Monday, January 28, 2008

Case Study Monday: Using Dynamic Content to Generate E-Mail Marketing Campaigns


Welcome to another Case Study Monday!

This week, we are featuring a very compelling -- and thorough -- success story that was done as a collaboration between Listrak (a leading provider of hosted email marketing software, that "allows permission-based marketers to manage, send, track and grow their email marketing investment"), and DiscountBeautyCenter.com (an online retailer who offers the "nation’s largest selection of brand name cosmetics, fragrances, and professional beauty supplies at everyday savings of up to 70% and more").

Listrak offers this Case Study along with several others in the resource area of their website. For all of us who utilize e-mail marketing in our direct marketing strategy, this is some very interesting reading. We hope you enjoy it as much as we did!

Overview
In response to several customer inquiries regarding practical uses for dynamic content, Listrak’s marketing and professional services departments teamed up to help DiscountBeautyCenter.com, an online supplier of brand name cosmetics, fragrances, and professional beauty supplies, set up and test the viability of using dynamic content to generate their email campaigns.

Specifically, DiscountBeautyCenter.com and Listrak wanted to determine the differences in:
  • The time it takes to create dynamic content emails verses regular batch and blast HTML emails
  • The overall click through rates generated by both types of campaigns
  • The number and amount of sales produced by both types of campaigns
  • The ROI each type of campaign received

Listrak selected DiscountBeautyCenter.com for the study because it offers over 30,000 products across 339 different brands. The products are categorized into seven categories – hair products, cosmetics, appliances, skin care, nail care, fragrances, and bath products.

DiscountBeautyCenter.com has used Listrak to send out email newsletters and promotional
material since 2001, and it has always achieved good results from each email send. However, even though it has a lot of valuable customer data, DiscountBeautyCenter.com was not segmenting its list or building targeted email messages. This made it a prime candidate for Listrak’s dynamic content case study.

At first, DiscountBeautyCenter.com was not convinced that dynamic content would increase response, but Listrak felt that relevant messages targeted to specific customers would sell more products and, therefore, increase the overall ROI of the email campaigns. DiscountBeautyCenter.com agreed, and Listrak began the project.

The Creative Process
Listrak started the creative process by holding an internal meeting between its marketing team, professional services team, and DiscountBeautyCenter.com’s account manager in order to determine the correct course of action. First, they looked closely at DiscountBeautyCenter.com’s email campaign strategy and found that it was already sending re-engagement campaigns offering $5 off a $25 purchase to customers that have not made a purchase in over three months. For companies that are new to dynamic content, a re-engagement campaign is a good place to start.

However, DiscountBeautyCenter.com was not using dynamic content to generate the emails. Instead, it used simple profiling to segment its list of more than 42,500 names. These emails generated the highest conversion rates for DiscountBeautyCenter.com, so Listrak made the decision to use the same offer but to expand the emails to cross-sell each customer based on their purchase history.

The first major challenge in doing this was the sheer number of products DiscountBeautyCenter.com sells. Listrak wanted to have the email campaign ready to send out within a matter of weeks and it did not have time to create 30,000 dynamic content containers for each of DiscountBeautyCenter.com’s products. It had to come up with a way to target a broader audience while still presenting relevant product offers. One possible solution that the teams discussed was to pick the top selling products across DiscountBeautyCenter.com’s categories and send targeted email messages to the customers that purchased those products. For example, if someone recently bought a hair dryer, the customer would receive information on other appliances, such as diffusers, dryer stands, or flat irons.

Another possible solution was to cross-sell across the top four selling brands. For example, customers that previously purchased OPI nail care would receive information on new OPI
products, and customers that previously purchased Aveda hair care would receive information on Aveda products. A third possible solution was discussed that would combine the two approaches.

Instead of just using one dynamic content container for the brand or category level, Listrak would design an email that had two dynamic content containers for each item. This way, the emails would present information on each customer’s brand and product preferences while giving DiscountBeautyCenter.com the space to highlight the top selling products in each category.The teams felt like this was the best approach but they knew they could not make a decision without any data to support their theories, so the account manager was asked to gather customer data to see if this was a viable option. Because DiscountBeautyCenter.com had all of the data readily available, it took less than two hours for the product manager to mine the information from the database.

For many companies getting started with dynamic content, this step presents a challenge as the companies have not collected enough data or the data is stored in different locations and it takes a lot of time and effort to pull it all together. (For more information on the type and amount of data to collect, read Listrak’s white paper “Creating Relevant Email Campaigns with Dynamic Content.”)

Using DiscountBeautyCenter.com’s customer data, Listrak found that the top four selling brands were Aquage, OPI, Helen of Troy, and Kenra, and it also found the top selling products in the hair care, skin care, cosmetics, nail care, appliance, and fragrance categories. Knowing what the top brands and products were, Listrak was able to design the layout of the campaign. The new campaign featured one template with a common logo header, category navigation buttons that mimic DiscountBeautyCenter.com’s website, a large dynamic content container for the four different brands across the top of the email, and another dynamic content container for the top selling products in each of the six categories. The template also included an offer and call to action as well as the legal disclaimer at the bottom of the message.

