Increase Profits Via Email With Database Marketing Best Practices

Email marketing made the transition from interesting new advertising technique to established marketing channel during the past few years. Established marketing channels are fully integrated with modern databases, allowing practitioners to better understand how customers interact with advertising. This week, I thought I'd explore some of the ways email marketers use database marketing to improve performance.

• Segmentation: Divide your email marketing list into three segments:
  1. those who purchase because of an email campaign;
  2. those who click through an email campaign but don't purchase; and
  3. everybody else.
  You'll immediately notice that the purchasers spend a lot of money, maybe 25 cents to $1 per email marketing campaign. Those who click through but haven't historically purchased spend maybe 5 cents to 15 cents per email campaign. And everybody else spends 3 cents per email campaign. Store the RFM value of purchasers and the recency and frequency of clickthroughs in your database. Report email performance based on these attributes.
• Merchandising: Many retailers segment customers based on the merchandise they've previously purchased, then send targeted campaigns based on merchandise preference. This may work well among those who click through campaigns and those who haven't historically interacted with email campaigns. Among those who purchase because of email marketing, productivity is so good that it may make sense to introduce these customers to merchandise they haven't previously shopped for.
• Past purchases: If you need to maximize the ROI of each campaign, target customers based on prior purchases. Test what happens if you send an email to a customer who said she wanted to receive “accessories” email campaigns, for example, but only purchases women's merchandise. Often, the prior purchase yields better results as a segmentation variable than the stated customer preference.
• Retail: Retailers know that email marketing drives similar sales to retail stores as it drives to e-commerce websites. If the goal is to drive e-commerce sales, deliver your email campaign early in the week. If the goal is to drive retail sales, deliver your email campaign late in the week.
• Testing: Always execute mail and holdout group tests. The results from mail/holdout group tests are usually different — sometimes dramatically different — than what's observed via typical email marketing campaign metrics. Measure the incremental lift of an email campaign.
• Transition: Email subscribers are often in a transitory state, evolving their advertising preferences from traditional marketing (i.e., catalogs) to modern marketing (i.e., search, social media, visiting your website without need for advertising, etc.). Pay very close attention to the purchase habits of your email subscribers, and strongly consider a different traditional marketing contact strategy for them. Many marketers are doing mail/holdout tests with email subscribers, testing the optimal number of catalog and email contacts to drive sales across channels.

The key to all of this is to have a good customer database, hosted internally or by your chosen vendor. By capturing email clickthrough and purchase data, website clickstream data, and point-of-sale purchase information, you can create an email database marketing program that generates significant profit for your business.