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Rethinking Inactives: Reduce First, Then Reactivate

Carey Marston, SmartPak Equine

Fred Swain, Tafford Uniforms

A show of hands please…

1. Do you have a concrete definition of what an inactive

is: including timeframe, purchase/offline activity, etc.?

2. Do you know what percentage

of your audience is inactive?

3. Have you implemented proactive programs to minimize

or re-engage inactives?

Inactives – a huge issue!

Bios

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• Carey Marston Kegel– 6+ years @ SmartPak

• Customer Care Rep for 1 ½ years• Email Marketing Manager

– Avid equestrian

• Fred Swain– 16 years in direct marketing– Grew up in direct mail– 5 years @ Tafford Uniforms

• Email• Catalog• Loyalty• Male Model

(worst selling top ever)

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Overview on SmartPak and Tafford Uniforms

SmartPak’s Email Program

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• ~1MM emails sent per month

• Generates 34% of online marketing channel revenue

• Healthy transactional and triggered email program drives high return

• Email team comprised of:» Email Marketing Manager» Email Designer

Transac-tional &

Triggered Email; 11%

Promo-tional

Email; 89%

Email Volume

Transac-tional &

Triggered Email, 37%

Promo-tional

Email; 63%

Email Revenue

SmartPak’s Email Program FrameworkEmail Channel

Promotions Transactional Lifecycle

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Newsletters

Offers

SmartPaks On-Hold Confirmation

Order Confirmation

SmartPaks Confirmation/Welcome

PasswordRecovery

Credit Card Failure Notification

SmartPaks Cancel Confirmation

SmartPaksWelcome

Order Reminder

Abandoned Cart

SmartPaks On-Hold

Post Purchase Review

SmartPaks Up-sell

Order Shipment Confirmation

Today, ~30 transactional and lifecycle emails per

day, and 10+ promotional emails per

month

Order Delivered Confirmation

Tafford’s Email Program

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• 5MM emails sent per month

• Generates 35-40% of total sales• Send frequency is based on

program engagement

• Automated messages have always been a integral part of our plan. Welcome, Post Purchase, Abandoned cart, Anniversary campaigns all contribute high $/email .

• Email team consists of three staff members

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Some might thinkwe are heavye-mailers in regardto frequency, but…

We tested mail frequency

over several months…

-most profitable was 5Xweek

-some segments could sustain 7X

Tafford’s Email Program

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Inactives – The Past

Inactives (5 Second) History

Recognize ~50% database inactive

Testing showed suppression of inactives generates stronger engagement

Reactivation campaign launched

Proactively removing deadwood from list

2007

2010

Today

Work in progress…

SmartPak: Attempt #1

More transactional

Inactive definition = No open or click in 6+ months

SmartPak: Attempt #2

More promotional

Inactive definition = No open or click in 6+ months

(Updated messaging to be less confusing)

SmartPak: Attempt #3Most

effective

Current definition of inactive = No open, click OR purchase in

6+ months

Tafford Inactives; The historical perspective

Haphazardly ran reactivation campaigns– Wanted to institutionalize– Lots of excuses for not– no good reasons

Occasional Survey

Quarterly “Miss You” campaigns which continue to run

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Root Causes

Define &

Segment

Test Read & Respond Automate

The Reason We’re All

Here…

Inactive Action Plan!

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Inactive Action Plan!

Root Causes

Root Causes…

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Never fully engaged - just wanted the incentive

Interests / needs have changed

Content did not meet expectations

Emails are being routed to junk folder

You send too often for their taste

You send un-personalized, irrelevant emails

Long sales/purchase cycle

Inability to update email address / change preferences

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Define &

Segment

No Standard Definition of Email Inactive

Use your data to define inactive

for your business

Source: Email in Action, eConsultancy & EEC, February 2012.

Current Inactive Definition for SmartPak

NoOpens

No Purchases

6+ Months

Email Behavior

Purchase Behavior

Time Window

Who Stays (Who Goes?)

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2 Types of Inactives

Dormant: Likely to reactivate with right offer and

timing

Deadwood: Not likely to ever reactivate, pose serious

deliverability risk

What to look for to create a successful inactive definition, for your business

Source: There's Inactive and There's Inactive, Eric Kirby, Magill Report, March 2012

Recently Took Closer Look At Data

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Have Not Purchased in 3+ Years

55%

Purchased in Last 3

Years45%

Purchasers Most Recent Ship Date

Opted-in 2+ Years Ago

75%

Opted-in Less Than 2 Years Ago

25%

Opt-In Date for Non-Purchasers

Defining Inactives - Tafford

This has been a long and winding road…– changes in product and marketing mix

Sometimes we could seeinactives – sometimes, not

Definition of “INACTIVE” has followed this path

Started to use 12 months openers as engaged

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2012 Focusing In

318,000 total opt ins174,000 opened in the last

12 months (only 55% of all opt ins)

132,000 opened in 4 months (only 42% of all opt ins)

Trimming the fat…

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~ 42k recipients had received 160 emails from Tafford without a sniff

6.72MM habitually unopened emails out of the 60MM sent annually

That’s 11% of budget filed here!

