Dear Dr. pROfIt
By Kevin Hillstrom
About Kevin
Kevin Hilstrom is president of MineThatData, a consultancy that helps CEOs understand the complex relationship between advertising, customers, products, brands and channels. His clients include billion dollar retailers, international direct marketers, publishers, catalog brands and online pure-plays.
Prior to founding MineThatData, Kevin spent nearly 20 years in multichannel retailing at some of the most well-known brands in the U.S., including Nordstrom, where he was the vice president of database marketing, Eddie Bauer and Lands’ End. Kevin is also author of numerous books, including his most recent, “Online Marketing Simulations,” available at Amazon.com.
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Dear Dr. pROfIt: Use Email Targeting for Positive ROI
As with anything in marketing, if you can align customers with a message that they want to receive, you'll obtain an improved return on investment.
Often articles and case studies suggest that highly targeted emails yield outrageous levels of profitability. This certainly happens, but the audience receiving the message is limited to small quantities with specific behavioral characteristics.
For the average company looking to scale results across its entire customer database, start by doing something simple: Pick an attribute that 25 percent to 35 percent of your customers possess. Maybe you sell computers. Segment your email file based on whether customers buy a Mac or a PC. Then create two versions of your next email marketing campaign, one featuring Mac products, the other featuring PC products. Send the Mac version to customers who previously purchased Macs, and send all other customers the PC version.
You're likely to observe that Mac customers will spend 25 percent more if they receive an email that's merchandised to their interests.
When you don’t have the resources to execute marketing tactics at the level you want, start simple. In this example, you have two versions of an email campaign and two sizable audiences. You'll be able to demonstrate a positive ROI.
Once you demonstrate positive ROI, you can make the case for more complex targeting strategies. The key is to test a simple strategy with audiences large enough to generate a positive ROI.
