Clickstream Analysis and E-Mail Marketing

 

Marketers constantly try to improve email CTRs (define). They also strive to make email more relevant.

A previous column addressed the need to temper email frequency with relevance. The industry has come a long way from standard, mass email to highly personalized email and steadily increased email relevance. Though an email offering sales or free shipping has become a magic bullet for boosting the top line, companies are finally learning slicing margins and losing money on each transaction aren’t a recipe for success.

Luckily, recent reports from JupiterResearch prove a point we’ve addressed in this column for years: get to know your customers, and they’ll reward you with their loyalty.

Though it’s been slowly catching on for a while, email marketing based on clickstream analysis is finally taking center stage. E-mail companies such as Responsys are teaming up with analytics companies like Coremetrics, WebSideStory, and WebTrends to provide true integration that marries email marketing campaigns to actionable analytics.

What is clickstream-based email marketing, and how effective is it? Today, we’ll look at what it is and, with the help of a JupiterResearch report, provide some numbers to ascertain its effectiveness.

Clickstream-Based E-Mail Increases Conversions

A clickstream-based email is a message (or campaign) that takes into account a user’s clickstream data. Whereas a standard personalized email might include purchase data (because you bought X, we recommend Y), an email that includes clickstream data can be more specific.

Instead of answering “What?,” as in “What did the user buy, and what might he like today?” we can begin to answer “Why?,” as in, “Why is the user visiting the site today?” Based on why the user is interested in us today, we can begin an email marketing campaign based around those needs.

Let’s say I browse Amazon.com’s electronics department. A clickstream-based email marketing message could be sent to me that’s weighted toward electronic merchandise, even if I’ve never purchased electronics from Amazon before. A standard personalized message might contain information about DVDs and books (because of my purchase history) but ignore the fact I’m currently interested in DVD players, not DVDs. Only clickstream data can ferret out that kind of information.

Clickstream-based email campaigns not only have superb relevancy, they have incredible immediacy. They’re up-to-the-minute because they look at what users are doing now, not basing personalization just on previous purchases, regardless of how long ago those purchases were made.

Numbers Back It Up

According to “The ROI of E-Mail Relevance,” a recent JupiterResearch report, this level of relevancy is paying off. The following is the percentage of people who immediately purchased something based on an email they received, broken down by content:

• Sale price for products: 73 percent
• Free/discounted shipping: 67 percent
• Product the user was considering: 60 percent
• Special offer similar to previous purchases: 16 percent
• Personalized subject line: 8 percent

Of these email messages, the only one that uses clickstream behavior is the “product the user was considering” email. Is it the most successful type? No. Is it the most profitable? Most likely. The only email messages that performed better were the “sale price” and “free/discounted shipping” messages. An extremely relevant offer with no discounts, faired almost as well as the free-shipping panacea. I’d rather convert 60 percent of customers on highly profitable orders than 67 or 73 percent who convert only when I cut my margins by offering sale prices or (worse) lose money by paying for shipping.

Open Rates, CTRs, and Conversions

Clickstream-based email is also more effective when compared to email using other forms of personalization or segmentation. These numbers, also from JupiterResearch, show the various metrics of mass email, life-cycle email, targeted email, and clickstream email. Clickstream wins on each count:

E-Mail Type	Open Rate (%)	CTR (%)	Conversion Rate (%)
Mass	20	9.5	1.1
Life-cycle	27	14.0	2.8
Targeted	30	12.9	2.7
Clickstream	33	14.0	3.9
Source: JupiterResearch, 2006

I know I’ve thrown a lot of numbers into this column, but here are the most important ones: profit and revenue. JupiterResearch also measured the monthly net profit and revenue of each email type. Below, each email type’s net profit and revenue:

E-Mail Type	Net Income ($)	Revenue ($)
Mass	5,155	45,600
Life-cycle	76,668	222,970
Targeted	83,419	228,754
Clickstream	162,631	401,942
Source: JupiterResearch, 2006

Conclusion

Clickstream-based email is a new and wonderful way to increase relevancy in email marketing campaigns. Is this technology combination a magic bullet? Of course not. There are a lot of things to take into account. At present, the new technology doesn’t come cheaply. On the other hand, the results are more effective, making the investment worthwhile.

Because clickstream analysis isn’t just used in aggregate form, privacy becomes an issue. Smart implementations of this technology must allow users to opt out of being marketed to based on site usage. Filters must be used to weed out behavior users don’t want reported. Say I want to be able to tell a site it can watch my behavior across categories A, B, and C, but not in categories D, E, or F. User control is paramount to squash privacy concerns.

New campaign types require out-of-the-box thinking. This email’s power shouldn’t be used to offer the same old messages with discounts and free shipping. Otherwise, you cut your margins just as before, only more effectively. Use this relevance for loyalty-building and personalization, not for cutting margins.

Thoughts? Let me know!

Until next time…

Jack

Want more email marketing information? ClickZ E-Mail Reference is an archive of all our email columns, organized by topic.