Adopting an E-mail Program Improvement

  |  May 28, 2009   |  Comments

How a total makeover or a room-by-room improvement can bring in more revenue.

Moving your e-mail program from a basic broadcast model to one that incorporates targeted and triggered messages is like buying an old house and trying to figure out whether you should do the entire project at once, or work room-to-room as your time and budget permits.

In the column, "Creating a Good E-mail Marketing Strategy", I encouraged marketers to "start somewhere; start anywhere. Even the smallest change you make today will start you down the path to the right strategy."

My company recently designed a total e-mail-marketing makeover for a client. The makeover incorporates a mix of programs, including triggered, transactional, and targeted messages for a consumer-products company. It is credited with helping the company nearly double its annual e-mail revenue, from $3 million to $5.1 million.

Although the company implemented this design as a whole, you can also implement programs one-by-one, thereby building each new initiative on the foundation of the previous ones.

Case Study: Elements of an E-mail-Marketing Makeover

Company background: The company is a mid-size manufacturer of a popular brand, sold both in major department stores, some outlet stores, and its online store. Previous annual e-mail revenue was $3 million.

Pre-Makeover E-mail Key Performance Indicators:

  • Average unique click-through rate: 4.5 percent
  • Average conversion rate: 3 percent
  • Average revenue per e-mail: $0.19
  • Average order value: $125

The new e-mail-marketing program incorporated three initiatives: triggered and lifecycle messages; adding marketing content to transactional messages; and targeted messaging, where the client swapped out one of its five monthly broadcast campaigns for a campaign that was targeted for a portion of its list.

  • Part One: Events and Dialogues (Triggered/Lifecycle)

    This initiative has four parts: a welcome program, a browse program, a cart abandonment program, and a win-back program:

    • Welcome Program

      This program sends a series of three e-mails to new subscribers:

      • E-mail 1: Sent at opt-in. No offer.
      • E-mail 2: Sent a week later. Free-shipping offer.
      • E-mail 3: Sent within a week after e-mail 2 to those who didn't use the offer, reminding them that the free-shipping offer is about to expire.

      Key Performance Indicators:
      Click-through rate: 8.7 percent (2x average)
      Conversion rate: 9.8 percent (3x average)
      Revenue per e-mail: $1.07 (6x average)
      Annual revenue: $683,000

      The new welcome program generated 23 percent of what the company used to make with the entire program.

    • Browse Activity Program

      This program sends a single e-mail three days after a customer browses the site and leaves without buying. The e-mail has no offer, but the content targets the product category with the most page views.

      Key Performance Indicators:
      CTR: 13.3 percent (3x average)
      Conversion rate: 5.7 percent (2x average)
      Revenue per e-mail: $1.03 (5.4x average)
      Annual revenue: $328,000

    • Shopping-Cart Recovery Program

      This program sends an e-mail three days after a customer leaves items in a cart. It includes a free-shipping offer; but, unlike the browse e-mail, it doesn't target the abandoned items or the category.

      Key Performance Indicators:
      CTR: 17 percent (4x average)
      Conversion rate: 17.8 percent (3x average)
      Revenue per e-mail: $2.97
      Annual revenue: $280,000

    • Win-Back Program

      This program sends three series of two e-mails, triggered at six months, nine months, and 12 months after the last purchase. E-mail 1 includes an offer; e-mail 2 is a follow-up and reminder of the offer, sent seven days later. (The offer expires after 10 days.)

      Key Performance Indicators:
      CTR: 2.7 percent (0.6x average)
      Conversion rate: 9 percent (3x average)
      Revenue per e-mail: 29 cents (1.5x average)
      Annual revenue: $152,000

  • Part Two: Transactional Cross-Selling Program

    The company added a small amount of marketing content to transactional messages (purchase and shipping confirmations, etc.). Each message had the same static content: a list and descriptions of the company's three top-selling products.

    Annual revenue: $180,000

  • Part Three: Broadcast and Targeted Programs

    The client replaced one of its five monthly broadcast campaigns with a targeted campaign using segmentation. The targeted segment is about one-fifth of the total audience on average.

    Average monthly revenue: $90,000 ($40,000 incremental revenue on top of $50,000 average monthly campaign revenue)

    The Bottom Line: An Extra $2.1 Million (70 percent more than prior year.

    Here's how the numbers stack up for the first year the client used these new marketing programs:

    $1.44 million (Events and dialogues)
    0.18 million (Transactional)
    0.50 million (Targeting incremental revenue)
    3.0 million (Broadcast messages)
    $5.12 million (Total revenue attributed to e-mail)

Key Takeaways

  • Your mileage may vary, but this company saw a big bang from its welcome series. Beyond the revenue, a good welcome series engages your subscribers more quickly, leading to lower list churn and greater likelihood that your acquisition efforts will pay off. If you do no segmentation or lifecycle message now, this would be a good place to start.

  • This marketing program transformation occurred with minimal staffing and relatively modest expense. The company operates a one-person marketing department. It did get outside help for this project, which amounted to about a quarter to a half of a full-time consultant's time. That's not very much additional effort for a couple of million dollars.

  • This marketing program has plenty of room to grow. Moving all broadcast campaigns to targeted efforts and replacing static offers in transactional messages with dynamic cross-selling content are just two ways this client can continue to build performance and revenue.

So find a room and fix it. What are you waiting for?

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Ed Henrich

Ed Henrich is vice president of professional services for Responsys, leading the company's creative, campaign development, strategy, and analytics teams to produce award-winning and profitable client e-mail marketing programs. Ed is a pioneer in the e-mail marketing industry, having joined Post Communications (now Yesmail) in 1997 when it was a five-person startup. For eight years, he was the company's vice president of client services, then president. Before that, Ed was a venture capitalist at Internet Capital Group and a senior consultant with McKinsey & Company. A former Fulbright Scholar to Australia in Control Systems Engineering, Ed holds a PhD and an MS from UCLA and a BS from Drexel University. Follow him at his blog, LinkedIn, or Facebook.

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