Email Marketing: The Kentucky Derby’s customer-centric newsletter reduces opt-out rate 64%

SUMMARY: The Kentucky Derby was marketing based on assumptions about their customers and wanted to put some concrete data behind the content choices the marketing team was making.

In developing a newsletter centered around Derby content, the team began segmenting and directing compelling content directly to the customers who wanted it most. Read on to learn what they found through this effort.

by Courtney Eckerle, Manager of Editorial Content

Kate Ellis, Marketing Analyst, The Kentucky Derby, studied business as an undergraduate and decided to merge that background with her interest in horses after finishing college.

She enrolled in a one-year intensive program for equine marketing at The University of Louisville, through which she got an internship with The Kentucky Derby, and has been working for the prestigious competition full-time ever since.

"It was a little bit more racing focused than I expected, but in a good way. I got to learn a ton of new things about racing and the Derby and just all that is involved in the racing industry," Ellis said.

The Derby is one of the top tier sporting events in the country as well as the longest consecutively run sporting event in the United States — 141 years for the 2015 Derby.

"It's just a huge event, comprised mostly of the most competitive horse race in the world, but it's also one of the most exciting social events of the year," she said.

THE CUSTOMER

The merging of the sporting event and social atmosphere is what makes The Kentucky Derby such a unique experience, Ellis added, because while the horse race is the highlight of the event, there is also "a great aspect of social. You get dressed up. You wear a dress and a hat. You get to see the celebrities that are here and the excitement, drink a mint julep. There's just a lot of tradition and a lot of spectacle to the event."

As marketers, Ellis said her team's role was to expand the public's knowledge of all of the facets of the event, while using email marketing to focus on who they wanted to engage with.

"Our goals tend to be around providing that exceptional racing experience and the entertainment experience for anyone who's attending the Derby and, also, for anyone who would watch it on TV," she said.

CHALLENGE

Ellis has been in her current position for about a year. "I was kind of thrown … into managing our email marketing, and we had all these lists, just leftover lists," she said. "Not sure where they came from, who the people were or what they're interested in."

Her team manages two brands underneath these lists — The Kentucky Derby and Churchill Downs, which is the local brand and much more specific to year-round content. As the national brand, The Kentucky Derby has a much wider scope and a huge breadth of content to cover.

As of a year ago, the marketing team knew very little about who was on the Derby email subscriber list, including where it came from and what the people who were on the list were interested in learning.

"So along with that, we knew very little about our customers and what leads them to engage with our brand," she said.

The team had been operating on a theory about the main drivers of why customers engage with the brand: "They're the equine customers, which are the people who are interested in horses. They engage with the Kentucky Derby because they love horses. I consider myself one of those people," Ellis said.

There are also people who engage with the brand and its content because it is an opportunity to figure out the best bets in the field.

"Parimutuel wagering is one of the few legal wagering things that you can do in the U.S., especially online. So there are great opportunities for people to enjoy the sport through wagering on it," she said.

Then there is the popular social aspect of the Derby, which includes fashion celebrities, mint juleps and perhaps most famously, the hats. All of this information about their customer base, however, was mostly based on educated guessing.

"We had this list where we don't know anything about them. Then we have these theories about our customer segments, basically, based on what they're interested in … We really didn't have any validation of the segments besides observation," Ellis said.

CAMPAIGN

Ellis and her team developed a campaign with the goal of learning about their customers and filling in engagement gaps with the brand.

The team started segmenting out customers with The Derby Insider, a weekly newsletter beginning in February and bookending the Kentucky Derby 2014 by running through the week after the race.

"[The newsletter is] a good opportunity here because we have a lot of interesting content, and it actually goes a lot further than just that one weekend in May," she said, adding that they wanted to extend the time period customers were engaging with the brand.

Along with The Derby Insider, they developed a content strategy, "but we were really flexible with it because we wanted to learn from our customers, from their behavior through this email process," she said.

Step #1. Research current content and assets

"I specifically did a lot of my own research about what kind of content we had, what things were out there about the Derby, and then [I] was basically theorizing about what our customers might be interested in," Ellis said.

From that research, she added, the team took the structure of The Derby Insider to focus on three pillars of interest for customers:

Equine

Lifestyle

Wagering

The team developed a content plan off of those pillars so that every newsletter had something that would speak specifically to those three audiences.

"There is always a feature on a horse. As the road to the Kentucky Derby develops, we don't necessarily know who the horses are going to be, but we knew … we have an audience who really just wants to hear about the horses or see their pictures, watch their races," she said.

For example, with wagering, even in February, there is content that customers focused on determining the best pick would be interested in. The Derby Insider features experts making picks for the Derby early, or a featured wager — the first of which begins in November.

"If you pick a horse in November, and you think they're going to win the Derby, and then they do, you usually get a much larger payback than if you were to make that bet on the day of the race," Ellis said.

Customers don't realize what a wealth of lifestyle content there is available, Ellis added. For instance, they offer information on official Derby parties, as well as tips for hosting your own.

"We have all kinds of information about how to have your own Kentucky Derby party. We have recipes for food and beverages that you might eat at the Kentucky Derby," she said.

Step #2. Create a content plan

In developing and researching the content, the team made a plan and structure for the whole three months of content, making sure "we had a list of all the content that we needed to hit, and then broke it into those equine, lifestyle, wagering segments to make sure each segment had some relevant content in it," she said.

