In its second-largest acquisition, Amazon buys the company for $970 million.
The retailer sends “smart e-mails” to customers that have exhibited a particular behavior. For instance, the program, managed by customer loyalty specialist Loyalty Lab, puts customers into a queue to receive an e-mail offer related to a past purchase.
Smarthome Inc. sells home automation products, such as timers that turn lights on and off at specified times. The retailer, which mainly sells online, has recently learned the value of an automated e-mail program that sends out follow-up e-mails to consumers who buy a particular product or sign up for the retailer’s e-mail list.
Smarthome began in November implementing “smart e-mails” from Loyalty Lab Inc., a company that specializes in campaigns that increase customer loyalty. The retailer sets up a rule, such as, when a consumer buys a Sony electronic book reader send them an e-mail in two weeks promoting accessories like a power adapter or colored covers, says Sandeep Gupta, manager of analytics and operations at Smarthome. Each day Smarthome sends Loyalty Lab a data feed of customer purchases, and Loyalty Lab automatically puts Sony e-book buyers into the queue to receive the appropriate e-mail two weeks later.
“The beauty of it is we set it up once and it stays alive for as long as we want,” Gupta says. He says the company has created about eight of these automated e-mail programs and they are producing much higher response rates than the company’s regular weekly e-mail newsletters, Gupta says. He says recipients respond to the targeted e-mails 14.7% of the time, compared with 5.9% for the e-mail offers sent to the entire list; revenue per e-mail is $43 for the targeted programs, versus $10 for the broadbased e-mails.
Besides setting up e-mails based on purchase behavior, the retailer also has created an automated program for consumers who sign up to receive e-mail from Smarthome. “About a week later we send a welcome e-mail explaining what we do, the next week we send a tutorial about how to improve your home and make it more automated, and the third week we’ll send an offer,” Gupta says.
Gupta says the automated e-mail program is part of the Loyalty Lab service and does not cost Smarthome extra. The only cost, he says, is that it takes the retailer’s e-mail designer about 20% longer to develop a targeted e-mail than the typical e-mail that goes to all subscribers.
Privately held Smarthome generates revenue of more than $25 million each year, and about 80% of it comes from the web, Gupta says.