adopters have been enjoying significant benefits. LoveSac has boosted its conversion rates by 150 percent while increasing the size of its database by 50 percent while expanding subscriber detail.
It was the same for essentialapparel.com, even though its hosted MyBuys Personalized E-mail Alerts Services has only been active since June of this year. "The conversion rates are twice those of our conventional e-mail campaigns," says Akiva Bergstrom, vice president of business development, essentialapparel.com. "In fact, sales peak on the days after we send out the personalized messages. Customer feedback has been positive. People tell us they love receiving the notifications."
Most important, the technology does not create barriers to achieving results. For example, hosted software applications make it easier, simpler and affordable for retailers to implement personalized e-mail solutions. "We feed customer data and updates on product inventory, availability and prices to MyBuys who then use various algorithms and other analytical tools to develop the necessary recommendations," says Bergstrom. "We were up and live within 12 weeks. A hosted system requires much less IT infrastructure and
support than having our own in-house system."
What's at Stake?
Personalized e-mail campaigns are another marketing channel for retailers to deliver value to customers. "It's all about saving time and offering savings," says Freedman. "Such campaigns are a cost-effective way for retailers to get their messages out to the right customer. The retail landscape is constantly changing so they need the flexibility to deal with those changes."
That's where Web automation and simplification can make a difference. Since all transactions are electronic, data is constantly being tracked which provides retailers with next-day consumer data enabling them to craft specific messages to a more targeted audience.
"Before, sending out broadcast e-mails was a time-consuming effort that took three days," says Shelton. "And we had no way to determine whether the whole list was successfully deployed or whether the campaign was effective. Now we are able to track subscribers as they open, click and purchase."
How to Succeed
Besides basic alert messages, retailers also need to take advantage of offering possible up-sell and cross-sell opportunities. "We have combined our personalized messages with MyBuys Personalized Web Recommendation Services that suggests related items that other people who have bought recommended products have also purchased," says Bergstrom. "Also we want to improve customer dialog so they will become better educated about buying online rather than buying items and then returning them."
Segmented customer data also helps retailers target more precisely other electronic communications. "We send out regular e-mails including newsletters, promotions and upcoming events notices," says Shelton. "With better data, it is easier for us to create more relevant content that customers will read. Soon, we hope to include geographical and past-purchase data to further improve e-mail relevance."