Reusing direct marketing strategies for email-marketing campaigns

1,725
-1

Published on

"Is it possible to re-use the Direct Marketing Knowledge to manage E-mailing Campaigns?"
Case Study: RedCats (World n°3 in Home Shopping)

Master's thesis: (2003), HEC(Business School) + Telecom Paris

Published in: Marketing, Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,725
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Reusing direct marketing strategies for email-marketing campaigns

  1. 1. BELBEOC'H Gaëtan June - December 2003 Is it possible to reuse the Direct Marketing Knowledge to manage E-mailing campaigns? Case study: LaRedoute International Websites
  2. 2. Master’s Thesis “From Direct Marketing to E-mail Marketing” Master’s professional thesis Management & New Technologies Promotion 2002 – 2003 Acknowledgments D uring the six months I stayed at LaRedoute Web Department, I called upon many colleagues to help me understand the specific topics they mastered. They all contributed to the realization of this thesis which tries to bring together the knowledge of a whole team in the young and quickly moving e-mail marketing field. I would like to thank especially Mrs. N. Boudaa and I. LeCam, who helped me to understand the organization of the web department and to learn the profession of web marketer in an international context. I also greatly appreciate the helpful advice I received from my thesis director Mr. Bathelot who guided me in the organization of this thesis. Special thanks to the team of web-developers who made me size the technical factors behind all web-marketing decisions, and the “web-service” teams who easily shared with me their competence and experience in copywriting, designing and “HTML- integrating”. My regards goes also to many people working for other departments such as P. Delepaule, (International Studio’s manager), I. Marcotte (Web Analyst), Aymar De Franqueville (Legal Manager) and Obin, (Statistical and Targeting manager). LaRedoute DCEM – Master HEC/ENST 2003 Page 2
  3. 3. Master’s Thesis “From Direct Marketing to E-mail Marketing” Executive Summary I n the year 2003, e-mailing is a key success factor for mail-order selling companies such as LaRedoute. Most of their on-line business is done thanks to targeted e-mailing special offers. More than just informative newsletters, they have become a fully efficient direct-marketing media. Hence they have benefited from the traditional direct marketing experience of mail-order selling companies. But e-mail is an Internet media and has many differences with a direct marketing letter. In this thesis, we will try to establish which from the direct-marketing techniques should be re-used as is, which should be adapted to the e-mail media and finally what new technique should be used especially for e-mailing campaigns. To achieve this goal, we will review and compare the communication techniques, the tracking and targeting processes and the final sending of a traditional direct marketing and an email marketing campaign. LaRedoute DCEM – Master HEC/ENST 2003 Page 3
  4. 4. Master’s Thesis “From Direct Marketing to E-mail Marketing” Table of Contents Acknowledgments......................................................................................................................2 Executive Summary...................................................................................................................3 Table of Contents.......................................................................................................................4 Introduction................................................................................................................................6 Context.......................................................................................................................................8 1) Communication and promotional offer techniques..............................................................10 a) A changing strategy for a changing customer...................................................................10 i) A change in the view of the customer...........................................................................10 ii) An organizational change.............................................................................................10 b) Communication for paper mailing VS e-mailing.............................................................11 i) The mailing envelope / the e-mail header.....................................................................11 (1) Message on the envelope.........................................................................................12 (2) E-mail subject line...................................................................................................12 (3) Expeditor’s identification: the “from” line of e-mails.............................................13 (4) Consistency of email address over time..................................................................15 ii) The letter body / the email body...................................................................................15 (1) Text / Image coherence...........................................................................................16 (2) A readable text.........................................................................................................17 (3) A believable and proactive style.............................................................................19 iii) The gift leaflet.............................................................................................................20 iv) The order form.............................................................................................................21 c) The communication principles of direct marketing..........................................................23 i) The entertaining communication style..........................................................................23 ii) The standard commercial communication....................................................................25 iii) The intimate communication style..............................................................................26 iv) The administrative style...............................................................................................28 d) Commercial offers techniques for traditional mailing and for e-mailing.........................31 i) Special-offers codes and contingency marketing..........................................................31 ii) Specialized small catalogues and dedicated landing page...........................................32 iii) Transparent offer-codes links......................................................................................34 e) The viral process, a danger or an opportunity?.................................................................34 i) Viral Marketing, how to get the best from the viral phenomenon................................34 ii) The dangers of the viral phenomenon:.........................................................................37 2) Tracking, Analyzing and Targeting......................................................................................41 a) Tracking customers’ order and behavior..........................................................................41 i) Tracking the orders........................................................................................................41 (1) Tracking orders customer per customer..................................................................41 (2) Tracking and testing different targets in the same campaign..................................42 ii) Tracking prospects’ or customer’s behavior................................................................42 (1) The advantages of Web technology: almost everything is e-traceable...................42 (2) Technical bases of the e-tracking technology.........................................................43 b) Analyzing the results and targeting..................................................................................45 i) Customer purchase analysis...........................................................................................45 ii) The RFM model (Recency Frequency Monetary Value) ............................................46 iii) Behavior analysis........................................................................................................48 (1) The opening rate......................................................................................................49 LaRedoute DCEM – Master HEC/ENST 2003 Page 4
  5. 5. Master’s Thesis “From Direct Marketing to E-mail Marketing” (2) Click-through analysis.............................................................................................49 (3) Unsubscribe rate......................................................................................................50 iv) Behavioral targeting....................................................................................................51 v) Towards a multi-channel data-mining and targeting....................................................56 3) Sending and making sure it arrives to destination................................................................59 a) The importance of timing..................................................................................................59 i) The best months.............................................................................................................59 ii) Choose your day...........................................................................................................59 iii) Choose your time.........................................................................................................60 iv) Choose a frequency.....................................................................................................60 b) Coordination with the call-center.....................................................................................62 i) Coordination with the call center...................................................................................62 ii) Interview with LaRedoute.fr web call center...............................................................62 c) Foresee the load on your servers.......................................................................................64 d) Receiving the (e-)mailing.................................................................................................67 i) Importance and origins of Spam....................................................................................67 (1) Defining Spam.........................................................................................................67 (2) Origins of the Spam problem..................................................................................68 ii) Anti-Spam legislation...................................................................................................69 (3) U.S. regulation: the CAN Spam act of 2003...........................................................69 (4) E.U. regulation:.......................................................................................................69 iii) Anti-Spam software and the False Positives problem.................................................70 (1) Automated Spam Filters..........................................................................................71 (2) Anti-Spam tools and actions taken by e-mail users................................................72 (3) ISP’s Anti-Spam black-list......................................................................................74 Advices and recommendations................................................................................................75 Conclusion...............................................................................................................................78 Bibliography.............................................................................................................................79 Index of illustrations................................................................................................................81 LaRedoute DCEM – Master HEC/ENST 2003 Page 5
