In its second-largest acquisition, Amazon buys the company for $970 million.
The e-retailer of natural products applies behavioral data to customize e-mails.
The Honest Company, an e-retailer of natural bath and personal care products, is finding it can convert more new site visitors into customers, and more quickly, when it personalizes the welcome e-mails it sends them. The e-retailer applies data from a new customer’s visit and aggregated data from other visitors to show her in the welcome e-mail messaging and offers that are most likely to appeal to her, says Sue Cho, manger of e-mail marketing for Honest Co.
The Honest Co. was founded by actress Jessica Alba in 2012 and has since raised $52 million in venture funding. It began by selling subscriptions for monthly shipments of product bundles, such as a 30-day supply of diapers and wipes or a “health and wellness” bundle of organic vitamins and supplements, for a flat monthly fee of $39.95. While the retailer now also sells products individually, it continues to focus on marketing the subscription plan to consumers. It offers a free 7-day trial supply of products to new customers and then asks them to convert to a regular subscription.
When a consumer first visits Honest.com, the site requests her e-mail address. If she provides it, she soon gets the first of six e-mails in Honest Co.’s welcome series.
The message she receives, and the ones that follow, are personalized based on the data Honest Co. and its predictive analytics vendor Retention Science can cull from her visit. For example, the four photos in the e-mail may vary depending on what she clicked on the site or how she arrived. A consumer who visits after searching on Google or Bing for “organic baby wipes” might see photos pertaining to that product category, for instance, while a consumer who clicked from a blog about nutrition might see images of wellness products, says Jerry Jao, founder and CEO of Retention Science.
“We are showing the offer that makes the most sense based on how they are opening and clicking,” Cho says. “Instead of going from a trial offer and waiting to convert to a bundle, we now see people subscribing to a bundle right away.” Jao adds that consumers who receive personalized e-mails typically sign-up for subscriptions a day or two earlier than consumers who do not.
As a consumer opens more Honest Co. e-mails and returns to the site, the messages become more personalized. They are also sent based on when Retention Science’s algorithm determines she consumer is most likely to open it. Previously, all welcome messages were sent on a pre-programmed schedule, Cho says.
The conversion rate from personalized Honest Co. e-mails is 170% greater than for non-personalized e-mails, Cho says. The e-retailer has been applying and refining its messaging with Retention Science’s services since April 2013. Retention Science provides software-as-a-service, or SaaS, technology. SaaS technology lets clients subscribe to Internet-hosted software, typically for a monthly fee.
Retention Science feeds data to The Honest Co.’s e-mail service provider, ExactTarget, Cho says. That way, The Honest Co. sets up its e-mail campaigns via ExactTarget, but Retention Science controls how and when the e-mails are sent.
Cho and Jao declined to say how much the predictive analytics service costs, although Cho says it is generating a positive ROI. Jao says Retention Science’s fees typically depend on the size of the customer file, plus set-up fees for the service and the customization rules the retailer requires.