This presentation was given by 3 Birds Marketing Co-Founder Kristen Judd and CTO Chad Smith at the 13th Digital Dealer Conference and Exposition at the Mirage Hotel in Las Vegas on October 25, 2012. The presentation was an "email intervention" for automobile dealers to encourage them to consider the long term potential revenue loss associated with over-emailing the customer database.

2. Two Unique Perspectives

3. What’s the Big Deal About Email?
Email is an efficient, cost effective method of communication with customers and prospects.
Did you know…
» 93% of online adults use email
» ROI on email is $40 for every $1 spent*
» More than ¾ of consumers prefer permission based email
for marketing messages**
» Even the heaviest social media users still use email more
*2011 Direct Marketing Association
**2012 Exact Target study

4. Cheap,
Big Return,
Let’s Blast!
NOT SO FAST!

5. Alternate Titles We Considered
» Houston, We Have A Problem
» More Is Not Always More
» Step Away From The Send Button
» Extreme Makeover: Email Edition
» Email Intervention

6. The Hidden Power In Numbers
This is boring.
This presentation will not be boring.

7. Our Study
» Industry knowledge
» Input from Automotive Groups, General Managers,
Internet Directors, and Trainers
» Generally accepted industry statistics
» More than 5,600 bulk email communications sent by
automobile dealers totaling over 74,000,000 individual
emails

8. Average Automobile Dealer Database Size –
Records With Email Addresses
23,000

9. How Dealers Build Their Databases
You work hard for the data.
» Organic, 1st party leads
» 3rd party leads
» Other lead sources (OEM, group portals, etc.)
» Showroom traffic
» BDC, telephone calls
» Vehicle deliveries
» Service department
» Conquest campaigns
» Community events, sponsorships, contests, etc.

10. Building the Database - Front End
Additions to
your database
*Based upon an average automotive website conversion rate of 2%.

11. Growing and Maintaining the Databases – Back End
» How many repair orders do you do in your
Service Department each month?
» Did you know that, on average, 40% of your
service customers did not buy their vehicles from you?
» What is your email penetration rate?
» Do you capture email addresses in the Service Department?
» Do you update email addresses in service?

12. Two Steps Forward, One Step Back?
One Step Forward, Two Steps Back?
» Average email unsubscribe rate automobile dealers is 0.42%
» Unsubscribe rate range for top performing automobile dealers
is <0.3%
» Unsubscribe rate range for worst offenders is >1.0%

13. What does responsible emailing look like compared to “blasting”?
Responsible Emailers Offenders
Frequency of email Several sends per month Several sends per month
campaign sends
Number of emails Limited sends to full database; More Consistent pattern of sending
sent per campaign segmented; Targeted sends to full customer database
Messaging Tailored to customers’ preferences and Same message to all customers, no targeting
position in the vehicle lifecycle
Average email >15% open rate and well above <10% open rate
performance
Unsubscribe rate <0.3% >1.0%

14. There Goes
Your Database
Responsible
LET THE EMAILING BEGIN!
Offenders

15. There Goes +140 from website conversions
» 4 email campaigns
Your Database 1 newsletter to full database (23,000)
3 targeted emails (3,000)
» 31,000 emails
Responsible
» 6.3% unsubscribe = -69
+71
LET THE EMAILING BEGIN!
+140 from website conversions
» 4 email campaigns
to entire database (23,000 x 4)
» 92,000 emails
Offenders » 1.0% unsubscribe = -920
-780

16. There Goes +140 from website conversions
» 4 email campaigns
Your Database 1 newsletter to full database (23,000)
3 targeted emails (3,000)
Responsible
LET THE EMAILING BEGIN!
+140 from website conversions
» 4 email campaigns
to entire database (23,000 x 4)
Offenders

17. There Goes +140 from website conversions
» 4 email campaigns
Your Database 1 newsletter to full database (23,000)
3 targeted emails (3,000)
Responsible » 31,000 emails
LET THE EMAILING BEGIN!
+140 from website conversions
» 4 email campaigns
to entire database (23,000 x 4
» 92,000 emails
Offenders

18. There Goes +140 from website conversions
» 4 email campaigns
Your Database 1 newsletter to full database (23,000)
3 targeted emails (3,000)
Responsible » 31,000 emails
» 0.3% unsubscribe = -69
LET THE EMAILING BEGIN!
+140 from website conversions
» 4 email campaigns
to entire database (23,000 x 4
» 92,000 emails
Offenders
» 1.0% unsubscribe = -920

19. There Goes +140 from website conversions
» 4 email campaigns
Your Database 1 newsletter to full database (23,000)
3 targeted emails (3,000)
Responsible » 31,000 emails
» 0.3% unsubscribe = -69
LET THE EMAILING BEGIN! +71
+140 from website conversions
» 4 email campaigns
to entire database (23,000 x 4
» 92,000 emails
Offenders
» 1.0% unsubscribe = -920
-780

20. The Cost of Irresponsible Emailing
Putting the loss in perspective.
Replacing database loss through unsubscribes
Average cost of a 3rd party lead: $21
780 x $21 = $16,380

21. The Long-Term Cost of Irresponsible Emailing
Loss of repeat business
What is your PVR? $______?
$1,000 (conservative estimate)
75% of database is customers
75% of 780 585
Customers close at a higher rate
50% of 585 292.5
Potential lost repeat business = $292,500

