The online retailer has spent nearly $300 million acquiring three shipping software vendors over the past nine months.
It’s the month before the holiday season. Do you know where your e-mail is headed?
The big payoff comes every year, but more for some retailers than for others. It's the rush of holiday shoppers, when sales in the four or five weeks between Thanksgiving and Christmas turn the annual revenue count into either a bag of cheer or a sack of coal.
Often what makes or breaks a retailer's holiday shopping season is how well it prepares and promotes special offers—and how well it delivers those offers to consumers.
For many retailers the cheapest and most effective way to hit consumers with a series of marketing messages is through e-mail—a marketing channel many merchants are using earlier and earlier to hawk holiday gift ideas, according to a study by e-mail services provider Responsys Inc. of retailers' 2011 holiday season marketing practices. That study found that 60% of merchants over the past four years began mentioning the holidays in e-mails before the end of October.
It takes a strong mix of art and science to send the right volume and type of messages that get consumers to respond to e-mails and push up sales, especially now that online shoppers are so accustomed to deleting unwanted e-mail after just a glance at a message's subject line.
Schwan's Home Delivery is an example of a retailer that has stayed abreast of how its customers respond to e-mail. A nationwide frozen foods retailer, its retail site Schwans.com has been known to top the Nielsen Co. rankings with e-commerce conversion rates of more than 50%. It credits much of its success to a sophisticated e-mail marketing program. "E-mail is a key driver for us," says Erica Webb-Belzer, director of marketing communications at Schwan's Home Delivery, a unit of Marshall, Minn.-based Schwan Food Co.
Cyber Monday planning
When it comes time to plan for the season's sales-spurring e-mail greetings, Webb-Belzer and her staff first conduct a good old-fashioned brainstorming session, and then develop and test the best-received holiday campaign ideas.
In the 2011 holiday shopping season, such brainstorming paid off on Black Friday and Cyber Monday, the Friday and Monday following Thanksgiving, producing sharp spikes in sales attributable to e-mails that promoted holiday dinner specials. Those messages included subject lines that Webb-Belzer and her team tested in low- and high-tech ways ahead of time. Staff came up with several e-mail subject lines and pinned them up for the entire marketing department to view. "People walked by and voted for the ones they liked," she says.
The e-mail marketing team then chose the two most popular subject lines based on that low-tech survey and conducted A/B tests through its Responsys e-mail management system to see which produced the best returns. The winner: "Save $2." "We learned it was best to keep the subject line short, simple and sweet," Webb-Belzer says.
When the retailer began sending promotional e-mails on Cyber Monday, it didn't take long to see results, she says. "When we launched the Cyber Monday sale at midnight, my team and I were on the phone for two hours watching the real-time report from Responsys showing that this many customers opened the e-mail, this many clicked through and the number of sales. Watching it was extremely addictive. Within even the first 15 minutes we had received quite a few sales."
Setting the holiday table
Although the pace of marketing and sales activity leaps to a feverish pace during the holiday shopping season, retailers typically set the table for what's to come during the peak season far ahead of time. Schwan's, for example, is drawing on lessons it learned in January of this year as it crafts its e-mail campaigns for the upcoming holiday season.
The retailer learned during a campaign early in the year that an e-mail promotion touting the benefits of its loyalty program worked better when it sent one type of pitch to existing loyalty club members and another to prospective members. "We learned we should use certain words for members and non-members," Webb-Belzer says.
E-mail campaigns sent to loyalty club members produced strong results when they informed recipients about the volume of points they could receive in a new promotion. But non-members responded best to e-mails that mentioned the amount of money they could save, rather than the number of points they could receive.
With that and other lessons learned throughout the year as it tested new marketing approaches, Schwan's will run with the most effective strategies during the fourth quarter. "We'll be using a lot of that learning during the holidays," Webb-Belzer says.
Another retailer that's been preparing all year for the holiday season is Bill Shea, general manager of Wine Country Gift Baskets. The holidays are crucial for the web and catalog retailer, which does more than half of its business during the fourth quarter, he says.
"Nobody is as peaky as we are," Shea says. "We have to get it right during the holiday season." And that means spending most of the year preparing for holiday e-mail campaigns.
Watching competitors' e-mails
To search for the most effective e-mail headlines and offers, for example, Wine Country will use its in-house e-mail management system to test multiple versions throughout the year and monitor more than 20 marketing e-mails every day from its rivals. "We'll look at the e-mail from all of our competitors and see what grabs our attention, which headlines work and which don't work," he says.
The single e-mail subject line pitch that has proven to work the best, he says, is free shipping. "Free shipping is the magic headline," he says. In a test Wine Country conducted of two offers for the same gift basket at the same total order price—say, $40—it found that consumers bought more often when the basket was priced at $40 with free shipping than when the basket was $30 and shipping cost $10.