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Nov 18, 2013 (3 years and 6 months ago)

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© 2007 e
-
Dialog, Inc. All Rights Reserved.

Arthur Middleton Hughes, Senior Strategist

The Direct
Effect:
The
difference between
primitive Hunting and
customer
-
centric Farming
in e
-
mail marketing


© 2008 e
-
Dialog, Inc. All Rights Reserved.

Who is this guy?


Arthur Middleton Hughes


31 years in direct
marketing. Direct Mail, Database Marketing, e
-
mail
Marketing.


Built 20 databases for Compaq, Nestle, Western
Union. Ciba Geigy, Pacific Bell, Air Touch, Miles
Kimball, BMW, plus banks, insurance, resorts.


Eight marketing books published. English, Japanese,
Chinese, Portuguese

2

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Distance selling has changed everything


Consumers can find any product they want anywhere in
the world


They can compare products, and check prices


Marketers can sell to anyone in the world


Obscure, hard to find products, can find a market.


The secrets: Google and personalized e
-
mail marketing

© 2008 e
-
Dialog, Inc. All Rights Reserved.

The ten steps to success

1.
Switch your e
-
mail from Hunting to Farming

2.
A great website plus search engine marketing

3.
Learn the lifetime value of your e
-
mail subscribers

4.
Acquire millions more e
-
mail subscribers

5.
Send triggered e
-
mails

6.
Use transactional e
-
mails to sell

7.
Feature ratings and reviews

8.
Segment and personalize

9.
Don’t mail too frequently

10.

Use tests in every campaign



4

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Most e
-
mail marketing is hunting


E
-
mails are so cheap to send that most marketers do
not bother with a database


“Mail ‘em all. Someone will buy.”


Instead of studying the subscribers, marketers work
to sharpen their e
-
mails. Result: open rates falling


5

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Successful emailers are farmers


Building a subscriber database


sending
relevant

e
-
mails to people you care for and know a lot about.


Result: opens and conversions increase.

6

© 2008 e
-
Dialog, Inc. All Rights Reserved.

E
-
mails based on subscriber data


e
-
Dialog supports e
-
mails that are relevant to each
subscriber


based on her preference and behavior


Transactional e
-
mails that get opened and read


E
-
mails that boost catalog and off line sales


Triggered e
-
mails that get results


7

© 2008 e
-
Dialog, Inc. All Rights Reserved.


Step 2: A great website + SEO


Build a very interactive website filled
with links to great information.


Use cookies to welcome visitors
back.


Feature the products that visitors
prefer (not what you want to sell).


Have a useful search box.


Provide lots of information


Make sure you are indexed on all
search engines


SEO = Search
Engine Optimization


Check out competitive websites.

8

© 2008 e
-
Dialog, Inc. All Rights Reserved.

How do you reach customers?

9

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Compare the Media

Which channel is most effective?

TV

Print

Other

Direct
Mail

Internet

E
-
mail

2008

US
Spending
(billions)*

$65.1

$62.7

$54.5

$59.6

$11.4

$1.4

Sent to
segments?

NO

Sometimes

NO

NO

Personalized?

NO

NO

NO

NO

Click to order?

NO

NO

NO

NO

Customers do
research?

NO


NO


NO


NO

Triggered
messages?

NO

NO

NO

NO

Transaction
Messages?

NO

NO

NO

NO

NO

Measured
effectiveness?

NO

NO

NO

*Source: Robert
Coen

MagnaGlobal.com and The DMA (for E
-
mail)


US Spending Only

© 2008 e
-
Dialog, Inc. All Rights Reserved.

E
-
mails: lowest cost per order

11

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Interactivity: Clicks = Sales

12

Source: MailerMailer 2007

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Step 3: The value of your
customers

13

Typical Retailer Customer Lifetime Value Table
Acquisition
Second
Third
Year
Year
Year
Customers
200,000
80,000
36,000
Retention Rate
40%
45%
50%
Visits Per Year
1.10


1.30


1.50


Spend Per Visit
120.00


130.00


140.00


Total Revenue
26,400,000


13,520,000


7,560,000


Marginal Costs
20%
18%
18%
Marginal Costs $
5,280,000


2,433,600


1,360,800


Acquisition Cost ($40)
8,000,000


-


-


Card Database Costs ($2)
400,000


400,000


400,000


Total Costs
13,680,000


2,833,600


1,760,800


Gross Profit
12,720,000


10,686,400


5,799,200


Discount Rate
1


1


1


Net Present Value Profit
12,720,000


9,627,387


5,042,783


Cumulative NPV Profit
12,720,000


22,347,387


27,390,170


Lifetime Value
63.60


111.74


136.95


© 2008 e
-
Dialog, Inc. All Rights Reserved.