  6. 6. Master’s Thesis “From Direct Marketing to E-mail Marketing” Introduction From mailing to e-mailing: Is it possible to reuse all the direct marketing knowledge to manage e-mailing campaigns? Case study: LaRedoute. L aRedoute, as one of the oldest European leader in mail-order selling, has a great experience in direct marketing. Communication techniques, personalization, special offers, reporting and targeting, all these techniques have no secrets for the company. Engaged in the e-commerce since a few years, the company has recently achieved one of the last steps of multi-channel integration: the e-commerce department is now standing side by side with the more traditional direct marketing. If multi-channel technical integration is today’s trend and seems to be the right path for modern companies, the evolution of marketing is not so clear. Indeed, direct-marketing is quite a mature field with its long years of experience and its easily-measurable campaigns. E-mail looks like traditional mail in many ways and it seems easy to translate directmarketing experience toward emailing. However, Internet is a lot different than paper in many aspects and these differences should apply indeed to e-mails and traditional paper mailings. In this thesis, we will try to prove with facts, technical literature and a bit of experience, which from the direct-marketing techniques should be re-used as is, which should be adapted to the e-mail media and finally what new technique should be used especially for e-mailing campaigns. To achieve this goal we will describe the process of a direct marketing campaign from its conception to its final destination and analysis, each time highlighting what is presently used in both traditional direct marketing and e-mail marketing, what could or couldn’t be used from the direct marketing experience toward e-mailing and which new techniques appeared specifically for e-mailing. In the first part we will step into the communication and promotional offers techniques of direct marketing and see how well they can adapt to e-mailing. Then, we will explain the techniques used to track, analyze results and define targets to enhance the efficiency of the campaigns. We will therefore present different techniques such as “special-offer codes tracking” and “Recency Frequency Monetary-value” model for traditional direct marketing and LaRedoute DCEM – Master HEC/ENST 2003 Page 6
  7. 7. Master’s Thesis “From Direct Marketing to E-mail Marketing” explain some of the latest internet tracking technologies. Finally, we will explore in our last part the sending process of paper mailing and e-mailing campaigns and show the great differences between them. Topic restrictions: The scope of this thesis has been reduced on purpose to the study and comparison of traditional direct marketing and e-mail marketing techniques for mail-order companies. The following subjects have not been treated:  Detailed statistical, financial or technical explanations: more than giving details about used techniques, we will attach to explain which techniques are useful and what are their basic principles.  Direct marketing and e-mail marketing in other sectors of activity. This thesis was done at LaRedoute and is hence mainly focused at mail-order selling companies. Vocabulary: Direct Marketing definition1: the practice of delivering promotional messages directly to potential customers on an individual basis as opposed to through a mass medium. In our thesis, however, we use the word "direct marketing" for traditional (paper) directmarketing as opposed to “e-mail marketing” or “e-mailing”. 1 Definitions given in the inverstorwords dictionary: http://www.investorwords.com LaRedoute DCEM – Master HEC/ENST 2003 Page 7
  8. 8. Master’s Thesis “From Direct Marketing to E-mail Marketing” Context L aRedoute is the largest and oldest mail order company in France. Since 1922, the company is selling products through catalogues and has developed a great experience in direct marketing. Traditional mailing is still the most important mean of contact with customers. Depending of the customer's quality, LaRedoute send up to one mailing every two weeks, to an active database of around 8 million active customers which accounts for almost three quarters of French population. This great experience has led LaRedoute to an international leading position. The first newsletter was sent once every two month in 1997 to almost 10 000 customers without a real commercial planning. Since that date the importance of e-mailing is growing every day, and today a commercial planning is prepared every season for France and for International as well. Campaigns are sent to more than 750 000 customers once every two weeks for France, and targeting is thoroughly used to enhance the results. 2002 has also been the year of tests for e-mailing campaigns and results were clearly in favor of multichannel cooperation. All these results showed that e-mailing is becoming a strategic asset for mail order companies such as LaRedoute. Moreover e-mailing has two major advantages over traditional mailing which makes this media particularly interesting. The cost of printing and sending processes is virtually free for email compare to the very expensive cost of traditional mailing. For example, the “Fideli7” campaign for the year 2002 has been sent to 2 465 000 customers using traditional mail and to 650 000 using e-mailing. paper mailing cost of the document (paper, ink…) stamp cost Envelope Adressing Sending Total € € € € € 0,056 0,231 0,029 0,025 0,341 E-mailing € € € € € 0,010 0,010 2 2 The sending cost for traditional mailing is the cost of preparation (mainly putting letters into envelopes). For emailing, the cost of sending is the redemption cost of the e-mailing software. LaRedoute DCEM – Master HEC/ENST 2003 Page 8
  9. 9. Master’s Thesis “From Direct Marketing to E-mail Marketing” The other major advantage of e-mailing compared to traditional mailing is the fact that you can reach your customer almost anywhere. This is really useful for example during the summer holidays. This is especially important for mail-order companies because of the timing of operations which are generally valid for three weeks only. LaRedoute DCEM – Master HEC/ENST 2003 Page 9
  10. 10. Master’s Thesis “From Direct Marketing to E-mail Marketing” 1) Communication and promotional offer techniques a) A changing strategy for a changing customer A few years ago, internet was still an evolving media concerning a small, well educated part of the population. Some say this is still the case today, but in 2003, the internet crisis is far away, and e-commerce is growing at an incredible yearly rate of more than 100% (for French mail order companies), accounting for almost 10% of overall turnover3 to compare with almost 0,5% in 1999. Moreover, in USA, Online sales totaled 30% of cataloguers’ sales at the end of year 2002 according to DoubleClick 4. This prefigures that online growth has not reached its maximum and will certainly be as important as the traditional letters. According to many actors at LaRedoute, 2003 has been a year of great changes: i) A change in the view of the customer5 In 2000, the number of e-shopper was quite negligible. Hence it was interesting to take them as a separate target. Profiling study showed that the average LaRedoute e-shopper was a working young mother with children. At that date, the e-mailing commercial planning was adapted to this client profile. Today, with a growing customer database of nearly one million customers, the segmentation has to be redefined. As many customers in the emailing database were also recognized as making orders via traditional mail, telephone or minitel®, the decision was to give up the distinct view of internet shoppers and instead to use a single “multi-channel”6 customer database to follow a single targeting process and a single multi-channel commercial planning. ii) An organizational change This change has led to an internal reorganization that occurred in July 2003 to change the place of the e-commerce department in the company. No more a stand-alone department, the e-commerce is now completely integrated in the flow chart of LaRedoute, standing side by side with the paper-catalogue department and the stores department. 3 9% of total turnover of French mail order companies in 2002, Journal du Net, July 18, 2003 http://www.journaldunet.com/0307/030718vad.shtml 4 DoubleClick report of July 15, 2003 5 Isablelle Marcotte, laredoute.fr analyst 6 a « multi-channel » customer can make an order either by phone, by mail or by internet LaRedoute DCEM – Master HEC/ENST 2003 Page 10
  11. 11. Master’s Thesis “From Direct Marketing to E-mail Marketing” These great changes interfere in favor of integration of the web, and more specifically of email as a new media for LaRedoute’s direct marketing strategy. In practice, the integration of e-mailing in the general commercial planning allows costs and time saving as it is possible to re-uses the texts and images that were created for traditional mailings. The question we should ask is how far can we go in re-using the communication of a traditional campaign for an e-mailing campaign? b) Communication for paper mailing VS e-mailing With more than 30 years of direct mailing experience, LaRedoute has developed a great experience in communicating to its customers. A lot of different tests have led to a set of “Best Practices” of direct marketing. We will present them and show if and how they can be applied to e-mailing. Information about traditional direct marketing communication comes mainly from an interview with Philippe Delepaule, manager of LaRedoute International Studio (August 20th 2003). A traditional mailing is generally composed by four elements: the envelope, the letter, the gift description, and the order coupon. A commercial e-mail cannot be decomposed in such a way, but we will try to show the similarities. i) The mailing envelope / the e-mail header The envelope has to attract the customer in a matter of seconds, without affecting the image of the company. The only goal is to make the customer open it! To achieve this goal, the marketer can play on different factors: the size and the format of the envelope, its design, the message written on it, and the identification of the sender. In comparison, the email can only play with two of these factors: the subject line and the identification of the sender. LaRedoute DCEM – Master HEC/ENST 2003 Page 11
  12. 12. Master’s Thesis “From Direct Marketing to E-mail Marketing” (1) Message on the envelope In traditional mailing, the envelope must show a clear promise to the client: it must be unique and irresistible (“for me especially, today or never”). The second point is that the promise must The justification have a justification, otherwise the customer will have an image of bad quality or outof-date products, and the brand image of the company will be affected. Figure 1: Example of an envelope from a mailing from LaRedoute in France The strong promise (2) E-mail subject line We can apply these "Best Practices" to the email subject, which is the first element of a newsletter seen by the customer and hence directly related to the opening of the email. The two key points of a good subject line:  A strong and clear promise  Personalized and clear justification Taking into account these two constraints, marketers should do their best to distinguish their e-mail from the bulk of other commercial e-mails that their customers receive everyday. A good example of differentiation is the use of subject-customization: in Spain, the use of first name in the subject of the email increases the opening rate of about 13% (figures from Spain e-marketing workshop 2003) and about 9% in USA. This kind of results shouldn’t be taken as a definitive truth, some U.S. companies claimed that the use of client’s first name in the subject line upped their opening rate by 50% 7 in 2002, but as this practice was used by more company, the power of this trick decreased. Examples of email subject lines: 7 Circulation Management, Nov 1, 2002 http://circman.com/ar/marketing_email_subjectline_testing/ LaRedoute DCEM – Master HEC/ENST 2003 Page 12
