September 15, 2003, 12:00 AM

How outsourcing boosted Tower Records’ e-mail response rate

Tower Records boosted its response to e-mail marketing campaigns by increasing its segmentation capacities through outsourcing, reports Jupiter Research. With outsourcing, Tower was able to speed up customer segmentation and campaign optimization.

Tower Records has been able to increase its response to e-mail marketing campaigns by boosting its segmentation capacities through outsourcing that function, reports Jupiter Research Inc. Outsourcing the formerly in-house program to provider Digital Impact, Tower was able to speed up customer segmentation and campaign optimization resulting in improved campaign results and fewer internal errors than if it had retained those tasks in-house, Jupiter found. Tower retained control of creative elements in the campaigns, but assigned responsibility for tasks such as executing the campaigns and mining cross-channel customer data to Digital Impact.

In one test that used data on how recently customers had purchased, Tower was able to construct customer segments that produced a significant increase in conversions, Jupiter reported. For example, customers who’d purchased within the past 12 months and received targeted content with free shipping converted at a rate of 11%, a 41% increase over 12-month buyers who did not receive the targeted content and offer. Tower also found that customers who`d purchased within the past 13 to 24 months responded best to discount offers of 10%, and the music retailer saw a 76% lift in conversion on percentage-off offers to this segment.

“By outsourcing to Digital Impact, Tower was able to rein in hardware expenses and benefit form cross-client knowledge in the areas of deliverability and segmentation,” Jupiter says.

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