The value of your
subscribers

14

E-mail Subscriber Value
Campaigns
Rates
2009
2010
2011
Deliverable Subscribers
2,000,000
1,608,000


1,292,832


Monthly Unsub Rate
0.80%
192,000


154,368


124,112


Annual Permanent Bounce Rate
10.00%
200,000


160,800


129,283


Subscribers end of year
1,608,000


1,292,832


1,039,437


Promotional e-mails delivered in a year
52
104,000,000
83,616,000


67,227,264


Percent Opens
20.00%
20,800,000


16,723,200


13,445,453


Clicks (% of opens)
15.00%
3,120,000


2,508,480


2,016,818


Revenue
Annual Online Orders due to E-mails (% Opens)
3.00%
624,000
501,696


403,364


Online orders from Transactions and Triggers
5.00%
31,200
25,085


20,168


Revenue due to e-mails
136.95


89,730,197


72,143,078


58,003,035


Costs
Marginal Costs
15%
13,459,530


10,821,462


8,700,455


E-mail acquisition cost per subscriber
4.00


8,000,000


E-mail Creation Cost per year
150,000


150,000


150,000


E-mail Delivery Cost
2.00


208,000


167,232


134,455


Total Costs
21,817,530


11,138,694


8,984,910


Profit
Gross Profit
67,912,667


61,004,385


49,018,125


Discount Rate
1
1.1
1.15
Net Present Value Profit
67,912,667


55,458,531


42,624,457


Cumulative NPV Profit
67,912,667


123,371,199


165,995,655


Subscriber Three Year Lifetime Value
33.96


61.69


83.00


© 2008 e
-
Dialog, Inc. All Rights Reserved.

4: Sign up millions of subscribers

1.
Once you
know each subscriber is worth


83.00 …

2.
Use that value
to create an acquisition plan and an e
-
mail
marketing budget.

3.
Be creative and resourceful in your plan:


Reward both subscribers and employees


Revamp your website to focus on registration


Make your e
-
mails interesting and fun


Make sure everyone is working on acquisition


Use a dozen different techniques

15

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Reward Staff and Subscribers


Once you know the value of an e
-
mail subscriber you
can afford to incentivize subscribers and employees .


If each e
-
mail address is worth

38.70
you can give a
subscriber

5.00 for her e
-
mail address.


You can give employees

5.00 for getting each new e
-
mail


When the new e
-
mail is entered, a welcome e
-
mail is
sent out right away, asking the subscriber to click that
she really wants to receive your e
-
mails.


If the e
-
mail is new, and valid, and she clicks “yes” you
give the reward to the employee and to the subscriber.


16

© 2008 e
-
Dialog, Inc. All Rights Reserved.


If you want them to register, you
must promote the idea on the
website, in transactions, in print
and direct mail and catalogs. Go
all out.


Give them a reason for
registering.


Compare these two approaches


One is tiny and hard to find.


The other gets results.


Which do you use?


17

Encourage Registration

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Give them reasons to subscribe

18

© 2008 e
-
Dialog, Inc. All Rights Reserved.

19


Avis features an opt
-
in
prompt in their
Reservation
Confirmation for
customers who have not
opted in during
purchase process


Also includes good
added value retention
content. . . . for local
information about
weather, directions, and
airport information.

How Avis gains millions of subscribers

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Julie gets a personal invitation

20

© 2008 e
-
Dialog, Inc. All Rights Reserved.

5: Create powerful triggers


Cold Stone with 1,700 locations created a birthday
club “Receive FREE Ice Cream on Your Birthday!”


In two years, 2,000,000 signed up for e
-
mails


Birthday e
-
mails have open rates 62.5% higher than
other e
-
mails. Click
-
throughs are 350% higher.


Franchisee survey: “Overwhelmingly positive
response… drives people into the stores… people
don’t come in by themselves”

21

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Birthday/Anniversary Trigger


Make your customers
feel the love


Check the results:
Birthday e
-
mails get
opened at twice the
rate of other e
-
mails.

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Subject Line:

You have 3 CDs in your cart!

S&S Worldwide got a
25 percent conversion
rate on personalized
transactional
messages focused on
arts & crafts items left
in carts.



Abandoned Cart Triggers work!

Overall, Abandoned
Cart Recovery emails
lifted Timberline’s total
sales by 2.7% . They
were able to sell 15%
of the products left in
the carts where they
had the e
-
mail
address.

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Keep track of what they bought

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Trigger that got results

© 2008 e
-
Dialog, Inc. All Rights Reserved.

6: Transaction e
-
mails get opened


These messages are opened 80% to 90%


“Receipt of Your Order”


“Your Order Has Shipped”


“Your Registration Was Received”


“Please Keep for Your Records”


These should be in HTML with a promotion below the
fold.


Result: very high sales rates from transaction e
-
mails


Typically double those of promotional emails

26

© 2008 e
-
Dialog, Inc. All Rights Reserved.

How HP does transactions

27

This is what
produces the
additional sales

© 2008 e
-
Dialog, Inc. All Rights Reserved.