  13. 13. Master’s Thesis “From Direct Marketing to E-mail Marketing” This email follows these best practices: £10 off and free delivery for Christmas Strong promise LaRedoute UK Justification This one only shows the promise: Take 15% off Puma(R), Adidas(R)... LaRedoute US Strong promise but no justification No real promise and no justification: Succombez a la tentation! LastMinute.com (Succomb to the tentation!) No explicit promise and compelling justification Email subject line has many drawbacks in comparison with the envelope, mainly for its small size (only a few words) and its zero-flexibility in the choice of the format. But these constraints give an extreme importance to each word of the subject line. We can find an interesting comparison with the newspaper advertising copywriting: according to the well copywriter David Ogilvy8, "on the average, five times as many people read the headline as read the body copy. When you have written your headline, you have spent 80 cents out of your dollar." This basic principle applies exactly for e-mails and should be email marketer’s motto. (3) Expeditor’s identification: the “from” line of e-mails The sender’s name and address are the other key elements of the envelope which can be relevant for emailing. They also play in favor of the opening of a letter or an email. In traditional direct marketing, recognition of the sender through the expeditor’s address, name and logo has mainly two objectives:  Reassure and identify the sender  Attract his curiosity to make him open the letter Email “from” line is, like the subject line, far less flexible than traditional mailing. There is only place for an email address and a few words. But the absence of place doesn’t mean absence of importance, according to Doubleclick Consumer Email Study9, nearly 64% of consumers cite the “from” line as the most important factor in opening an email. This 8 David Ogilvy, Ogilvy on Advertising, Vintage Books (March 1987) 9 DoubleClick 2003 Consumer Email Study, October 2003 http://www.doubleclick.com/us/knowledge_central/documents/research/dc_consumeremailstudy_0310.pdf LaRedoute DCEM – Master HEC/ENST 2003 Page 13
  14. 14. Master’s Thesis “From Direct Marketing to E-mail Marketing” result can be explained by the email-specific Spam 10 problem: customers receive each day more unsolicited commercial emails, which makes them very selective. Since opening tens or hundreds emails just to check whether they’re worth is very time consuming, the “from” line is becoming the easiest and fastest identifier of the trustworthiness of emails. Email marketers should brand their newsletter with an easily recognizable address. The email address should sound as true as possible to inspire confidence, and marketers should avoid using computer-generated email addresses Bad examples: Good examples: Houra.258248.6624.0@info.houra.fr annonce@amazon.fr VictoriasSecret@vsd.m0.net newsletter@maximiles.com Beside the email address itself, SMTP11 allows the sender to add a small description. This is another opportunity to precise the provenance of the email and to reassure the receiver. You can for example add a short description of your company or precise the department from where the email has been sent. Examples of email “From” lines: "Houra votre cyberMarche" <Houra.258248.7319.0@info.houra.fr> Good description Bad computer-generated-like email address This short description is good because the Houra is not a “top-of-mind” brand of supermarket. "Claire_3SUISSES" <Claire_3SUISSES@xmr3.com> Good precision Bad computer-generated-like email address This is here a good Idea to give a real name to establish a relationship between the seller and its customers because 3Suisses is a “top-of-mind” mail order company in France and a description wouldn’t be useful. But why the address looks that much generic? Would you like to establish a relationship with a machine? "LaRedoute" <LAREDOUTE@uk.redoute.com> Average description misleading email address (http://uk.redoute.com or www.uk.redoute.com brings nowhere) 10 Spam : Electronic junk mail or unsolicited commercial emails. This topic will be deeply treated in the second part of this thesis. 11 SMTP: Simple Mail Transfer Protocol. LaRedoute DCEM – Master HEC/ENST 2003 Page 14
  15. 15. Master’s Thesis “From Direct Marketing to E-mail Marketing” The short description could be enhanced with a short indication of the business, as LaRedoute isn’t a top-of-mind company in the UK, we could use for example “LaRedoute, Fashion at my doorstep” to precise it. Concerning the email address, this is a better-looking example comparing with the two precedent examples. However, it is misleading because most email address ends with the website host name (for example, somebody@hotmail.com www.hotmail.com) and here http://www.uk.redoute.com refers to the site or http://uk.redoute.com are not valid web addresses. (4) Consistency of email address over time Another point, directly related with Spam is the fact that some exclusive email filters accept only emails coming from a personal email-address “white list” edited by the user. If a user subscribed to a newsletter and added the newsletter email address to his white list, he will receive future emails coming from this newsletter only if they are sent with the same address. This is a copy of the Exclusive email filter of the well known webmail www.hotmail.com : 12 This constraint tells us that email address should always stay the same on all your newsletters. The three main points of a good from line:  A clear and reassuring address  The address should stay unchanged over time  Add a short description of the company or the department ii) The letter body / the email body According to Philippe Delepaule, there are mainly three key points for a good direct marketing letter: text / image coherence, easily readable, and believable. 12 Screenshot of a part of hotmail.com “Junk Mail Filter” option page. November 15, 2003 - 23:30PM GMT+1 LaRedoute DCEM – Master HEC/ENST 2003 Page 15
  16. 16. Master’s Thesis “From Direct Marketing to E-mail Marketing” (1) Text / Image coherence First, the letter must attract the attention of the reader with pictures: the first reading is more a global view of the mailing and is done by the right -imaginative- part of the brain. The visual part of the letter should set an ambiance and seduce the reader. Then, the second reading is made by the left –analytical- part of the brain. The text you write must confirm the first impression set by the images. This is the text / images coherence communication rule. Figure 2: Example of a problem of graphic / textual coherence This is a bad example: do you see anything common between the design and the text? (traditional mailing, LaRedoute) Figure 3 : e-mail commercial Newsletter from Newport News Sept. 12th 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 16
  17. 17. Master’s Thesis “From Direct Marketing to E-mail Marketing” This is a coherent example: All images are showing a leather-fashion collection and the text is not speaking about something else. (Email newsletter, Newport News) (2) A readable text • Choose the right font Tests made for traditional mailings advocate for the use of readable font. This may seem as evidence, would it be useful to create a mailing if it’s hardly readable by its customers? But the important thing is that most fonts used for paper mailings are not adapted to screen reading. “Arial” and “Times New Roman” are good examples of paper-font. Microsoft has therefore developed four web-specific fonts: You can easily compare these fonts with the next one, Times New Roman, which is paper specific. • Writing for commercial mailings and emails Customers don’t read commercial mailings like poems; marketers have only a short time to attract their attention and shouldn’t distract them from the only objective of the newsletter: sell them products or services. LaRedoute DCEM – Master HEC/ENST 2003 Page 17
  18. 18. Master’s Thesis “From Direct Marketing to E-mail Marketing” Dear Madam, Dear Sir, Often, summer stays longer and we can benefit from its light and warmth… this is “Indian summer”. This period of sweetness, of clement sun, exceptional colours, is the ideal moment for… Figure 4 : bad (commercial) copywriting example (LaRedoute paper mailing) This is a bad example; the text is very long and not related with the product. The only good point is the use of small paragraph which facilitates the reading. • The major differences from traditional mail and e-mail writing styles: Interview with François Demontagne, LaRedoute web copywriter and ex- paper copywriter: (September 2003) “All along the year we do a continuous piecework rate, reading our customers’ favorites magazines. This leads to the seasonal establishment of a set of editorial rules we define together. That helps us to always stick to our clients’ favorite writing style and keep a consistence in what we say. As an example13, LaRedoute is now using a personal and familiar writing style. Texts are written as if a customer was speaking. The use of “I” prevails to help the customer place herself in the situation described by the texts and imagine her with the products. This editorial guide is used for paper as for web copywriting, but as you write for the web, you must be very synthetic and transmit only important ideas using magic words of direct marketing and an inciting language. You must find the good sentence. You must also be more intriguing…make the customer want to click to learn more.” 13 Fil Rouge – Charte éditoriale PE04, LaRedoute LaRedoute DCEM – Master HEC/ENST 2003 Page 18
  19. 19. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 5 : good example of commercial e-mail copywriting. Newport News, September 19th 2003 This newsletter is a good example; it is easy to read thanks to two reading levels: (colors and fonts are different). Small but explicit descriptions illustrate the pictures. Writing is inciting and asks for action. • Reading on the web: According to the web ergonomics specialist Jakob Nielsen 14, 80% of the web users do not fully read web pages but only “scan” them. This goes in favor of shorter text writing. You should only explain one idea per paragraph. Titles must be carefully thought of to attract the reader into the paragraph. He insists in using the journalistic writing method of the inverted pyramid. The most important ideas should be said first so that the web users get a chance to read it. Only if he is interested, he will go deeper into the text. (3) A believable and proactive style The Call to action: a direct marketing technique essential for the email marketing: 14 Jakob Nielsen, Homepage Usability: 50 Websites Deconstructed LaRedoute DCEM – Master HEC/ENST 2003 Page 19
