August 2, 2001, 12:00 AM

JCPenney drives web sales with segmented e-mail sends as many as 3 million e-mail marketing messages a week. Careful segmentation has kept the opt-out rate low.

J.C. Penney has the numbers to show its successful growth on the web. From $15 million in sales in its 1998 launch year to $294 million last year and a projected $400 million this year, Penney has grown its web volume impressively, becoming what it believes is the leading home furnishings and apparel site on the Internet. But lately its focus is shifting from top to bottom. “We are on a new kick called profitability,” Melanie Angermann, vice president of marketing for, told an audience this week at the eTail 2001 Conference in New York. “We aren’t so top-line driven.”

Now the focus is on retaining repeat customers, building average purchases, increasing conversion rates and converting catalog and store shoppers to higher-volume multi-channel buyers-all the things that drive web-site ROI. A key tool Penney is using to tackle the profitability challenge is aggressive e-mail marketing. It has gathered 4 million opt-in e-mail customers, and in a given week it might send 3 million HTML e-mails.

But here, too, said Angermann, the focus is not on volume of messages, but the targeting of them. It bases its targeted e-mail marketing campaigns on various segmentation methods, including by the customer’s sales channel preference, merchandising preferences and the source through which the opt-in e-mail address was obtained. Penney tests all messages for results before expanding usage, and tracks e-mail campaigns carefully by sales results.

No meaningful e-mail segmentation opportunity is overlooked. Recent opt-in subscribers are treated differently from veterans. A customer who recently purchased children’s clothes from Penney, for instance, will likely receive an e-mail promoting only children’s clothes online. Penney tests electronic order blanks in different groups to make a web purchase as simple and pain-free as possible. Some e-mail campaigns are grouped around products associated with a timely event, such as July 4th or back-to-school. E-mail promotions generally include a “forward to a friend” option to capitalize on the viral effect of the web. And product-specific e-mail messages targeted to recent buyers of similar merchandise always include the web site’s navigation bar, just in case the personalization results were in error, as in the case of a single women buying maternity clothes for a friend.

Penney collects e-mail addresses as aggressively as its uses them in promotion. “We like to collect e-mail addresses from every source we can,” remarked Angermann, noting that even initial messages to those customers are tested to see which are more likely to produce an opt-in response. And while Angermann insisted that Penney “never sends an unsolicited e-mail promotion” and provides easy opt-out instructions on all e-mail promotions it transmits, it is implementing an opt-out program that allows customers to opt-out of certain e-mail messages while staying on the list to receive all others. Added Angermann: “We have a fair number of customers who opt-out of e-mail promotions for the plus sizes.”

Is this aggressive e-mailing strategy reaching a saturation point, where customers may begin to push back, Angermann was asked. “We wonder when we’re going to hit saturation, but we haven’t seen any increase in opt-out rates yet,” she answered. “I’m absolutely blown away by our low opt-out rates, but I think our segmentation approach to e-mailing has a lot to do with reducing opt-outs.”


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