E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
With so many hooks in a sea of e-mail, only the right bait will tempt shoppers to bite.
E-mail messages need a hook, says Ryan Holiday, American Apparel Inc.'s director of online marketing. That's because consumers won't open or click through an e-mail unless there's something—an enticing subject line, an appealing product, a big discount, really anything along those lines—that compels them to bite.
That's the lesson American Apparel learned when it found in late 2010 that a large percentage of its e-mail recipients had stopped opening and clicking on the nearly eight e-mails it sent each week. In hindsight many of its messages weren't particularly enticing, he says, as the retailer's entire e-mail list received the same mix of e-mails, such as messages highlighting the creative directors' favorite styles, announcements about new products and modest promotions like free shipping on purchases of more than $75.
"Looking through the open and click-through rates we saw a lot of fatigue," Holiday says. That's no surprise in an era when consumers are inundated with marketers' messages delivered via e-mail, social media, mobile app push notifications and text messages. "We decided to take it upon ourselves not to contribute to that," he says.
Holiday and his colleagues began tailoring the content of messages to shoppers based on their past purchases. It also cut back on the number of e-mails it sends—it now sends about five messages a month—and resolved to only send e-mails that contain a compelling motive that would spur a consumer to open the message and click through to the retailer's site. The changes worked. American Apparel's open and click-through rates have risen nearly 20% year over year and the e-mail conversion rate is up roughly 33%.
Those types of positive results illustrate why e-mail endures as a marketing mainstay, says Ari Osur, a principal analyst at Forrester Research Inc. E-mail is relatively inexpensive and can consistently produce a high return on investment, he says. That would explain why 87% of major online retailers sent out e-mail promotions on the Monday following Thanksgiving, also known as Cyber Monday, up nearly 13% from a year earlier, according to a report by e-mail services provider Responsys Inc.
But the flip side of so many retailers sending marketing e-mails is that consumers are tuning out what they view as a barrage of marketing messages, Osur says. That means merchants like American Apparel increasingly have to find ways to better understand their customers in order to craft compelling messages.
Technology can help, and 43% of marketers in a recent Forrester survey of interactive advertisers plan to increase their spending in the channel in the next three years. But part of the answer, some retailers are finding, lies in recognizing that less can be more when it comes to e-mail marketing—as long as the few messages they send hit the marketing sweet spot for each shopper.
A large portion of retailers' investments are focused on breaking down marketing channel-specific silos to building more unified, holistic views of shoppers, regardless of whether they shop in a bricks-and-mortar store, online or via catalog, Osur says. "Marketers are trying to consolidate their data so that they have a single view of their customers across their various channels," he says. "Those insights can help them to deliver a specific message to a specific consumer."
For instance, American Apparel last year began tailoring information in its e-mail messages based on a consumer's past in-store and online purchases. That approach is particularly valuable for American Apparel because it sells apparel and accessories of various styles, and some of its customers are interested in some of its merchandise and not the rest. Some are focused on the latest fashion styles, others on basics, and others on items like jewelry, Holiday says. "Being able to know what a shopper is looking for enables us to find an appropriate way to urge the shopper to shop with us again," he says.
That's a starting point in segmenting a customer list. But web-only retailer Freshpair Inc. takes that tactic a step further. The underwear retailer sends consumers e-mails based on the actions they've taken on its web site and then, when the shopper clicks on the e-mail, it presents her with a customized landing page featuring products she previously viewed or bought or put into a shopping cart. Freshpair's e-mail services provider, Responsys, works with the retailer's Adobe Systems Inc.'s Omniture analytics platform so that it can leverage on-site behavior to automatically target consumers.
There are two ways Freshpair knows who is looking on its site—the retailer tags with cookies shoppers who have previously signed in to FreshPair.com, typically when making a purchase, or a shopper signs in to the site on his own. Once the retailer knows who a shopper is, when he looks at a pair of Calvin Klein boxer briefs on the site but doesn't complete a purchase, the retailer's system triggers an e-mail focused on that browsing behavior. Clicking through, he lands on a page featuring the boxer briefs he looked at, as well as related products.
"The solution makes us less beholden to marketers coming up with things that we think people might want to see on the site," says Matthew Butlein, Freshpair president. "Instead our messages are based on what we already know the shopper was interested in." Testing the impact of those customized landing pages with its testing and targeting technology e-commerce vendor Monetate Inc., the retailer found that its bounce rate fell 25%, compared to traffic stemming from untargeted e-mails.
The approach is really a shift in mindset—from thinking of customers in groups, such as affluent middle-aged men, to thinking about individual customers, says Forrester's Osur. "The balance of power has shifted," he says. "Retailers need to be customer-obsessed."