  20. 20. Master’s Thesis “From Direct Marketing to E-mail Marketing” As the president of Red Door Interactive 15 says, “the call to action is the moment of truth for each e-mail. The trust you have developed lets you tell people about special deals, offers or sweepstakes and expect a more direct action. If you have built a good relationship with the user, he will expect it, understand why it is there and react to it when he is ready.” Many different communication techniques can be used in a traditional mailing or an email to influence the customers and convince them to buy your products. You should use them as they have been tested for many years, but they will work only if they look believable and if you could be convinced yourself by what you tell your customers. The main points to follow for writing the content of a newsletter:      Maintain a coherence between your images and your text Choose a font optimised for screen reading (Verdana or Georgia) Use short paragraphs and concise sentences Tell the most important things at the beginning Use a proactive style: push customer to act immediately iii) The gift leaflet The gift leaflet is a component of many mailings. It is a traditional direct marketing technique to show in details the advantages you offer to customers. The leaflet presents the advantages of your gift, using direct marketing “magic words” such as “free”, “for you”, “exclusively” and seducing pictures of the gift. Presenting a gift, especially if it’s free should always be as detailed as possible. Should it be on a paper mailing or on the web, customers will read all the details to make sure that what is showed on the picture is true and qualitative. Show it precisely, and present every advantage, technical details and completions. Free gifts are always leading to doubt for customers who are wondering what’s behind your product. You need to reassure them about the gift’s commercial value; the warranty duration…This is important to present the gift in details in a separate leaflet, because otherwise, the abundance of details would dilute the commercial messages of the main letter. 15 Reid Carr, president and strategy director of Red Door Interactive, DMnews.com, Aug. 29, 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 20
  21. 21. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 6 : Gift description in a paper mailing Precise as much as possible the (positive) technical details and finitions of the gift! This same approach can be used in an email with the “micro-websites”. To precise some elements of the newsletter without diluting the messages of the email, dedicated web pages better known as "Landing Pages" can be created. As for traditional direct marketing it is very important to give details of the products sold especially when they are free. A recent study16 of French internet surfers says that 79% of men and 75% of women are searching for product information before their purchase. Link to open the details window iv) The order form Different views of the gift, and associated detailed description to reassure the customer about its value. 16 l'Internaute Magazine, Septembre 2003-11-25 http://www.journaldunet.com/0311/031104enqueteconso1.shtml LaRedoute DCEM – Master HEC/ENST 2003 Page 21
  22. 22. Master’s Thesis “From Direct Marketing to E-mail Marketing” The purchase order must be easy to fill. It must have the same colors and design codes as the rest of the mailing and be pre-completed with the most frequent options and personalized with the name and surname of the customer. The emailing campaigns should learn from this in simplifying the order process when order comes from an email. The maximum should be done to avoid the customer’s hassle of filling long forms. Figure 7 : example of an order form from a mailing from LaRedoute LaRedoute DCEM – Master HEC/ENST 2003 Page 22
  23. 23. Master’s Thesis “From Direct Marketing to E-mail Marketing” c) The communication principles of direct marketing LaRedoute has many contacts with its customers each season (up to two in a month for traditional mailing). Hence, this is very important to change the way of transmitting the same basic message “buy our products!” to the same customers. This can be achieved through varying the style of communication used to interact with the customer. The goal is to wake their curiosity and to make them open the envelope. Communication in direct marketing is a lot about being the best out of the mailbox to have a chance to avoid the bin! i) The entertaining communication style The use of gimmicks (scrape-off games, cut and paste…) can help the customer find out all the advantages of the offer. It is often a good idea to relate the use of an entertaining communication way to special days: holiday, Christmas, Easter, Halloween… This style of communication can use very developed visuals and texts, in relation with the event. Original designs and good games ideas are welcomed. Here are two examples of the use of an entertaining mailing campaign for Halloween (LaRedoute France, October 2003), the design is clearly related with a special event close to the customer daily life (Halloween). The communication is funny and uses a lottery to entertain the customers. LaRedoute DCEM – Master HEC/ENST 2003 Page 23
  24. 24. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 8 : examples of entertaining communication on paper mailings (LaRedoute) This way of communication can be very efficient on the Internet thanks to the high interactivity of this media. Gimmicks coming from the paper have been adapted to the web: below are examples of “scraping game” made by a French web-agency specialized in marketing games, www.touche-etoile.com. More than just repeating what have been done offline, web-games and gimmicks can go a lot further and are often used as a good mean of recruiting new prospects through virality. These games often ask information and email from the participants and promote competition and easy transfers to friends. If the game is funny and launched at the right moment, this can bolster the acquisition of prospects in a tremendous way: with the LaRedoute DCEM – Master HEC/ENST 2003 Page 24
  25. 25. Master’s Thesis “From Direct Marketing to E-mail Marketing” second version of its game, www.voyages-sncf.com acquired about 230000 email address in only 15 days. e-Scraping game for a German brand of bier On the internet, games can be more original or funny than basic DM gimmicks.The goal is to attract prospects via email virality. But to be effective, keep them as simple to understand as possible. Games are often hosted on a website (or a “micro-website”) and can be accessible through a link coming from a newsletter or from the website’s home page. Figure 9 : example of entertaining communication on the web The website www.redoute.be used quiz and games thoroughly this year (2003) to celebrate the company’s 20th anniversary. This was relayed in newsletters with “Jackpot orders” and sweepstakes among others. ii) The standard commercial communication This communication technique presents promotions, gifts or any other advantage proposed to the customer. The communication way is direct and loud: show your offer! Use visible colors such as red and yellow, magic words and promotional design so that the customer catch your offer. Use a direct writing style: push the customer to act now. LaRedoute DCEM – Master HEC/ENST 2003 Page 25
  26. 26. Master’s Thesis “From Direct Marketing to E-mail Marketing” As done in direct marketing for a long time, this is important to specify the main advantages offered to the customers on the envelope. This is what drives up the opening rate. Email from: www.laredoute.co.uk The subject is: HURRY! Exclusive 48 hour sale preview! This could maybe be enhanced with an indication of the advantage, for example: Hurry! Up to 35% off, exclusive 48 hour sale preview Figure 10 : example of a commercial communication (www.laredoute.co.uk) On the letter / email itself, this is also important to order the messages: the most important should appear first. For emails, this is especially important because depending on the software used to read e-mails, customers can preview the upper end of the email through the “preview pane” before really opening the email. Moreover, if the customer has to scroll down the e-mail to view some messages, these ones will be less viewed than the first ones. However, this should not limit you to small e-mails: the web usability specialist Jakob Nielsen17 has publicized in 1997 a web usability study which shows that the behavior of web users has changed vis-à-vis scrolling down web pages: According to him “the change from 1994 is that scrolling is no longer a usability disaster for navigation pages. Scrolling still reduces usability, but all design involves trade-offs, and the argument against scrolling is no longer as strong as it used to be. Thus, pages that can be markedly improved with a scrolling design may be made as long as necessary.” iii) The intimate communication style 17 Jakob Nielsen web usability Alertbox : http://www.useit.com/alertbox/9712a.html LaRedoute DCEM – Master HEC/ENST 2003 Page 26
  27. 27. Master’s Thesis “From Direct Marketing to E-mail Marketing” The objective of this communication style is to praise the client for an event where he lies at the center: his birthday, the anniversary of his first order, his 10th, 25th … or 100th order… any occasion to implicate the client in a personal relationship with the company. Here, the writing style can be either official or conniving. This style of communication often uses personalization and a great knowledge of the customer’s buying behavior. (Customer seniority, total number of orders…). The design often uses special honorific items: diplomas, medals, palms… and often uses qualitative envelopes and paper. Personnalisation : Generally name / surname Original and prestigious design of the envelope (very long) : bring the customer to open it! Prestigious sender: The Customer Relationship manager signed the letter for your birthday ! Figure 11 : examples of paper mailing using intimate communication This communication should also be used in e-mailing campaigns because it is highly effective for traditional and develops a more personal relationship with the customer. But this communication style implies more than basic personalization. As most of the newsletters are “personalized” with the name and surname of the client, the Intimate communication style must dissociate from other newsletters. The example next page presents an email from the American mail-order company “Newport News”. This is not a common commercial newsletter promoting products; instead, the customer is invited to a “private” sale, for the “best customers only”. This technique gives LaRedoute DCEM – Master HEC/ENST 2003 Page 27
  28. 28. Master’s Thesis “From Direct Marketing to E-mail Marketing” consideration to the customer who feels privileged. However, the communication power could be a lot enhanced if the name, surname and number of orders were displayed. Here the assertion “as one of our best customer” is vague and the client can doubt from it. (I received this newsletter without having ordered anything). This event is specific for the customer. Could be improve with a better personnalisation (name & surname) Figure 12 : example of a newsletter using a personal intimate communication (Newport News e-mail) iv) The administrative style This style refers to administrative correspondence: delivery coupons, tax letters… The sender's name or department must be unusual and official (i.e. Gift Department, General Management, Financial Department…) and the aspect of the design should be very formal: use of black & white, listing extracts… A credible story should be created to explain to your customer why they received this specific mailing. For example: send a satisfaction questionnaire to your customers and explain them that to thank them for the time they spent on it you are happy to give them a special discount on their next order. To summarize, you should use personalization with a cold, formal copywriting and design. Add to this an unusual sender. This communication style is often very effective because it differentiates from the commercial advertising. LaRedoute DCEM – Master HEC/ENST 2003 Page 28
  29. 29. Master’s Thesis “From Direct Marketing to E-mail Marketing” Envelope Recto: Official Style: The customer tipically differentiates this kind of mailing with usual commercial advertising. All these "logos" and "stamps" are of course only there to make the look more important - official: The customer should ask ? What have I done? Why the financial department is writing to me? Figure 13 : examples of mailings using administrative communication LaRedoute has recently tried to reuse this Administrative way for emailing campaigns. This was a great success, for example with this e-mail sent in U.K., which resulted in more than 4,7% activation rate. LaRedoute DCEM – Master HEC/ENST 2003 Page 29