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Test

operation: Tafford still loves you

1 month reactivation test started on 2/14/12

Test split all subscribers who hadn’t opened in months 4-12.– Group A received 5 emails per week– Group B received 1 email per week but

they were not our normal email

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operation: Tafford still loves you

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Read & Respon

d

operation: Tafford still loves you results

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Group A received 5 emails per weekGroup B received 1 email per week email

operation: Tafford still loves you takeaways

One month saved 10% of budgeted email qty

Generated slightly less profit but 4x higher $/email

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Group A received 5 emails per weekGroup B received 1 email per week email

SmartPak: Reactivation Results

Metrics Reactivation Other Emails

Bounces 3% - 7% 0.57%

Open Rates 3% 18%

Revenue-per-Email

$0.06 $0.20

Total Reactivated

4% of total send

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Automate

Operation: Tafford’s Endless Love

Reactivation program is the only program at Tafford that is not squarely focused on ROI Distant, Early Warning to locate subscribers before they are left out in the cold as chronic non-responders

1. re-engage2. save email send qty3. sell4. parting is such sweet

sorrow

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Automated Program to Re-Engage

Just activated 5/1. No

results to report as of

yet

Steps in Re-Engagement Program

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Track 1 Track 2

Track 3

Evaluate for 30 days for activity, move into once a month

frequency for 6 months.

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Lessons Learned / What’s Next

Some Lessons Learned

OK to suppress

Most inactives are inactive

Right definition and approach is key

Be careful with messaging

What’s Next for SmartPak

Remove deadwood from list

Track the life of inactives

More behavior-based automation

ECOA on more recent non-responders

Tafford’s Endless Love: Results

Results are for one monthOpen rate of emails even higher than in testing phase– $/Email however is lower

Will run as is for May and re-evaluate underperforming parts of the program

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Tafford’s Endless Love: One Month Takeaways

Results are limited

Will have May to develop more results and re-evaluate underperforming parts of the program

If part of the program doesn’t work…we’ll test something else!

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What’s Next for Tafford

Monitor engagement based on both open and purchase dates

CONTINUE TO TEST

Add update preferences email and opt in and purchase date anniversary campaigns

Build preference adoption to send email messages based on the subscribers needs/wants

Key Takeaways

Don’t ignore inactives – be proactive

Focus on minimizing inactivity

Automate reactivation program

Test and optimize

Appendix

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NOT ALL INACTIVES ARE CREATED

EQUAL

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SmartPak: Analysis/Definition

Determine Root Causes

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Are certain acquisition sources producing a higher rate of inactives?

Has increased frequency numbed them?

Is your email program stale and boring?

Are you attracting the right audience?

Are you delivering against expectations?

Do you have deliverability issues?

Retail Reactivation SuccessesProactive changes in email strategy driving permission marketers

Retail industry revamping email strategy » Recognition of customer burn-out (opening/clicking fewer emails than 4 years ago)» “Noise” increasing in average inbox (sophistication required to stand-out)

Nicole Miller improved messaging and cut volume (1 per week, down from 3) » Improved unsubscribe rates» Opens rates jumped from 15% to 40%» Email now 17% of sales (up from 10%)

GameStop split base into “general” and “rewards” customers» Decreased email to general, increased customization and targeting for rewards

customers» High-value rewards customers opening 30% of emails (compared to 10% of

generals)

Neiman Marcus increased email while stepping up use of customer data» Better targeting drove 10% to 20% increase in open and click-through rates» No increase to unsubscribe rates

Source: Stores Smarten Up Amid Spam Flood, Wall Street Journal , March 2012

After Identifying Inactives, Then What?Options to test

Reduce frequency

Remove bounced addresses » Always remove hard bounces

after first occurrence» Soft bounces after 3 to 5

consecutive occurrences

Update email addresses» ECOA campaign

Reengagement campaign» Strong offers and good, re-

engaging content » Avoid typical promotions (drive

up complaint rates)

Source: Delivery Rate Increases from 60% to 99% by Separating Inactive Subscribers, Marketing Sherpa, April 2012

The results for active subscribers:• 40%+ increase in sender

score• 50%+ increase in

average inbox placement rate

• 99%+ average delivery rate

The results for inactive subscribers:• 30%+ increase in sender

score• 90%+ average delivery

rate Results based on split IP (not always necessary to

drive improvement)

Deliverability Environment Changing

Must be more vigilant to ensure you land in inbox

ISPs determine which emails are delivered to its users (inbox, junk folder, dropped altogether)

Healthy bounce and low churn rates no longer enough to ensure inbox placement

Increasing focus on engagement in email deliverability» ISPs looking at engagement (e.g. opens, clicks, even “add to

address book” and “forward to friend”)» Three biggest players have changed the rules of the game

Gmail’s “Priority Inbox” filters on user’s interaction with emails

Yahoo’s filtering growing more complex Hotmail behavior-triggered filters (messages deleted

without being read, etc.)

Reactivation an imperative, (no longer a

nice-to-have…)

Analyze…

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By list source

Age on file

Customer segment/profile

Subscriber survey responses

Creative test results

Response by message type/frequency changes

Who Stays (Who Goes?)

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Which subscribers have potential, which don’t?

AOV

• Higher average order value will indicate higher value subscriber (correlates with acquisition source)

Acquisition Source

• Poor quality acquisition source usually indicates poor quality subscriber

Activity

• Big difference between subscribers who were never active and those who were active and then went dormantSource: There's Inactive and There's Inactive, Eric Kirby, Magill Report, March 2012

Today: Inactive (Re)Analysis for SmartPak

No Opens/Clicks

No Purchases

6+ Months

Prospects with no purchase 2+ years; inactives with no purchase 3+ years

No longer emailing(check purchase

activity, quarterly)

Receives reactivation campaign

Minimize Inactivity with Onboarding

Minimize Inactivity with Onboarding

Minimize Inactivity with Preference Center

Source: Good Preference Centers Can Hold Onto Subscribers Even as They Change, Marketing Sherpa, August 2011

Good preference centers help hold onto subscribers even as their needs/ interests change…

Email Marketing

Mobile

Social

Marketing

Automation

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