March 25, 2010, 12:00 AM

Petco boosts average order values with segmented e-mail campaigns

After switching to an e-mail marketing program that supports segmented newsletters based on customers’ interests, the multichannel pet supplies retailer boosted online average order values by 30%, e-mail marketing manager Margaux Abaya says.

After switching to an e-mail marketing program that supports segmented newsletters based on customers’ interests, multichannel retailer Petco Animal Supplies Inc. boosted online average order values from e-mail newsletter recipients by 30%, says Margaux Abaya, the retailer’s e-mail marketing manager.

 

“Before segmenting e-mail, our average order value was about $65, but now it’s up to $85,” she says.

 

Petco is managing its e-mail newsletter campaigns with Precision Central, a suite of applications from its e-mail services provider, e-Dialog. Precision Central enables the retailer to develop up to 500 distinct versions of its newsletter based on customer interests as recorded by web analytics on Petco.com, Abaya says.

With its prior e-mail management system, Petco rarely sent segmented e-mail campaigns because it was simply too difficult to both come up with information regarding demand among segments of customers and develop distinct newsletter content to appeal to particular customer interests, she says. “In the past, we couldn’t really do it because the old system required us to pull reports on what people were doing online to create different segments of customers,” she says. “We had to pull data from our e-mail program and our online customer purchase data.”

In addition, the old newsletter format wasn’t designed to easily support a large variety of content.

By contrast, she adds, the Precision Central system provides a newsletter template designed with 12 customizable segments of content. This enables Petco to produce up to 500 distinct versions of its newsletter each month.

The e-Dialog system also comes with built-in analytics that lets Petco monitor how much e-mail recipients are opening their newsletters, clicking through links and making purchases. Petco adds to this data with information it compiles through its Coremetrics web analytics application as well as sales data from its in-store point-of-sale system customize newsletters for its store shoppers.

 

An online customer who usually shops for dog supplies and is a member of the Petco PALS loyalty program, for example, might receive a newsletter with a mix of content related to her favorite breed, including a personal note about how many more bags of dog food she needs to buy to qualify for a free bag. Another customer who usually shops in one of Petco’s 950 physical stores for cat supplies would receive a newsletter tailored to store content about felines.

 

The more Petco uses the e-Dialog system, testing how segments of customers respond to different newsletter versions, the more it will learn how to boost conversion rates and sales, Abaya says. “The key for us is testing,” she says. “We can drill down into the 12 segments of the newsletter to see how each is engaging customers.”

 

In one test earlier this year, Petco e-mailed special codes to customers who could click them to earn free shipping on their next order, plus get entered into a drawing to win a product if they forwarded the free-shipping offer to a friend. “We saw that this wasn’t enticing enough,” Abaya says. “People didn’t bite.”

 

So the marketing team came up with something they figured would be more compelling, driven by consumers’ curiosity. The result was a Mystery Savings campaign, which required e-mail recipients to click a code to see if they would receive a purchase discount of 5%, 10% or 20%. Recipients could then share the same discount offer they received with their friends via Facebook, Twitter or e-mail; for every friend who also clicked the code to receive the discount, the initial recipient would also receive a $1 credit toward a Petco purchase.

 

“This campaign did really well with open rates ranging from 13% to 70%, click-through rates of 10% to 22% and an average order value of about $75,” Abaya says.

 

Such campaigns, she adds, serve as a base to continue improving on follow-up campaigns. By using the e-Dialog system’s reporting tools, Petco can see, for example, which e-mail recipients had the highest open and click-through rates on a particular campaign to better plan future campaigns.

Petco is No. 186 in the Internet Retailer Top 500 Guide. E-Dialog is a unit of a unit of GSI Commerce Inc.

 

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