  30. 30. Master’s Thesis “From Direct Marketing to E-mail Marketing” A good example of how personalization can be efficiently used This example shows how an original and believable story can be used in “administrative letters”. This one is enhanced by the basic design of the email and the inclusion of a false “Original Message” at the end. => Imagination is also possible –and should be used- for emailing campaigns. Figure 14 : example of an e-mail using official communication (www.redoute.co.uk) Use the four communication styles of Direct Marketing to vary your contacts with customers:  Commercial style shows clearly the commercial advantages to the customers  Entertaining style use gimmicks, games and a funny communication to attract customers  Intimate communication style used with personalization develops a personal relationship with your customers. (ex. Birthday gifts)  Administrative style use surprise and originality to boost orders LaRedoute DCEM – Master HEC/ENST 2003 Page 30
  31. 31. Master’s Thesis “From Direct Marketing to E-mail Marketing” d) Commercial offers techniques for traditional mailing and for emailing i) Special-offers codes and contingency marketing Mail-order companies such as LaRedoute use different techniques to promote their products. As they often have a great knowledge of their customers they can adapt their commercial offers to customers’ preferences. One of the most commonly used techniques is “specialoffer codes”. The customers are asked to give a “special-offer code” in the order form to benefit from a specific price reduction or gift. This allows marketers to adapt their offer to the demand, to the consumer, or to almost whatever. This is a typical case of contingency marketing: why would you give one of your customers a 30% discount if you know she will buy your product at -10%? With special-offer codes you are able to offer different promotional offers to different customers to get the most of your products. This technique is widely used in mail-order companies. For every order, many parameters are recorded to know more about the purchasing comportment of customers and hence be more efficient in offering them what they like and what they can afford. For example, some customers won’t respond the same if they are given a special discount check or a gift of the same value, it is hence possible to learn from customers’ purchasing behavior and adapt to it. Figure 15 : use of a special-offer code in a mailing To make it easier for the customer to fill-in the order, most mailing order-coupons have pre-filled special-offer codes. On the figure 15, clients should only mark a checkbox. This technique is one of the first to have been re-used for e-mailing. Today, most of the commercial e-mailing campaigns that give a special advantage to customers use special-offer codes. Doing this has two major advantages. LaRedoute DCEM – Master HEC/ENST 2003 Page 31
  32. 32. Master’s Thesis “From Direct Marketing to E-mail Marketing”  It is really easy to set-up: Especially for mail-order companies that used the technique for traditional mailings for years, the incremental cost of setting up such a tracking tool is almost zero.  It is flexible and works for all channels: Today’s direct marketing campaigns are “integrated”; they use many different channels to relay the same operation. As an example, LaRedoute relays its operations with paper mailing campaigns and e-mailing campaigns, and the customers can order using either the telephone, the minitel® or the Internet. All these different Medias work well with a simple special-offer code. Figure 16 : use of a special-offer code in a newsletter ( www.gap.com) ii) Specialized small catalogues and dedicated landing page Another commercial technique used by direct marketers is the targeted sending or small specialized catalogues. As an example, LaRedoute sends its "white" only to a specific target of customers which is more receptive to this kind of products. Figure 17 : specific catalogue (la redoute "white") LaRedoute's White catalogueue for season autumn / winter 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 32
  33. 33. Master’s Thesis “From Direct Marketing to E-mail Marketing” As the cost of printing and sending catalogueues is pretty high, it is indeed a good idea to target their sending. This technique use dedicated landing pages only accessible through a link from the email. This is more difficult to implement as you need to create a web page especially for one e-mailing campaign (or one per group of customers if you have a different offer per targeted group). This technique cannot be automatically duplicated on the other Medias as it could be possible with a special-offer code. This is however a good mean to offer a real advantage to your customers. They can get something different than just anyone else surfing directly on the website. We can compare it to the small, specialized booklets (catalogues) sent to targeted customers in traditional direct marketing. Of course without the high cost of printing and sending such small catalogues. This advantage can also be showed as a virtual private sale, as only those who received the email can access the dedicated web-page. This comparison is the most frequent because of the reactivity of the Internet. Special sales are often only available for a few days or hours. This can be seen as a real privilege for customers as they can be sure of the availability of the products before the sale is extended to all customers. Can be enhanced with personalization (name / surname) One click brings to a dedicated preview of the sales landing page, only accessible via this email LaRedoute DCEM – Master HEC/ENST 2003 Page 33
  34. 34. Master’s Thesis “From Direct Marketing to E-mail Marketing” iii) Transparent offer-codes links This technique can be used on the web by writing the value of the special-offer code directly on the link so that it is invisible for the customer. The special code will appear directly and transparently into the order form as the customer coming from an email places an order. This technique has the advantage of being easier for the customer who hasn’t to do anything to benefit from the advantages presented on the e-mail. The other advantage is that the code is not much sowed to the customer and chances are that it won’t be spread on the web as fast as it could happen with basic special-offer codes. There are of course drawbacks to this technique: new links have always to replace traditional links in the newsletter and it can happen that the customer wants to benefit from another offer specified by another special-order codes which will replace the one specified in the links. A customer doing so will be surprised that the discount specified in the newsletter will be discarded as soon as another is selected. The use of special-offer codes is a good way to use contingency marketing to get the most from your products proposing a different price to different customers for the same item. e) The viral process, a danger or an opportunity? i) Viral Marketing, how to get the best from the viral phenomenon "The award for Internet marketing buzzword of the year goes to 'viral marketing'." -- Iconocast, December 16, 1998 Viral Marketing can be defined as an ingenious way of free advertising that can boost the traffic to your website. The reason it's called "viral" is because it works just like a virus. One person gets your promotional material (ebook, article etc) and passes it on to as many people as possible. But compared to a computer virus, it's not dangerous. Methods include "refer-a-friend", "pass-it-on", "send-an-article", ecards, ebook distribution and many more. There are ways of implementing a viral marketing strategy to virtually any website. And the options are endless.18 18 Definition from the Internet Marketing Dictionnary :http://www.internet-marketing-dictionary.com/viralmarketing.html November 29 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 34
  35. 35. Master’s Thesis “From Direct Marketing to E-mail Marketing” Viral marketing is hence intended and well prepared actions taken to make a marketing message spread like a virus to the largest possible population. But the viral process can also be, and is often unintended. Internet and the e-mail have greatly developed this phenomenon as it is nearly costless to transfer information to all your friends! The viral phenomenon can be efficiently used to increase the effect of e-mailing campaigns: you just need to tell the recipients they can freely forward the offer to their friends and facilitate as much as possible this transfer. For example, Banana Republic include a link in its newsletter to make it easy to transfer it to friends: Click here to forward to a friend. A click on this link opens the following window: LaRedoute DCEM – Master HEC/ENST 2003 Page 35
  36. 36. Master’s Thesis LaRedoute DCEM – Master HEC/ENST 2003 “From Direct Marketing to E-mail Marketing” Page 36
  37. 37. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 18 : Banana Republic “Forward e-mail to a friend”'s popup window; November 2003 More than just incitating the customer to forward your newsletter to a friend, such a tool allows you to monitor the “virality” of your e-mailing campaign, as it is technicaly impossible to track the number of e-mails that have been forwarded using the traditional “forward” button of your customer’s e-mail software. Figure 19 : Hotmail.com’s e-mail toolbar : (November 2003) Figure 20 : Yahoo.com’s e-mail toolbar : (November 2003) You need hence to incite them to use your forward button instead of their software’s. Doing this will help you to track the virality of your campaign and to work to enhance it through attractive and inciting messages. However, the figures you collect for “forwarded” messages will have to be taken as under-evaluated because not taking into account emails forwarded using the e-mail boxes’ “Forward” button. As we have just seen, the viral process can be used to improve the efficiency of an emailing campaign, in a way that couldn’t be imagined for a traditional direct marketing campaign. ii) The dangers of the viral phenomenon: As we now know, the viral phenomenon can spread your offer far further than you originally intended. This can really be a problem when you target a very attractive offer to some of your customer. If the offer is so attractive, it will surely be forwarded to many people and hence go out of the company’s control. As mail order companies often try to get the most of their customers through contingency marketing (a different price for a different customer), this is not a good idea to loose the control the best offers as it can reduce your margin and affect your brand image. LaRedoute DCEM – Master HEC/ENST 2003 Page 37
  38. 38. Master’s Thesis “From Direct Marketing to E-mail Marketing” The problem of viral marketing is due to the lost of control of your offer that can happen after you launched a highly targeted, very attractive offer in the form of an e-mailing campaign. If the offer is forwarded to only a few customers’ friends, this is not a bad thing, because this is a good word-of-mouth advertising for your company. But the lost of control happen when your offer falls into the hands of “promotions hunters”: consumers who don’t care about your company but only about the special offer. This problem is coming from the internet media. Before the internet, it was not possible to disclose information at a very large scale without important financial means, especially if the information was only true for a few weeks. With the internet, it is now possible to publish information almost instantly, for free and accessible from almost all over the world and some internet websites are specialized in disclosing special-offer codes. Figure 21 : sample of banners of communities’ websites listing special-offer codes These are some examples of websites that displays special-offer codes as soon as they are appear. Some of them even propose newsletter to inform “promotion hunters” of the new offers that have come up. Others propose to send an e-mail-alert when a new offer-code appears for the selected companies. Hereafter is the detailed example of www.CodeReduc.com, a French website displaying special-offer codes from many well-known companies. The left column shows the 15 newest promotions and the right column present users’ favorite reductions. (the screenshot was taken on November 29th 2003). LaRedoute DCEM – Master HEC/ENST 2003 Page 38
