When consumers close a door, marketers open a window.
Americans signed up in droves to stop junk mail, catalogs and telemarketers, so companies are taking a digital path to our cash -- e-mail. During the holidays, consumers were receiving four or more e-mails daily from some retailers.
It's easy to see why. E-mails generate $39.40 in sales per dollar of advertising, according to the Direct Marketing Association, a trade group that advises companies using data marketing.
"They're fantastic for retailers because they generate tons of money," said Chad White, a research director at marketing software company Responsys.
But with that payoff comes the risk of consumers once again opting out after reaching saturation. That's why companies such as Crutchfield electronics, Williams-Sonoma, Sephora and Home Depot are changing their e-mail marketing strategies by targeting customers with information of interest to them rather than sending out mass e-mails.
Customers are getting e-mails of welcome, birthday celebration, shopping-cart abandonment, or "come back, we miss you."
The tailored e-mails even outperform social media at driving customers. "Facebook and Twitter are superstars at starting conversations, contests and testimonials, but not e-commerce," White said.
E-mail is taking business away from more traditional advertising such as direct mail because it's cheaper and can be a form of constant communication, said Hal Stinchfield, CEO and founder of Promotional Marketing Insights in Orono.
Still, some think it's too constant.
"It's extremely obnoxious to receive multiple e-mails reminding me that I have items in a shopping cart.," said Stephanie Schultz of St. Paul. "Recently, I received three from Urban Outfitters all saying the same thing. 'Did you forget something?' No, I didn't forget. I just didn't want to buy it."
Stinchfield said the key is relevance without too much frequency. Savvy marketers know that messages sent too frequently can make customers bolt for the opt-out button.
Smart companies are monitoring the number of e-mails that customers open, the number of links they click on in the e-mail and their purchase patterns, he said.
But companies using targeted e-mails still need to feed the beast. The key to continued success is aggressively gathering more addresses. Bricks-and-mortar stores such as Macy's and Crate & Barrel now routinely ask customers at the checkout counter if they would like a receipt sent to an e-mail address.
Other stores run sweepstakes to gather addresses. During the holidays J.C. Penney gave away millions of buttons with codes on the back for a holiday sweepstakes, as long as customers entered an e-mail or Facebook address to see if they had won.
But collecting e-mail addresses by the gigabyte doesn't automatically translate into giganormous sales. Smart retailers are using "triggered" e-mails, White said. The shopping-cart-abandonment e-mail was the original form of triggering. Retailers sent out a vague reminder that a consumer had left something in the cart. They might even offer it at a discounted price.
Before Christmas, Todd Larson of Sauk Rapids searched for a subwoofer and a wiring kit at Crutchfield.com but decided to wait a few days before purchasing it. Within a couple of days he received an e-mail from Crutchfield that it would throw in the $30 wiring kit free if he bought the subwoofer. "I like getting targeted e-mails when they save me money," Larson said.
Sizing up the customer
Consumers can't count on getting a discount by putting an item in their shopping cart and then playing the waiting game, White said. Instead, many retailers are providing incentives by telling consumers exactly what they left in their cart with a lot of information about it.
For example, if a customer who clicked to a site via e-mail to browse HDTVs left without buying, a retailer using triggered marketing will send a follow-up e-mail a couple of days later that might explain the difference between LCD and LED TVs, provide features for the last one that the consumer checked, and list the top-rated and best-selling TVs.
The browse-based e-mail is like a salesperson trying to lure customers back by sizing them up. Are they early adopters or value customers? "Triggered e-mails have a 50 percent open rate and a conversion rate of 10 percent or more," said White. "They can generate 10 to 30 percent of sales revenue."
So why aren't all retailers doing it? It's a complicated system that requires a lot of data intelligence. Retailers need a lot of current data to be able to tell customers if the items they looked at are top sellers or highly rated, Stinchfield said. Still, retailers are expected to send 19 percent more e-mails in the next year.
Some retailers know that not all of us appreciate a watchful eye monitoring our online activity. "I think it's creepy," said Dawn Darner of Woodbury. "It's like Big Brother Box Store is watching."
She has given out her e-mail address to about five retailers to try to keep her privacy in check.
Marketing-averse consumers also should avoid giving out their mobile numbers. The next revolution will move from e-mail to mobile, Stinchfield said.
With nearly 96 percent of Americans expected to have smartphones by 2016, marketers will be texting us to get our attention. "They know that most of us always have our smartphone at the ready."
John Ewoldt 612-673-7633