With this many dynamic content containers, it meant there were 24 possible versions of the email that would be sent to DiscountBeautyCenter.com’s customers as each of the four brand containers could be matched with six possible category containers. Customers would receive the version based first on their brand preference, or the brand they bought the most, and then on their product preference, or the products they purchased the most. This way, the emails would fulfill the purpose of cross-selling each customer with targeted products based on their purchase history. If the contact did not fit into one of the brands or categories, he or she received the default versions. Listrak selected the Aquage brand as the default brand and hair care as the default category as these had the most number of sales in 2007 and would, therefore, appeal to the broadest audience.

Putting it All Together
It took about 10 hours for the graphic designer on Listrak’s professional services team to create the HTML template for the dynamic content email campaign as well as the 10 dynamic
content containers. He built the HTML template using a combination of Photoshop and Dreamweaver. He imported the content using Listrak’s HTML editor and he used Listrak’s Media and Content Libraries to build the dynamic content containers. The Media Library is a feature of Listrak’s email marketing solution that allows users to upload images for online storage, ensuring that the links remain valid and the images render correctly.

Listrak’s designer simply copied the images from DiscountBeautyCenter.com’s website, pasted them into Photoshop, saved them, and then uploaded them to Listrak’s Media Library. Then, as he designed the message, he simply inserted the graphics from the Media Library into the message.

Similarly, the Content Library allows users to create and store blocks of plain-text and HTML content for use in the dynamic content containers. Then the user simply has to add the dynamic
content containers to the body of the email and define the profiling filters so the system knows which content block to use for each individual email.

After the emails were created, Listrak worked closely with DiscountBeautyCenter.com to ensure it reviewed each content block carefully, along with the other sections of the message. Because this was DiscountBeautyCenter.com’s first experience with dynamic content, Listrak wanted to explain in detail the profiling filters, content blocks, and dynamic content containers that would lead to the 24 different versions of the message. The total development time for Listrak’s version, including the data mining and the time to create the content containers, was 10 hours. However, as this was the first dynamic content email for DiscountBeautyCenter.com, many items had to be generated from scratch. Future campaigns will take much less development time now that some of the key items are in place.

In contrast, the previous DiscountBeautyCenter.com newsletters only took about four to six hours to create, as the CEO would simply select products to promote without any research into purchase history or segmentation. With the differences in creation time, Listrak knew that it needed to increase the amount of sales in order to match the ROI generated from the regular email campaigns. But it still felt that the targeted approach would deliver higher response rates and conversions.

The Results
Listrak’s dynamic content email campaign generated more sales for DiscountBeautyCenter.com than the "End of Summer Sale" email campaign it sent out in August, making this email send its greatest performing email campaign to date. Listrak found that there was a noticeable lift in both open and read rates for the dynamic content emails when it specified brand preference in the subject line. Open rates rose from 13.2 percent for non-preferential segments to 15.5 percent when it had brand preference stated in the subject line – an overall 15 percent increase in lift.

Concurrently, read rates, which Listrak tracks as a message opened for five seconds or more, rose from 9.1 percent for non-preferential segments to 12.4 percent when it had brand preference stated in the subject line – a 27 percent lift.

Listrak also found that the click through rate increased 41 percent - from 3.4 percent to 5.8 percent - when brand preference as well as category preference was dynamically inserted into the email messages. It is important to note that the average click through rate for all of DiscountBeautyCenters.com’s email campaigns in 2007 is 3.68 percent. The preference-based segmented campaigns represent a significant milestone by going above and beyond what has been previously possible. It is also significant that Listrak was able to increase response without heavy discounting which was one of the goals set forth by DiscountBeautyCenter.com’s management team.

Improving the Results
While the results were good, Listrak expected them to be better. So . . . the teams gathered again to look more closely into the campaign send and the response rates. The first thing that Listrak noticed was that only 13,000 of DiscountBeautyCenter.com’s customers fit into one of the targeted brands, which meant that nearly 30,000 customers received the default, un-targeted version of the email. Listrak should have chosen more brands to segment as the top four only represented one-third of DiscountBeautyCenter.com’s customers. Being able to target “long tail” preference appears to be the pathway to improved response. Going forward, Listrak will code each recipient email address on file with brand preference and category to be used in the subject line.

Listrak also found that the $5 off coupon was not used in 27 percent of the sales. This stresses the importance of following email design best practices even in targeted and segmented
messages. Listrak presented the brand preference at the top of the email and the product preference in the middle. However, the offer was at the bottom of the page below the fold, which means that many customers did not see it.

The power of segmentation and the power of the offer should not be isolated. Both features need to be used together to create an email that is irresistible to your customers. Overall, Listrak and DiscountBeautyCenter.com were happy with the exercise they went through in order to gain the firsthand knowledge and experience of generating a dynamic content email campaign. Both companies learned valuable lessons that they will carry forward to ensure that future campaigns
capture an even bigger audience with more relevant messages.

I'm sure you'll agree that this is an excellent case study! If you'd like to view the companion webinar that went with this success story, click here.

2 comments:

Adam Blitzer said...

Dynamic content can be amazingly powerful when well done but I always advise client to watch out for two things.

1. If you are only going to have two or three variations of your message, you don't need to go crazy with dynamic content rules. Sometimes it is a lot easier to just use multiple templates. Dynamic content rules are great for complex emails but for simple mailings, they can sometimes convolute the process.

2. It drives me crazy when I receive an email that begins with "Dear ,". I always think, "Gee... that's personal. We all need to be careful with default values when using dynamic tags.

Nancy Arter said...

Great advice, Adam! Thanks so much for your insight.