  39. 39. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 22 : List of all special-offer codes proposed by www.codereduc.com's website Figure 23 : details of a coupon from LaRedoute The danger is especially true for very attractive offers such as this one which is 15€ + a gift without any purchase minimum. For less attractive offer, such a “free” presence in the web can be regarded as free advertising for your company, another advantage of the viral process. These websites are a danger for traditional paper mailing as well as for e-mailing, as is not more difficult to add a special-offer code coming from a paper-mailing than from an email campaign: This is hence very important to include this constraint when you design your multi-channel (outlet-paper-phone-internet) promotional offer. To illustrate the importance of the phenomenon on brick-and-mortar companies, the American supermarket chain Albertsons Inc. has recently stopped its multi-channel advertising campaign using internet free coupons: “Reacting to recent incidents of Internet coupon fraud, supermarket chains Albertsons Inc. and Publix Supermarkets Inc. have started rejecting coupons that consumers obtain online LaRedoute DCEM – Master HEC/ENST 2003 Page 39
  40. 40. Master’s Thesis “From Direct Marketing to E-mail Marketing” and print at home. Albertsons said it has experienced some losses related to fraudulent use of Internet coupons."19 Steve Boal, CEO of Coupons Inc., which operates the Internet coupon service Coupons.com, said web coupons should have a low rate of fraud when used properly. The most important fraud-prevention measure, he says, is to take Albertsons’ approach of rejecting all freeproduct coupons. “Using a free-product coupon is begging for trouble,” according to him. To reduce the viral risk on the web, you can try to hide special-offer codes using landing pages or transparent offer-codes links instead of simple special-offer codes, but this is not bullet-proof as the links can often be displayed on the websites. The best way is to allow the use of “high-risk” offer-codes for targeted clients only. The viral phenomenon should be regarded as an important factor of your campaign, you should design your promotional offer to benefit from it or protect yourself from its bad effects: offers that are really costly to your company should be working only for the targeted customers and blocked for anyone else. Don’t forget traditional paper mailing as they are also vulnerable. 19 DMNews.com, Tuesday, September 30th 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 40
  41. 41. Master’s Thesis “From Direct Marketing to E-mail Marketing” 2) Tracking, Analyzing and Targeting As we gave the basic principles of communication and commercial techniques for e-mailing and traditional mailing campaigns, we should be convinced that it is much more efficient to target our offering. Targeting can only be used once we know something about our customers; therefore it is a necessity to use a tracking technology, and to analyze the data collected. In the following part we will first study the tracking technology used in traditional direct marketing and see how it can be re-used for e-mailing. As an Internet media, the e-mail can benefit from web technologies to track receivers’ behavior. All this will allow us to explain the technology used to analyze the data coming from our customer database. This will finally lead us to the targeting process, or how to get the best of our customers through a precise database analysis. a) Tracking customers’ order and behavior i) Tracking the orders Mail-order companies such as LaRedoute track the financial turnover of their direct marketing campaigns for each customer, so that they can know more about them and adapt to their behavior. The technique that is used is “special-offer codes”. The customers are asked to give a special-offer code in the order form to benefit from a specific price reduction or a gift (we talked about this in the first part of this thesis). It is hence easy to track customers who ordered using the same special-offer code and hence have responded to the same campaign. (1) Tracking orders customer per customer At LaRedoute, every customer has a single customer code. This customer code is created at the first order and then customers keep the same customer code for all their future purchase. When they make an order, should it be by mail, by phone or by Internet, they are asked to fill in their customer code and a special-offer code so that their profile can be updated in the customer database. With these two references, it is possible to retrieve the campaigns after which they ordered and to know more about their purchasing preferences. LaRedoute DCEM – Master HEC/ENST 2003 Page 41
  42. 42. Master’s Thesis “From Direct Marketing to E-mail Marketing” (2) Tracking and testing different targets in the same campaign More than tracking the results of one campaign, this technique is also very helpful to track different targets in the same campaign: the only thing to do is to define a different specialoffer code per target, keeping all other things equal. This is often used to test the reactivity of different customer profiles (for example to distinguish French-speaking customer from German-speaking ones in Switzerland). This technique is often used to test the validity of different hypothesis or common sense “knowledge”. ii) Tracking prospects’ or customer’s behavior Special-offer codes can be used to track orders made by customers but are of no interest in tracking the “behavior” of prospects or customers. What we mean by behavior is anything else than making an order. It can be reading the catalogue, opening or not a mailing, clicking on a link, calling the customer service... (1) The advantages of Web technology: almost everything is e-traceable This was possible to track customer’s behavior before the Internet, but this possibility was indeed very limited because only feasible through human interaction. As every interaction between the company and the customer can be recorded in a database, it is for example possible to record each time a customer makes a phone call or writes a letter to the customer service. This data is of course very important to track to be able to monitor the quality of service and to optimize the customers’ satisfaction rate 20. You can for example give a special compensation to all customers who complained for an order delay. Considering other behavior, more directly related with the marketing part of campaigns, such as receiving a mailing, opening an e-mail, selecting a product..., behavior tracking really appeared with the web technologies. Internet e-mail has the advantage over traditional mailing that it is possible to track and record for almost any action taken by the customers or prospects. To be more precise, the following bullet-list gives details about what information is “technically” traceable and recordable in an e-mailing campaign: 20 You can find additional information about call-centers in an interview with LaRedoute web call-center’s manager in part 3,b LaRedoute DCEM – Master HEC/ENST 2003 Page 42
  43. 43. Master’s Thesis “From Direct Marketing to E-mail Marketing” • If the customer opened the e-mail or not • When he did opened it • How many times he opened it • To how many people he transferred it • If and which link he clicked • If and what he bought after the campaign • How much time he watched the email • In which city he stays at the moment he is reading his e-mail • When did he last visit the website • What kind of operating system, e-mailing software and web browser he uses • If and when a customer decided to subscribe/unsubscribe to the newsletter The knowledge of customers and prospects is indeed greater as this information accumulates over a longer period of time. To make the comparison easier, the following table compares the information that can be tracked in a traditional direct marketing campaign from what can be tracked in an e-mailing campaign: Direct Marketing E-mail marketing is sent? yes yes is received? no yes is opened? no yes Number times read? no yes What is read (clicked)? no yes What is Buyed? yes yes This knowledge of the customers and prospects’ behavior is a great opportinuty for new targeting possibilities to increase campaigns efficiency. (2) Technical bases of the e-tracking technology The tracking information possibilities we listed above are available thanks to five different internet technologies, namely: log analysis, transparent pixel, server redirection, cookies, and IP-to-location. I will try to explain how they work and how they can be used to track LaRedoute DCEM – Master HEC/ENST 2003 Page 43
  44. 44. Master’s Thesis “From Direct Marketing to E-mail Marketing” behavioral information from e-mail recipients. All this data should of course be linked to a data-base related to customers/prospects personal information. Log analysis: This technology is the basis of all the others. A web server (the software which makes your website works) records different kind of information about incoming connection to your website. The web-pages you accessed, your IP address and time of connection are written on a “log file” in the web server. This means that you can retrieve the IP address of all the persons that visited any page of your website and the time and day they accessed it. As we are considering e-mailing and not websites analysis, this technology isn’t useful alone, but with the transparent pixel technique. Transparent pixel: A pixel is the smallest part of a picture on a computer screen. Today most newsletter and e-mails use HTML to enhance the presentation of the message. HTML is better-looking than basic text and can include images. These images are often not included in the e-mail itself but instead hosted on a web-server which address is specified in the e-mail (the URL of the images appears in the HTML code of the e-mail). When the e-mail is opened, the images are downloaded from the web-server which records your IP address and time of connection just as if you were visiting the website. As images can be long to download depending on your connection, the technology often uses one small and invisible transparent one-pixel image to record log-data. Server redirection: This technology is used to record “clicks” on newsletters’ links. The objective here is to make a difference from people who have been on the site on their own, and people who accessed to the site from the newsletter by clicking on the links. To solve this problem, the solution was to set the links’ target on the newsletter to a different webpage which cannot be accessed by another mean. This web-page only acts as an invisible gateway through the real destination’s page and instantly redirects to the really wanted webpage. As the data recorded in the log file contains the name of the web pages accessed, It is possible to retrieve persons who accessed the “redirection gateway pages” and then deduce that they clicked on the corresponding link on the newsletter. Cookies: Cookies are small files that can be set by websites and are stored on customers’ hard drive. They are often used to store data concerning the user’s session identifier. When he connects again to the same website, he can be recognized. This technology can be used to track the users’ passage on different web-pages and the date of their passage. LaRedoute DCEM – Master HEC/ENST 2003 Page 44