28

7: Ratings & Reviews


Ratings and reviews
have several results:


The open rate is higher


The click rate is much
higher


The sales are higher


But, getting reviews
is a lot of work.


You have to have a
contest


You have to encourage
customers to say bad
things


You have to be honest.




At Vitabase.com reviews
increased conversion by
67% and revenue by
80%.





NetShops Inc. (now
Hayneedle) found that
reviews led to a 26%
increase in product unit
sales


eSpares reports that each
product experienced
between a 6.3% and 14.2%
increase in conversion for
visitors served Ratings &
Reviews content compared
with those shown the same
products without reviews.


© 2008 e
-
Dialog, Inc. All Rights Reserved.

Dell Ratings and Reviews

29

Makes a lot of noise.
The fan noise is
horrible and the DVD
writer rattles the CPU

Dell, like other good distance
sellers, provides HONEST
reviews that often are quite
negative. Why? Because Dell
customers recognize that the
reviews are honest. They read
the reviews.


A 4.0 reviewed product often
sells better than a 5.0 product!


Goal: to get customers to say
something BAD about your
product


so you can have
reviews that are honest, get
read and result in higher
sales.

© 2008 e
-
Dialog, Inc. All Rights Reserved.

How reviews help

30

© 2008 e
-
Dialog, Inc. All Rights Reserved.

8: Segment and Personalize


“Hello Arthur Hughes”
works. These e
-
mails get
opened more, as a result
you get more sales.


After the greeting, you
provide content that
Arthur is interested in


not what you want to sell
to him.


Put Arthur into a segment
of similar people. Find out
what he wants. He is not a
college student, or a
young woman.

31

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Benefits of segmentation


Segmenting your audience lets you:


Learn about user behavior


Identify your most valuable customers


Create relevant content


Develop more business from particular
segments


Identify underperforming segments


Position your products/services to specifically
address customer needs


If you don’t segment, they will
unsubscribe


If you do, you can learn these things:


Find out who is opening your e
-
mails and
clicking.


What copy worked to prompt that click?


Find out why unsubscribers left.

32

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Sears Appliance Buyer Segments


Do you understand your subscriber segments?










PRODUCT PREFERENCES AND SHOPPING INTERESTS
.

Let us know which of

the following best describes you when shopping for

home products.

How I feel about brands

o

I typically buy top of the line name brand products

o

I buy name brand products at a moderate price

o

I am always looking for a bargain. I will try any brand if the price is right.

How I feel about technolo
g
y

o

I buy products with the latest features and innovat
ions

o

I buy products with mainstream features and technology

o

I am not interested in technology. Keep it simple for me.

© 2008 e
-
Dialog, Inc. All Rights Reserved.

9: Don’t mail too often

34

Online Retailer
5 Per
12 Per
Increasing Email Frequency
Month
Month
Subscribers Start of Year
515,677
515,677
Emails Delivered
32,161,000
79,890,000
Revenue per Delivered
$0.18
$0.10
Revenue
$5,788,980
$7,989,000
Revenue Per Subscriber
$11.23
$15.49
Unsubscribe Rate
0.740%
1.770%
Monthly Spam Complaints
0.046%
0.646%
Monthly Address Losses
1.53%
3.55%
Annual Loss Rate
18.36%
42.60%
Subscribers Lost in Year
94,678


219,678


Subscribers End of Year
420,999


295,999


Cost of replacing lost subscribers @ $15 each
$1,420,174
$3,295,176
Lost One Year Revenue from lost @ $11.23
$1,062,857
$2,466,105
Cost of emails creative & dispatch @ $6/m
$192,966
$479,340
Total present and future costs
$2,675,997
$6,240,622
Net Revenue after present & future costs
$3,112,983
$1,748,378
Lost profits from increasing frequency
$1,364,604
More e
-
mails = more
sales. It also means more
unsubscribes. You will
lose customers.


Actual case study:
Retailer boosted sales
from 5 to 12 per month.


Sales went up by $2.2
million.


Lost subscribers went up
by 125,000


Profits went down by $1.3
million.

© 2008 e
-
Dialog, Inc. All Rights Reserved.

10: Tests in every campaign


By testing, you can improve your opens
and sales


You learn what works, and what works
better


You will boost your revenue and reduce
your costs


The market is changing every day. What
worked last year is now so “Yesterday”.


You can only learn that by testing.


Every single campaign should include a
test.


Then you must find time to study the
test results and figure out what you have
learned from them.

35

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Summary


Switch from Hunting to Farming


Have a great website and
personalized e
-
mails


Find a way to acquire lots of
subscribers


Use constant tests to find out what
works well in Greece


Don’t mail to often


better to spend
your resources on finding a wider
audience.


Study your competition. Steal their
great ideas.


36

© 2008 e
-
Dialog, Inc. All Rights Reserved.

Next step: Read the Book

37

Comprehensive guide to
e
-
mail marketing


Has all you need to
know about distance
selling using e
-
mails


www.dbmarketing.com