Articles - Written by Arthur Hughes - 6 Comments
Doing Email Right
Recently a Fortune 1000 retailer worked with Quris to create a comprehensive email program for their customers. The company had not used emails extensively before. The goal was to show a general increase in store activity and total net revenue through emails to opt-in email customers. They wanted to prove that they could influence customer behavior through emails. In the process of this experiment, they created one of the most comprehensive and valuable exercises in the whole direct marketing industry.
To test their program, they set up a test population of just under 220,000 customers who had previously provided the company with their emails, and permission to use them.
Barriers to success
In doing their planning they learned that:
Setting up the test and control groups
The sample of just under 220,000 was divided into nine different groups for testing purposes. A control group of nearly 16,000 opt-in email customers was assigned at random before the program began. This group got no email messages.
Customers with op-in’s over a year old (nearly 90,000) got a reconnect message to which they could opt-out. Then the total test universe of over 170,000 was divided into four basic groups of about 43,000 each. Cells 1 and 2 got a constant message every two weeks. Cells 3 and 4 two got messages based on their prior month store visits. Cells 2 and 4 received eCoupons, while Cells 1 and 3 did not.
The coupons tested three offers:
A particular difficulty involved how to measure customer activity. Was it total expenditures, total number of transactions, frequency of transactions, etc. The company emerged from this test with valid quantitative measures to demonstrate the lift from email on an ongoing basis.
The company determines ROI based on incremental total net revenue (TNR) – Quris augmented this traditional analyses by isolating the source of the lift: i.e., did email drive new customers to the store? Or the same customers more frequently? Or the same customers to spend more? Also, Quris looked at the purchase propensities (e.g., comparing different types of transactions).
This is a very interesting and valuable study. Quris and the company used all the techniques available to do a really thorough job of exploring the relationship between emails and customer behavior. There are too few companies that have rigorously used control groups to prove that what they were doing was working. This analysis validated the email channel to the company’s senior management. As of 2003, the company sends out 8 newsletters and over 1.5 million emails per month.
Arthur Middleton Hughes, vice president of The Database Marketing Institute, has presented 28 seminars on database and email marketing. Arthur has also authored several books includingStrategic Database Marketing 4th Edition (McGraw-Hill 2012). He and Andrew Kordek, chief strategist and co-founder of Trendline Interactive, are hosting a two-day Email Strategy Study Group in Fort Lauderdale March 26-27, 2013, featuring group competition for email marketers responsible for subscriber acquisition, lifetime value, ratings and reviews, boosting their email budget, and doubling their ROI. To learn how to attend the Study Group, click here
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