Effective, cost-efficient segmentation is the holy grail of email marketing. This Holiday season, a major retailer resolved to maximize revenues from the email channel by segmenting their customer base and sending more targeted emails.
To do this, they challenged agency partner Ogilvy to help them overcome two of the biggest hurdles most companies face when they decide to segment and target: what to do with the data, and how to keep creative costs reasonable while increasing the number of versions exponentially.
The Data Dilemma
Like most, this retailer does its best to understand its customers by collecting data on purchases as well as click and browse behavior online. The data isn’t perfect – no one’s data is – but it’s a solid foundation for a number of analytic models.
The retailer turned to Ogilvy to design an approach for analysis of customer data that would define holiday segmentation efforts. After a thorough look at the data, together an approach was agreed upon that fit the retailer’s strategic goals both for the email team and for the enterprise overall.
The retailer chose to test a cluster analysis that looked at holiday purchases during the prior two years. Ogilvy analytics created groups, or clusters, of customers and “look-alikes” based on which categories they were most likely to purchase in during the holiday season.
This cluster analysis was broken out by month, since buying patterns change during the holiday season. And Ogilvy worked with the retailer to overlay lifetime value and behavioral segmentation data that could further target communications.
The resulting model was attractive to the retailer for a number of reasons. First, holiday spend patterns are different from the rest of the year due to gifting. Second, the retailer had already tested a few other methods and wanted to get results from a cluster analytic model prior to starting some model-mashup testing.
The retailer and Ogilvy analytic teams got to work applying the model to generate the lists and data required to fulfill on communications. However, tailoring communications to the extent the retailer hoped for would require significant changes on the creative production side as well.
The Creative Challenge
Going into the holiday season, The retailer’s challenge to Ogilvy was to cost-effectively create several hundred components that could be used to dynamically assemble emails tailored to individuals. The volume threatened to overwhelm a traditional creative team, so Ogilvy got… creative.
The retailer and Ogilvy together agreed that the top of the email – the “hero” area – needed a hands-on design to ensure creative was fresh and compelling for each send. But the products featured below the hero could be grouped into “slices”, and these wouldn’t need a fresh look and feel every send. This left the team with two critical hurdles and about three weeks to solve for them. Hurdle A: how to access usable product images without burdening the creative team; and Hurdle B: how to turn raw data into an email.
After looking at the retailer’s ecommerce site, Ogilvy quickly identified a solution for Hurdle A. Scene 7, an existing partner to the website team, already hosts most product images for the retailer’s dot-com sites. So the retailer and Ogilvy tapped the software-as-a-service provider for dynamic image manipulation in the emails as well. By integrating Scene 7 into the emails, the retailer was able to dynamically manipulate product images on the fly without burdening the creative teams. Product images were sharpened uniformly, and the retailer also added a savings call out to some of the products. All of this could be accomplished with one single “slice” template, provided at the start of the season.
To clear Hurdle B – turning raw data into a creative email – Ogilvy worked with Responsys, the retailer’s ESP partner. Responsys stepped up to the plate, confirming that the team would be able to convert rows of data – essentially an excel spreadsheet – into dynamic elements to be used in an email. This data would eventually turn into the “slices”. Because the slices would only need a small amount of input from a creative team, the retailer was able to feature a larger selection of products in their holiday emails.
Solving for both hurdles meant that the retailer could promote three to five times the number of products it usually showcased in emails prior to the holiday season. But, because emails were tailored to specific clusters, individuals wouldn’t be overwhelmed by products.
Bringing Holiday Magic to Life
The retailer’s willingness to push the boundaries for Holiday 09 emails led to a number of innovations that the retailer and Ogilvy will be refining throughout 2010, including:
- Cluster analysis test results which could inform a “model mashup” to improve relevance and email program revenue during 2010 drive periods
- Streamlined creative production process which can be further refined to get to a nearly infinite number of versions possible – true 1:1 communications in weekly marketing emails
- Cost efficiencies in creative production which will help make the increased versioning possible within the 2010 budget
- A significant lift in lifetime customer value driven by the segmentation strategy
The retailer and Ogilvy are excited about 2010 plans and are moving forward with analytic and process enhancements already based on learnings from Holiday 09.