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Case Study: Reviving the Dead List to Grow Email Revenues

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Company: Perricone MD
Contact: Neil Kjeldsen, vice-president of e-commerce
Location: Meriden, CT
Industry: Retail, Skin care
Annual revenue: Confidential
Number of employees: 70

Quick Read

Email-marketing performance remains strong, according to industry reports. And is it any wonder, considering these campaigns target recipients who have explicitly asked to receive communications and hear your spiel?

But those who opt in are not guaranteed loyalists; they have expectations surrounding types of messaging and frequency that must be respected if an email program is to be successful. And since we're talking about people, it's safe to say that there's a range of expectations residing within any given list—i.e., the same message and frequency isn't going to keep everyone engaged.

When Neil Kjeldsen took over management of Perricone MD's email marketing program, he quickly saw that this kind of reasoning had been ignored and the program was suffering as a result. One clue: a significant "dead list" of opt-ins who had completely stopped responding to the company's email communications.


Rather than abandon these leads, he chose to separate them and target them with more aggressively priced offers on a weekly basis. Within weeks, the company started to generate new revenue from this segment, and continues to do so.

Challenge

Perricone MD is the provider of advanced skincare solutions developed by Dr. Nicholas Perricone, MD, FACN.

Over the years, the company's products have earned a good share of fans as well as interested prospects, many of whom chose to stay in contact with the company by opting in for email communications. But those relationships were not well nurtured.

When Neil Kjeldsen took over as vice-president of e-commerce last year, he quickly realized just how ineffectual the email program he inherited had become. Mailings, for example, were often sporadic and always sent in bulk with the same message going to everyone on the list. Opt-outs and spam complaints were high—and they were hurting the company's reputation with organizations such as the International Internet Management Association (IIMA)—even though everyone on the list had chosen to opt in to the program.

Even among those who were not complaining or opting out, a sizable "dead list" had formed, consisting of recipients who had gone silent and become unresponsive.

Campaign

Kjeldsen sought to address the issue of inactive opt-ins. He had to determine whether it was worthwhile for the company to continue making contact—i.e., whether customers (and revenues) still resided within this "dead list" and, if so, whether his attempts to reach those customers might give rise to more spam complaints against the company.

He began employing iPost's Customer Reengagement Email Program in late 2008 and took the following steps.

1. Segmenting the list

First, Kjeldsen used iPost's predictive analytic solution to dive into the data and determine exactly who within the list was opening the company's emails and clicking through to the company website or making purchases. He separated those who had not been active in at least 6-12 months so that he could concentrate his efforts on those accounts.

2. Creating targeted mailings

Next, Kjeldsen used iPost's email marketing services to develop specialized campaigns consisting of aggressive offers—typically, low-priced sample sizes or sale prices of full-sized product, aimed at tempting this group to give the company's products a try—which he mailed to this segment on a weekly basis.

3. Managing adverse response rates

To help improve the company's standing with email-marketing regulators in the interim, Kjeldsen further separated the inactives into eight smaller groups so that the group with the most opt-outs or spam complaints could be singled out and mailed together with the company's strongest-performing active segment. Doing so helped lower the proportion of opt-outs, spam complaints, and undelivered messages across all mailings.

Results

After a single month of mailings, Perricone MD generated a 33% conversion rate from the inactive list segment. The offers of sample-size product were the most effective messages for targeting this group, and the company has continued mailing to the list every week, using that offer.

The results have remained consistently good, Kjeldsen said: "Every week, we get several hundred people buying." He also noted that close to 5,000 people from the original "dead list" have gone on to make at least two purchases since the launch of this program—an indication, he said, that these might now be considered regular active customers.

Plus, thanks to Kjeldsen's additional segmentation that matched troublesome accounts with the company's best-performing list, average opt-out and spam rates per mailing are down, allowing the company to avoid ending up on an email blacklist or being otherwise penalized.

Lessons Learned

  • Don't give up on your inactives: Kjeldsen contemplated whether the company should stop mailing to its inactive email subscribers altogether; after all, those names certainly weren't producing any revenue and were likely more prone to become annoyed with frequent mailings and increase spam complaints. But by simply adjusting the messaging to target this group, he was able to increase revenue and derive more than 5,000 repeat customers from a list once considered "dead." 

    Conversions from this list are still lower than mailings sent to the regular active list, but they're positive nonetheless, and the process is less costly than acquiring new customers. "It's much cheaper to re-engage a customer than it is to get a new one," said Kjeldsen. "Even if they don't buy with the same level of intensity as the 'good' list, they're still buying, and we're able to show growth."
  • List segmentation is a best-practice: "Not everyone should get the same message all the time," advised Kjeldsen. "If that's what's happening, there's probably untapped revenue in your email list." He showed that by dividing Perricone's list and developing distinct offers for each group based on previous engagement levels, the company could create a new "profit center" from its list of inactives, and at the same time maintain the appropriate communication strategy for its more active clients.
  • It's time to focus on price: Coupon sites are booming, and retailers offering sales and discounts are the ones drawing the most customers lately. Similarly, this case shows that reduced prices and low-cost "samples" may be the best way to grab consumer attention in times like these.
  • Repetition, repetition: It's unrealistic to expect a customer who has been dormant for months to suddenly take action just because a new offer is presented. As in many forms of marketing, repetition is one of the keys to email success. 

    Perricone MD is seeing several hundred new buyers every week, from the same list, using the same type of offer. It's a gradual process, but one that's definitely paying off with supplemental revenue that might never have been realized had the merit of this campaign been judged on the basis of only one or two mailings.
  • Consider the tools available: With marketing budgets strapped, it can be difficult to justify additional spending without an ROI guarantee. But for Perricone MD, making that investment proved worthwhile. The additional profit the company generated during the first month of this campaign was more than 13 times greater than the cost of employing the iPost solution, and by month three that profit was nearly 25 times higher than the solution expense. Add to that the ease with which Kjeldsen can now define and target customer segments, and manage dissenting forces such as high spam complaint rates, and you've got yourself a no-brainer.

What steps are you taking to reengage dormant customers? Email your success stories to CaseStudies@MarketingProfs.com.

Related Links

Looking for more email inspiration? Check out Email Success Stories: How 11 companies are pushing the (electronic) envelope to see how real firms are using email marketing to meet their marketing goals.


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Kimberly Smith is a staff writer for MarketingProfs. Reach her via kims@marketingprofs.com.

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