Email marketing remains a vital channel in driving e-commerce orders, representing 16% of orders as of June 2015, up a percentage point from a year ago, according to Custora’s E-Commerce Pulse, a publicly-available online dashboard tracking e-commerce statistics and trends (disclosure: Custora is my employer).
Customers increasingly expect retailers’ email messages to be personalized, relevant and engaging. Promotions and discounts are clearly a powerful way to connect with new and existing subscribers, driving revenue growth. However, e-commerce marketers need to make sure they are optimizing promotional email to balance subscriber engagement and profit margins.
Here is a rundown of five strategies e-commerce marketers can implement to optimize their promotional emails.
1. Segment Your Customers
Again and again, segmentation comes up as a key to personalizing emails. There are many dimensions upon which marketers segment, but an important first question to ask yourself is, “What am I trying to accomplish?”
Your concern may be “How do I win back churning customers?” or in the case of online retailer Crocs (disclosure: a Custora customer), “How do I reduce customer reliance on promotions?” In each case, segmentation can help.
By testing different messaging on customers who showed signs of fading away, as well those considered to be “lost,” Crocs discovered customer segments who were insensitive to discounts and required only a “we miss you” message to reignite their purchase cycle.
Crocs found that these customers exhibited a lift of 2X in revenue per user, compared with a control group that did not receive any email. In addition, these tests unearthed optimal discount percentages for other segments where offering a discount increased return on investment.
2. Create A Sense Of Urgency
One way to decrease customers’ reliance on discounts is to use expiration dates in the promotional offer. The most effective calls to action generally ask customers to act within a finite time period with limited-time offers and short-window promo codes.
One use for this strategy may be in your welcome email series. Shortly after a new customer’s first purchase, when she is highly engaged, send a promotional offer to encourage repurchase behavior. This will encourage customers to “act now” and help generate a positive association with your brand.
3. Go To The Source
Another way to personalize your promotional emails is to look to the customer’s acquisition source. A marketer may know that customers acquired through social media have a lower customer lifetime value than those acquired through keyword search, who may already be more brand aware.
This can tell you whether to offer a discount with a minimum purchase amount (for customers already more likely to convert) or a percentage off total purchase (for customers who may need an extra push to convert).
Acquisition source gives you one piece of the puzzle to help determine customer personas and develop an even smarter segmentation strategy.
4. Try Cart Abandonment Emails
Folks at my company recently chatted with Tim Grace, VP of e-commerce at The Tie Bar (and a customer), about building and growing a successful e-commerce brand. One tip that Grace was able to share was his endorsement of cart abandonment emails: These emails account for 20% of The Tie Bar’s email revenue.
Sending emails to shoppers who placed an item in their cart but failed to make a purchase was an effective way to convert these customers — especially those browsing on their phones and later completing the purchase on a desktop computer. Based upon your customer segments, these emails may include a discount, or they may simply be a reminder to purchase.
5. Always Be Testing
I’ve said it once, and I’ll say it again: There is no “one size fits all” approach to an effective segmentation and email promotional strategy. The best e-commerce marketers continually experiment to optimize their email promotions strategy, and they always keep their goals in mind when testing.
Final Thoughts
Promotions and discounts are important tools for an e-commerce marketer’s email strategy, yet it is crucial to use them wisely, lest customers begin to rely too heavily upon them, ultimately damaging your brand and hurting your bottom line. Begin optimizing your promotional email strategy by asking yourself what challenge you’d like to solve and determining how you will measure results.
Segment your customers using behavioral and demographic data to create personalized campaigns, then deliver the right promotional offer to those for whom it will make the most impact.
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