Contact: Don McNichol, director of e-commerce at Intermix
Location: New York, NY
Industry: Retail, Apparel
Annual revenue: Confidential
Number of employees: 100
Today's economy has earnest marketers scrambling for consumer attention, and as inboxes become inundated with more and more marketing messages and ads, the bar continues to inch higher for those attempting to stand out from the clutter.
Women's clothing retailer Intermix has found a straightforward solution: customized email communications that speak to specific customer interests, as determined through those customers' own actions.
Over the past seven months, the company has used iPost's Autotarget recency, frequency, and monetary-value (RFM) analysis platform to identify segments within its customer base and refine its email messages to appeal to each segment individually.
As a result, Intermix has been able to increase both open and clickthrough rates, as well as conversions, leading to a 9% increase in company revenue and 28% growth in its email marketing profitability—all despite a troubled retail market.
Founded in 1993, Intermix is a women's clothing retailer with 24 US stores and an e-commerce site that launched in 2005.
Since the launch of that site, the company has frequently used email to alert its entire database of the season's latest "must have" arrivals, sales, and other events.
Though Intermix was profitable, Don McNichol, director of e-commerce, knew there was room to improve. A veteran of the direct mail world, he believed that an RFM (recency, frequency and monetary value) analysis would help to identify segments within the company's customer database; Intermix could then send more targeted, relevant communications to each segment. Doing so, he suspected, would help improve customer relations, increase profit margins, and lower opt-outs.
"I was familiar with RFM from decades of successful application in traditional direct mail marketing and found that those three criteria have been the most reliable predictors of future customer engagement," he said.
Early in 2008, McNichol began searching for a technological solution that would help him to effectively engage in email RFM analysis and test his premise.
In June 2008, McNichol signed on to use the Autotarget predictive-analytics solution offered by iPost, based in Novato, CA.
Using Autotarget, McNichol engaged in A/B testing to evaluate customer reception to various products, brands, and discounted offers. On a daily basis, Autotarget analyzed email responses from iPost's email tracking database (including click rate and open rate) and purchase behavior from Intermix's customer database; it then segmented the 150,000-200,000 customers in Intermix's database by level of customer engagement with the brand.
The results revealed three distinct customer segments:
- VIPs: 20% of Intermix's customer base were found to have higher disposable incomes and low price sensitivity, opting for the latest trend regardless of cost.
- Brand Shoppers: 40% of Intermix's customer base demonstrated medium price sensitivity. Testing confirmed that these customers appreciate a good deal but are also more likely to buy items by specific designers.
- Sale Shoppers: The remaining 40% of Intermix clientele were found to be very sensitive to price and often waited for a sale before purchasing.
McNichol then used this information to better tailor the company's weekly email communications to each segment.
"We were able to really define results based on whether we were speaking the right message to a particular group and then determine if we should provide more of that type of message," he said.
Based on the results of continued testing and refinement, Sale Shoppers started to receive more frequent and steeper discounts (around 30% off); Brand Shoppers began receiving smaller discounts (around 10-15% off) along with information on specific brands; and the VIPs were often offered special invitations (such as to private shopping events) or gift cards, rather than percentage-based discounts.
The Autotarget campaign directly increased Intermix's multichannel revenue 9% from mid-2008 to the beginning of 2009. The campaign also helped Intermix increase email-marketing profitability 28%.
The revenue increases were in part due to Intermix's ability to reduce discounts some 40% by offering discounts mostly to its Brand Shopper and Sale Shopper segments, offering smaller discounts than usual to Brand Shoppers, and shortening its bi-annual sale to two months twice a year, rather than the industry standard three months twice a year.
"When it comes to email marketing, one size does not fit all," said Don McNichol, director of e-commerce at Intermix. "iPost's Autotarget enabled me to meet my goals of increasing direct revenue, sending more relevant emails, and minimizing customer discounts in only a few short months."
By refining each customer segment and sending only well-tailored communications that reflect the nuances of each segment, Intermix has apparently been able to better engage customers, who have learned to trust that the communications they receive from Intermix offer something of value for them specifically. They are therefore more likely to open and act on those communications.
As a result, Intermix has recorded a 90% increase in its email open rate, a 46% rise in clickthroughs, and an 84% decrease in email opt-out requests.
Intermix also found that although due to the current economy customers have been spending fewer dollars on each transaction, they have been making purchases more frequently since the introduction of the targeted email campaign.
- Get the right message in front of the right people: By segmenting and then providing customers with the types of information and offers they prefer to receive (as determined via testing), Intermix was able to build trust, increase clickthrough and conversion, and drastically reduce its opt-out rate.
- Test and learn: Those results were made possible through ongoing testing, which also helped the company clue in on important insights, such as how much better a variety of featured products perform compared with a single-product promotion, or that a smaller discount is often just as effective as a larger discount.
McNichol noted that frequent testing, especially at the onset of each season or sale period, is essential because customer behavior can change rapidly, particularly when disposable incomes are in flux.
"Changes happen so readily in a tough economic environment," he said. "All of a sudden, people move across segments, and without spending money on analysis, you have no real time data to understand what's happening."
Inspired by Intermix’s email marketing success? Learn other ways to improve your email marketing by reading our Email Marketing How-To Guide (FREE) from the Marketing Tools section of the MarketingProfs Library. Premium Plus Members may also enjoy viewing Email Customization: Getting Personal to Deepen Relationships, Generate Additional Sales, and More in the MarketingProfs Seminar Library. We hope these resources help you improve the effectiveness of your email marketing program.