22. The Long Term Cost of Irresponsible Emailing
Loss of Lifetime Value
During vehicle lifecycle (4.5 years) dealership customer
will add another vehicle to the household OR refer a sale
Customer unsubscribes x Conservative PVR
585 x $1,000 = $585,000
Additional potential lost referral revenue

23. What Does This All Mean?
The example was intentionally dramatic.
Some additional points to consider:
»Some attrition is inevitable and expected
»Sending to your entire database isn’t always bad and sending segmented
emails isn’t always good
»Sending relevant, optimized messages to groups of customers or all
customers that prompts recipients to go to your website, submit a lead or
make a phone call should be a core component of your marketing
strategy. Why?
– Filling the funnel
– 1st party leads close at twice the rate as 3rd party leads
– Loyal customer close at a higher rate than prospects
– Improved retention

24. Case Study: List Fatigue Rehab
Background:
»Honda dealer major metro area
»14 other Honda dealers within a 25 mile radius
»Internet savvy consumers
»Traditional advertising expensive, some radio
»Digital marketing strategy, heavy reliance on email

25. Case Study: The Problem
»Weekly email sends to full database,
heavy sales message
»List fatigue
– Open and click rates were slipping
– Unsubscribes were rising
»Management worried that dip in calls, leads,
showroom traffic and sales would happen if
emailing was scaled back

26. Case Study: The Plan
»Create 3 targeted messages instead of
one combined message
– Prospect
– Sales
– Service
»Decrease the number of sales customers
received each month,but continue to send
campaigns to prospects weekly

27. Sales
Service
Back to School, Prospect
Back to Honda
Weekly campaign
reorganized three ways for
three different targets.

28. Sales
Service
Prospect
Zero the Hero!
Weekly campaign
reorganized three ways for
three different targets.

29. Case Study: What Happened At First
Immediate, dramatic increase in open,
click and CTO rates in emails to all groups
»Prospect
– 207% increase in open rate
– 448% increase in click rate
»Sales
– 23% increase in open rate
– Click rate remained the same
»Service
– 121% increase in open rate
– 160% increase in click rate

30. Case Study: Tweaking the plan
»But despite improved stats, fewer people were receiving
the emails so they received fewer clicks overall
»Within 2 weeks, while sending emails to 66.5% fewer
people, the number of clicks were only down 14.5%
»Temporary shift from 1/3, 1/3, 1/3 to ½, ½,
to address anxiety
»At reduced send volume, as many clicks were being
generated as at full database send volume
»No short term dip in sales or service experienced

31. Case Study: 180 Degree Turn Around
Outcome:
»Increase in organic website leads from 640/month
to 870/month
»No 3rd party leads
»Email consistently a top 4 source of referring traffic
to the main website
»Reduced spend on traditional advertising
»Finished #1 in the district

32. Do & Don’t #1
»Do pick up your chin. Do consider the long term
impact of aggressively and frequently emailing your
full email list offers that are not geared to
demonstrated interests.
»Don’t spray and pray. Don’t give in to the
temptation to focus only on generating sales this
month, this week, this weekend, today at any cost.

33. Do & Don’t #2
»Do benchmark key data points. Know your basic
email performance metrics, but go beyond the basics.
– Bounce, open, click, CTO, complaint, unsubscribe rates
– Email penetration rate
– Traffic referred to website
• Tag email appropriately
• Compare to other sources of direct traffic
– Telephone traffic referred
– ROI
»Don’t keep doing the same thing if it’s not working.
Be prepared to adapt.

34. Do & Don’t #3
»Do analyze your data. Look at where customers
are in the vehicle lifecycle, what they have
demonstrated an interest in, most popular content
and offers, most successful campaigns and tailor
targeted messages accordingly.
»Don’t conclude that it is never a good idea to send
an email message to your full database. Softer
retention marketing pieces such as newsletters,
annual events, etc. may be appropriate for all
customers and prospects. But don’t send to your full
database as a default position.

35. Do & Don’t #4
»Do know what your follow up plan is
before you send email campaigns and
communications. Follow up email?
Telephone call?
»Don’t leave anything on the table. Some
people who receive an email will do exactly
what you want. Some will unsubscribe,
delete or not open. Others will interact
with the email but not call, submit a lead
or come in to the dealership. Don’t forget
to give them the nudge they need.

36. Do & Don’t #5
»Do maintain and update your customer
data. Do pay attention to hard bounces.
Do take advantage of the opportunity to
capture and update email addresses in your
Service Department.
»Don’t assume that just because you have
an email address associated with a
customer record that it is current and valid.

37. Do & Don’t #6
»Do look for data you can use for training
purposes to improve. Look at email capture
rates in the Service Department by Service
Advisor. Are certain Service Advisors
consistently failing to get email addresses?
Use this as a training opportunity.
»Don’t accept that there is nothing you can
do about it. Use your tools. Make email
address a required field.
Incentivize/disincentivize.

38. @SCVNGR Password Is…
“+1”

39. Questions?

40. Thank you.
Kristen Judd
Founder, Co-CEO
3 Birds Marketing LLC
321 W. Rosemary Street
Suite 110
Chapel Hill, NC 27516
Office: (919) 913-2747
Mobile: (415) 235-3902
Email: kristen@3birdsmarketing.com
Twitter: @kwjudd
Twitter: @3birdsmarketing
LinkedIn: www.linkedin.com/pub/kristen-judd/1a/563/548
Website: www.3birdsmarketing.com