  45. 45. Master’s Thesis “From Direct Marketing to E-mail Marketing” IP to Location: This technology is still not efficient in Europe (in 2003) but is used in the USA. The technology is simple: a database establishes the correspondence between IP and countries and cities. As subscribers change from time to time, the database must be updated. Companies who establish this database must hence keep a permanent relationship with all ISP. The website www.IP2location.com is a good example. All these technologies make possible to track personal data into a relational database and gives us many opportunities to track customers and prospects behavioral evolution and to imagine and create specific targets. b) Analyzing the results and targeting To optimize the global turnover generated by traditional mailing or e-mailing campaigns we must maximize the number of orders and the turnover per order. Traditional Direct Marketing has achieved this goal thanks to special-offer codes tracking and RFM (Recency, Frequency, Monetary value) analysis. As we will see, e-mail marketing has been able to use the same model but also added behavior analysis and targeting, thanks to the information available through web technologies. i) Customer purchase analysis Analyzing your customers database begins to be important when your database is big enough21 and your time and resources are not too restricted. The objective is then to differentiate the promotional offers and the communication depending on the targets of customers you have found. The analysis of customers’ purchasing comportment has benefited from the very long experience of mail-order companies. For example, LaRedoute has more than twenty years of customer purchasing history with a database covering nearly 80% of the French families with often more than a hundred data fields for each family. The customer database is hence often considered as mail-order companies’ most important asset. The data is collected and updated after each campaign, thanks to the “special-offer” codes we already studied. 21 "Big" is indeed very subjective, this "size" can be estimated in comparing the turnover increase between first, sending one newsletter to all of your customers and then sending two (or more) targeted newsletters to distinct sub-selections of your database. If this differences in turnover justifies the time spent to create, target and send targeted newsletter to parts of your database, do it! At LaRedoute, we "think" that targeted newsletters are not worth it when the customers database is less than 70-100 000 e-mails. LaRedoute DCEM – Master HEC/ENST 2003 Page 45
  46. 46. Master’s Thesis “From Direct Marketing to E-mail Marketing” After several campaigns, it becomes possible to determine some characteristics of a customer’s purchasing comportment and to try to determine some interesting and frequent patterns in the clients’ database. Each customer can have a specific purchasing behavior (order frequency, average order amount, average order quantity, reaction to gifts / reaction to discounts…), but groups of customers sharing some common characteristics can be found thanks to statistical analysis. More than only finding such groups, it is interesting to discover which variables have the most chances to determine if a customer belongs to one group or another. As a teacher at UCLA22 says, data-mining is primarily used today by companies with a strong consumer focus - retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data.” Data-mining has been used in a way or another (often with another name) in mail-order companies with the objectives to enhance the performance of direct-marketing campaigns thanks to more specific targeting. The most well known model used for direct marketing is the RFM (Recency Frequecy Monetary Value) model. ii) The RFM model (Recency Frequency Monetary Value) The RFM approach is one of the most efficient ways to predict the future behavior of the customers because it is based on their past and actual purchasing comportment. Tests have been made that prove that a direct relationship exists between the chances of a future purchase and the date of the three factors of RFM (the date of the last purchase, the frequency of purchase, and the global amount already purchased). A good explanation of the RFM approach is given by Jim Novo23 a marketing specialist: 22 http://www.anderson.ucla.edu/faculty/jason.frand/teacher/technologies/palace/datamining.htm accessed on December the 5th , 2003 23 Jim Novo, Drilling Down : “turning customer data into profit” http://www.jimnovo.com/RFM-tour.htm (accessed December 6th, 2003) LaRedoute DCEM – Master HEC/ENST 2003 Page 46
  47. 47. Master’s Thesis “From Direct Marketing to E-mail Marketing” First, mail-order companies ranked all their customers on these 3 attributes, sorting their customer records so that customers who had bought most Recently, most Frequently, and had spent the most Money were at the top. These customers were labelled "best". Customers who had not purchased for a while, had made few purchases, and had spent little money were at the bottom of the list, and these were labelled "worst". Then they mailed their catalogues to all the customers, just like they usually do, and tracked how the group of people who ranked highest in the 3 categories above (best) responded to their mailings, and compared this response to the group of people who ranked lowest (worst). They found a huge difference in response and sales between best and worst customers. Repeating this test over and over, they found it worked every time! The group who ranked "best" in the 3 categories above always had higher response rates than the group who ranked "worst". It worked so well they cut back on mailing to people who ranked worst, and spent the money saved on mailing more often to the group who ranked best. And their sales exploded, while their costs remained the same or went down. They were increasing their marketing efficiency and effectiveness by targeting to the most responsive, highest future value customers. In practice, mail-order companies use the time-span of a commercial season to observe the Frequency and Recency of orders. For LaRedoute and 3 Suisses, the customer is viewed within a 4-seasons time period. For example a very good customer in terms of Recency – Frequency has ordered during the last season and the three past seasons: In practice, mail-order companies use the time-span of a commercial season to observe the Frequency and Recency of orders. For LaRedoute and 3 Suisses, the customer is viewed within a 4-seasons time period. For example a very good customer in terms of Recency – Frequency has ordered during the last season and the three past seasons: Season n Good RF Customer Yes Good F Customer No Season n-1 Yes Yes Season n-2 Yes Yes Season n-3 Yes Yes The main objective set by RFM model (as well as other ones) is to define different segments of customers who respond differently to direct marketing solicitations. This segmentation will help marketers to build their seasonal commercial planning according a different importance to different customer segments. LaRedoute DCEM – Master HEC/ENST 2003 Page 47
  48. 48. Master’s Thesis “From Direct Marketing to E-mail Marketing” The following figure is an example of a marketing application of the results given by an RFM analysis of the customer database. The database is cut into three different segments, and a different commercial planning and strategy is done for each of the segments. Figure 24 : Targeting process and commercial planning based on an RFM segmentation Best RFM Clients DM pressure is more intensive for client with an above average ROI (return on investment). More catalogues and mailing sent 1/6th of the database 8 mailings per season with no minimal discount Average per season with 5 mailings RFM customers no less than 25% discount 2/6th of the database DM pressure is less intense (less frequent mailings) but offers are more attractive Worst RFM customers 2 mailings per season with no less than 40% discount 3/6th of the database As Jim Novo says, the Recency Frequency Monetary Value (RFM) model works everywhere, in virtually every high activity business. And it works for just about any kind of "actionoriented" behavior you are trying to get a customer to repeat, whether it’s purchases, visits, sign-ups, surveys, games or anything else. This is interesting to use this well known and tested model for e-mailing campaigns. iii) Behavior analysis As we already know, it is possible to track events concerning a newsletter thanks to web technologies. Another great advantage of e-mailing over paper mailing is that the first results LaRedoute DCEM – Master HEC/ENST 2003 Page 48
  49. 49. Master’s Thesis “From Direct Marketing to E-mail Marketing” come immediately. If the campaign is launched within a good timing (during the morning for example), the first results will be available during the afternoon. (1) The opening rate On the next graphic we can see the evolution of the opening of a newsletter, which was sent between 10 a.m. to 11p.m. The figure 26 shows that almost all of the campaign’s opening results are available in only one day. This information is interesting to track as it allows marketers to confront opening rate and time and to check what time or period gives the best performances. Figure 25 : date of beginning and end of the sending of a campaign Figure 26 : evolution of the opening of an e-mail campaign, from 10 a.m. 2 a.m. the next day The overall opening rate is the best indicator of the efficiency of subject lines. It is hence a good idea to separate a campaign into different batches with a different subject line for each batch so that you can compare the opening rate of different subject-lines. However, marketers should be careful in sending the batches at comparable times and dates to avoid the influence of external factors. (2) Click-through analysis Information concerning the click-through rate on the web links placed on different elements of the newsletter is useful in many ways:  It gives marketers information about the usability of the designed newsletter. Some places on the screen are not “seen” by users, some links are not perceived as such and are rarely clicked.  It gives a quick glimpse on what attracted customers the most. Some commercial newsletter gives access to different products selections or boutiques, and it is interesting to now which one worked best less than a day after.  It is a good way to check the quality of your subject line: a good opening rate is good but not sufficient and a small click-through rate following a good opening rate is often due to misleading or deceptive teasing subject-lines. LaRedoute DCEM – Master HEC/ENST 2003 Page 49
  50. 50. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 27 : Click rate repartition in a newsletter (3) Unsubscribe rate The unsubscribe rate is useful to monitor the interest subscribers take to your newsletter. This is important to remind that this rate can’t be considered as reliable because it only tracks users that clicked on the “unsubscribe” link placed at the end of the newsletter but don’t track the majority of users who simply delete the newsletter as they receive it or place it in their Spam folder. However, marketers should follow the evolution and react if the rate is growing in an abnormal way. There are mainly two ways to respond:  Change the content: People subscribe to newsletters for different reasons; marketers should try to stick to these reasons. Make polls to know what kind of content subscribers like the best.  Change the sending rate: If you are sure of the adequacy of your content and you still see the unsubscribe rate fall, then reduce the sending rate. LaRedoute DCEM – Master HEC/ENST 2003 Page 50
