January 20, 2014, 9:06 AM

How one e-retailer combats the trend toward lower e-mail marketing returns

With e-mail inboxes increasingly shunting marketing messages out of sight, Beyond the Rack keeps up its e-mail revenue with better targeting and more volume. Beyond the Rack ensures that all e-mails are fully responsive, meaning they adapt to the size of the consumer’s screen so they are easy to read on different devices.

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Flash-sale retailer Beyond the Rack acknowledges that it may be the exception, but revenue it’s deriving from e-mail marketing has not budged an inch since last year around this same time. 

Slightly fewer consumers are opening the e-retailer’s e-mails, says Kevin Murphy, senior director of business intelligence, but the merchant is offsetting that decline by sending more e-mails and creating more targeted messages. As a result, sales derived from e-mail, which comprise around two-thirds of its total revenue, have held steady since last year. “Our open rates did go down around 1.6%, but where it really matters in terms of revenue is actually stable,” he says. “We are heavily reliant on the e-mail channel, and it’s still as important as it always was.” He did not disclose the company’s e-mail open rate.

Beyond the Rack sent consumers, on average, 61 e-mails per month last year, according to e-mail data gathered by Internet Retailer available at Top500Guide.com. That’s the fifth-highest monthly average in the Top 500 Guide. NoMoreRack Inc. sent 77 per month, LivingSocial Inc. 75, The Bon-Ton Stores Inc. 71 and Fab.com 70.

Beyond the Rack’s experience is in stark contrast to a recent report from web site optimization firm Monetate Inc., which concluded that online retailers' revenue from e-mail marketing had dropped 17.7% the third quarter of 2013 compared with the same period in 2012.

Revenue is down, the report says, because fewer consumers are clicking back to an e-commerce site from an e-mail message, and, of those that do, fewer are buying.

Specifically, in the third quarter of 2013, 2.92% of retailers’ site visitors originated from e-mail, compared with 4.03% in the same period of the prior year. Average conversion rates for e-mail were 2.95% compared with 3.17%, according to the report.

While revenue from e-mail is steady for Beyond the Rack, the merchant has had to step up its game in recent months, to keep it that way, Murphy says. Consumer e-mail boxes are getting more crowded with offers from competitors, and e-mail providers are seeking to limit the amount of promotional messages that consumers receive. In May 2013, for example, Google Inc.’s Gmail program began automatically segmenting promotional e-mails into a separate Promotions tab; a consumer would have to take the extra step of indicating she wants to see a retailer’s e-mail in her Primary tab for those messages to appear there.

One area of focus for Beyond the Rack is to ensure that all e-mails are fully responsive, meaning they adapt to the size of the consumer’s screen so they are easy to read whether the shopper is on a desktop computer, tablet or smartphone. It’s also personalizing the content of its daily messages based on buying behavior. For example, if Jane A. Shopper has bought four high-end pairs of shoes in the past year, Beyond the Rack’s daily e-mail alerting her of a new crop of items for sale will highlight luxury footwear, as opposed to kitchenware, whenever possible.

In addition to that daily e-mail, the company might also send an even more targeted message to a smaller crop of people later in the day based solely on how they browse around the site. “We might send something like, ‘Hey, we saw you were checking out footwear three times in the last week but haven’t purchased anything yet,’” Murphy says. “’Here’s 10 bucks off to make it happen.’”

Or if the retailer detects that a consumer is browsing the site from a mobile device and hasn’t yet downloaded its mobile app, it will send an e-mail message to encourage them to do so.

These types of e-mails are very effective in spurring interest because they are based on how consumers are already behaving. “We might see a 15% open rate on a general message to three million people,” he says. “But then we’ll get a 50% open rate on these types of message that go to a thousand people.”

While Gmail’s changes have affected Beyond the Rack slightly, the impact has not been as dramatic as many feared, Murphy says. “The people that aren’t opening our messages probably weren’t opening them before anyway, or they weren’t the ones that were buying. They already had one foot out the door. The way to win with this is really in getting the right message to the right people.”

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