  51. 51. Master’s Thesis “From Direct Marketing to E-mail Marketing” Figure 28 : sending rate analysis for a newsletter As we talked before, many other indicators are traceable thanks to web technologies. The most interesting among them could be the soft-bounces rate and the hard-bounces rate, which should be calculated separately domain by domain so that marketers can control the false positive24 problem due to ISP’s black-lists. As we went into some (and not all) of the behaviour indicators that can be traceable we will now present targeting strategies that can be made thanks to this helpful information. iv) Behavioral targeting We can use the behavioral information we got from customers and prospects to create targets as we did with customers’ purchase information. We will only show real examples of what can be done thanks to this information, but there is a lot more target to try as this way of doing things is quite new. In fact, traditional mail-order companies are still mainly using RFM segmentation and targeting to stay coordinated between e-mailing and paper mailing. The use of behavioral information for targeting purpose is quite a new way of thinking because it is “web-only” by nature and no experience can be reused from traditional direct marketing. 24 False positive means permission-based e-mails that are filtered by error by Spam filters. This problem will be discussed in details in part 3 of this thesis. LaRedoute DCEM – Master HEC/ENST 2003 Page 51
  52. 52. Master’s Thesis • “From Direct Marketing to E-mail Marketing” Catalog-order tracking: This operation has been launched in autumn 2003 for Spain, Belgium and Austria’s e-mailing campaign. The objective is to track the prospects that went on the website and asked for a catalogue. Figure 29 : Links to order the catalogue (for free) on AT and UK's web-sites This target considers all the prospects who ordered a catalog book on the website one month ago. The Hypothesis is that if they ordered (and received) the catalogue, they are potentially interested in LaRedoute’s products and could be easier to transform than any other prospect. Three weeks after they ordered the catalogue on the website a specific e-mailing as shown in figure 30 is sent to them with a commercial incentive (a gift or a discount) for their first purchase on the website. LaRedoute DCEM – Master HEC/ENST 2003 Page 52
  53. 53. Master’s Thesis “From Direct Marketing to E-mail Marketing” 1) No shipping costs : For your first order via Internet on the winter 2003 collection 2) Free when you order To thank you for your first order on the winter 2003 collection, we are pleased to offer you this trolleybag for free! Figure 30 : newsletter sent only to people who ordered the catalogue and didn't purchased anything yet Results from this targeted e-mail (in terms of transformation rate) are three times better than average campaigns sent without particular targeting. Here is another example from www.houra.fr a French online supermarket. This e-mail campaign is targeted to prospects that begun to create a shopping-list and stopped before making their purchase. This e-mail offers them free home delivery for their first order. LaRedoute DCEM – Master HEC/ENST 2003 Page 53
  54. 54. Master’s Thesis “From Direct Marketing to E-mail Marketing” Hi Gaetan, Bravo, you recently made the first step toward the end of “hassle shopping” with the creation of your account at houra.fr. Here is a reminder of your personal account. Make now your first order without stress. Figure 31 : e-mail targeted to prospects that created their account (and begun a list) but didn’t made any order. The last example of an e-mail using “behavioral target” comes from voyages-sncf.com, a French rail and plane travel website. Here the objective is to enhance the image of the company in stopping sending e-mails to people who don’t open them. The target is defined as people who didn’t opened the newsletter more than N times in a row. LaRedoute DCEM – Master HEC/ENST 2003 Page 54
  55. 55. Master’s Thesis “From Direct Marketing to E-mail Marketing” To read urgently ! Watch out: read this carefully! You chose voyages-sncf.com to prepare your travel… … we want to be sure that you still want to benefit from this newsletter. For this, please confirm that you still want to receive our newsletter by clicking on this link… If we don’t receive any news from you during the following 15 days, we will consider that Figure 32 : newsletter sent to a target of prospects that never open the newsletter. you are not interested and we will stop sending you our newsletter… Both customer purchases analysis and behavior analysis should be used. But as RFM analysis and segmentation has proven its efficiency to activate and get the most from existing customers, targets created after a behavioral analysis is often the best way to transform prospects into customers. LaRedoute DCEM – Master HEC/ENST 2003 Page 55
  56. 56. Master’s Thesis “From Direct Marketing to E-mail Marketing” v) Towards a multi-channel data-mining and targeting As I. Marcotte25 explained, at the beginning of the web activity of LaRedoute, it was important to know more about the internet shoppers, and statistical analysis were realized that showed a recurrent profile for the web shoppers. They were often “Young working mother with children.” This wasn’t the same profile as LaRedoute’s general customer database (catalog and shops). This resulted in a choice to create a different customer database for web customers. At this stage, a separate commercial planning was made for the web-shoppers so that LaRedoute’s e-mailing campaigns were more precisely targeted to their profile and not blindly following the general paper catalog commercial planning. However, as I. Marcotte explained, a great change occurred recently in the customer analysis: “as the e-mail database was growing fast and the fact of having an e-mail address was becoming more ubiquitous, the reasons to keep two different commercial planning were less obvious. In 2003, many catalog shoppers also shop on the website and this was not true three years ago. This transformation in the behaviour of the customers is mainly due to the growth of the internet usage. Internet is replacing the Minitel® as a new mean to place an order and customers who before only used the catalog are beginning to discover the advantages that can offer a website. In the meantime, the services offered by the website are more valuable now than ever. It is now possible to try-on clothes on the virtual model®, a 3D model which can be personalized to reflect your personal measurements. You can also browse all the catalogs online, benefit from private flash sales and many other services. Even though the web-shoppers typology that was done in the year 2000 is not yet out of date, web-shoppers’ profile is loosing value because it includes multi-channel shoppers which are going to constitute the majority. Channels (in %) Mailing Phone Minitel® Audiotel Internet Other 1998 53,2 33,2 10,4 - 1999 53,2 34,4 9,1 0,5 2,8 2000 53,5 34,5 7,5 1,5 3 2001 53,5 34,3 7 2,4 2,9 2002 48,9 33,5 5,9 8,8 2,9 Figure 33: Evolution of the different channels of order for French home shopping companies, source: FEVAD 2002 25 This information comes mainly from an interview with Isabelle Marcotte who is www.laredoute.fr’s web analyst, in October 2003. LaRedoute DCEM – Master HEC/ENST 2003 Page 56
  57. 57. Master’s Thesis “From Direct Marketing to E-mail Marketing” As we can see from the table (figure 33), in the year 2002 the use of phone, mail and minitel® to place an order decreased. This fall has been compensated by the exponential growth of the Internet as a new efficient mean to order. In the U.S., the phenomenon is much more visible: “channel shift among marketers who have both catalogue and Internet sales became more pronounced in 2002. Online sales totalled 30% of catalogers’ sales in 2002, up 25% from 2001, when the proportion of online sales was 24%” 26. This trend shows that a customer can place one order using the Internet and then another using the telephone. This same customer will be in the internet customer database and in the traditional mailing database. This has hence been important to synchronize the two commercial planning, so that one media won’t interfere with the other. What would you do if you receive the same day a 30% discount by (traditional) mail, and a 20% discount via email? Even though they are different Medias, direct-marketing campaigns and e-mailing campaigns have been organized and planned to work together and to give the best results. This idea of synchronous direct marketing – e-marketing has been tested and approved in these last two years (2001-2002) by many marketers. SBC Analysis Finds Integrated DM Works Best 27 “Synchronized direct mail and e-mail marketing messages double conversion rates over the solo use of either tactic or banners at telecommunications giant SBC Communications, according to a recently completed analysis by online technology firm CentrPort and agency Rodgers Townsend.” In France, LaRedoute tested this hypothesis extensively in 2001 and compared four cases. Before each mailing, four targets were selected, as showed in the following table. 26 27 Spring 2003 Catalogue Industry Trend Report, DoubleClick, July 15, 2003 DMnews.com’s newsletter of Sept. 25, 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 57
  58. 58. Master’s Thesis Paper mailing E-mail E-mail overpressure sent 2 weeks after “From Direct Marketing to E-mail Marketing” Target 1 yes yes Target 2 yes no yes Target 3 yes yes yes no Target 4 yes no no Figure 34: Tests of multi-channel direct marketing campaigns The results were clearly in favour of the first target which confirmed that “integrated direct marketing – e-mail marketing” works best. However, this conclusion is not to be taken as-is: the Internet media have new possibilities that can’t be easily reused in a static media like the paper catalogues/mailings. For examples e-mailing (alone) have been used to promote the virtual model® on the website or to launch flash sales of 24 or 48hours only… These techniques can only be used on the web and justify the use of a specific web-targeting process. Marketing operations that only involve non media-specific content should be used both in mailing and e-mailing campaign, in a coordinated manner. Hence data-mining and targeting should not be media-specific. However, Internet offers new ways of interaction with the customer that cannot be reproduced in a paper format, it is hence also valuable to keep doing media specific data mining and targeting. LaRedoute DCEM – Master HEC/ENST 2003 Page 58
  59. 59. Master’s Thesis “From Direct Marketing to E-mail Marketing” 3) Sending and making sure it arrives to destination We already viewed how to analyze our customer database to get the most of the commercial planning thanks to the use of more precise targets. We will now give elements to optimize the sending process. a) The importance of timing i) The best months Timing of the sending process has been studied for a long time in Direct Marketing. It is well known that the best moment to launch a campaign is in January, shortly followed by February, October and November. The months to avoid are the summer holidays: July and August.28 Concerning e-mailing, no truth has yet been found, but e-mail addresses have a great a, coupled with the fact that most home-shopping companies propose 24 or 48hours delivery, allows customers to place orders during their holydays. For the U.S. home shopping company Shadwick’s, “the period of Sales and Christmas time are the most interesting. In Europe, apparel is the first gift offered and people buy much more and later in season on the web, as they are expecting deals”29. ii) Choose your day A great advantage of e-mail marketing over traditional mailing is that the transmission of emails is almost instantaneous. You can ensure that your campaign will be received, if not the next hour, at least the same day you launched it. This advantage gives the opportunity to send newsletters on time for special days like mother’s day, St Valentin day, or to be sure not to miss customers birthday. Figure 35: newsletter received Halloween’s day 28 29 the Yan Cleyssens, « L’e-mail marketing », p.183, DUNOD 2003 Florian Jacquier, Redcats international, e-mail discussion, November 2003 LaRedoute DCEM – Master HEC/ENST 2003 Page 59

×