From there, they fit in specific calls-to-action that might come up, such as registering for Derby tickets or contests to win a trip to the race.

After developing the plan and scheduling out the content, the team had to find out where those pieces of content lived, if it was able to be repurposed and then develop ideas for calls-to-action for that content.

"For example, we knew we wanted to do something about hats, because we know it's a big aspect about coming to the Derby, but we didn't necessarily have a good place to bring people," Ellis said. "What specifically do customers want (to know) about hats?"

The team had to develop several calls-to-action around the hats, and branching off of that focus, added a "Hats" board to the Kentucky Derby's Pinterest strategy.

This helped customers see what kind of hat they wanted to wear for the race and answered common questions such as: "'What should it look like? Should it be big and extravagant? Can it be small?' Here are some of the hats that we've seen at the Kentucky Derby, and we'd like to share with you," Ellis said.

The strategy here was to trickle content out slowly, at the point when it's relevant and when it is most opportune for the customer to receive it across the three-month campaign.

"We don't necessarily have a [call-to-action] to say, 'Hey. You can learn more,' because it's not there yet," she said.

Step #3. Utilize behavioral information from subscribers

"Anywhere that we could, we wanted to be able to give people more information if they wanted it. We definitely wanted them to take that action because we want to see from their click data what they're interested in," Ellis said.

When a customer clicked on a call-to-action for hats, for example, Ellis could then grab those customers and ascertain that aspect is an important part of the Derby experience for that particular customer.

"We had to develop that, make sure that there was always a way to get that information back from the customer. Then we really were just testing, it felt like, every week, because every week is a test to see," she said.

Through this testing and analysis of clickthroughs, the team was able to ascertain that celebrities are a big draw and point of interest for subscribers.

"Every week when we're sending these content pieces that we think that they want to hear, we get validation back on did they read it? Did they click on it? Is it something that our customer wants to hear about?" she said.

From that information, the team was constantly moving those customers into the right segments and lists for their interests. This ensured that the information they were sending was going to the audience that actually wanted to hear it.

One specific example Ellis shared is that the team considered some people who signed up for the Churchill Downs list may have also been interested in Kentucky Derby information.

"How many people are in that Churchill Downs list because they didn't know how to sign up for Derby information or because we forced them into that Churchill Downs list? They really just want Derby information. Or do they want both?" she said.

The team sent The Derby Insider email to the Churchill Downs list and found that over 20% of subscribers were interested in Derby content.

"We move them into the Kentucky Derby segment, and they're an engaged audience throughout the rest of the whole campaign," she said.

Step #4. Start small with segmentation

"We wanted to really figure out who it was who was engaged and what they were engaging with," Ellis said.

To begin segmenting, the team started with a list of the whole group of subscribers interested in The Kentucky Derby. That list was then broken into three segments for the three content pillars, as well as a fourth segment for non-purchasers.

The first way the team knew they could segment customers was based on if they had purchased a ticket to the event.

For example, one lifestyle-focused send was sent to purchasers and focused exclusively on hats with the subject line, "Start Planning Your Hat."

Click here to see the full version of this creative sample

However, a similar send to non-purchasers had the subject line, "Start Planning Your Party and Your Hat."

Click here to see the full version of this creative sample

"We knew we could start somewhere, and we could start with pulling out purchasers and non-purchasers. So then we can send them different content, not a lot of different content, but enough," Ellis said, listing parking and additional ticket information as part of email copy.

From there, because they had developed the structure to the newsletter of featuring equine, wagering and lifestyle content every week, "when we would send them that, we can pull everyone who clicked on equine information and say, OK. They might be interested in information about horses."

Ellis then added an additional step in order to know if someone was interested in Derby party information.

"So that later, when we have specific information, I can just send it to those customers who have shown interest and not necessarily blast this entire huge list that we had that just said, 'I'm interested in the Kentucky Derby,' when there's a very real possibility that some of these people are just on the list because they wanted to know about tickets," she said.

If the team didn't segment this information, she added, "the last week of the Derby it becomes email overload because there's so much going on. There's so many things happening before the Derby, but it's also a lot of information and relevant content."

By knowing which people on the list are particularly interested in which aspect of the Derby, however, the team can send out specialized content, such as sending an email listing the week of the event to subscribers interested in wagering about which horses had good workouts at Churchill Downs.

"We can send very specific targeted emails to people based on their interests. We're not overloading the whole of the list," she said.

Segmenting with a small staff

Even with the payoff, it was difficult for Ellis' small team to move from minimal segmentation to this undertaking.

"It became a very manual process, which is definitely difficult and a lot of work, but I think worth it," she said, adding that the positive results were encouraging for the team's mindset.

"It helped us a lot to remember that there are these different segments and these different reasons for people engaging with our brand because I think we all tend to be one of them or to place ourselves in one of them and forget about the others," she said.

It was a positive challenge for each of member of the team, she added, to look at the different pillars and say, "that might be true of this segment, but what we're learning over here is that there's another segment that's interested in something else, or we're learning that that segment might actually be a lot larger than we think it is."

RESULTS

"As an email marketer … you can use email to learn about what in your brand interests your customer, what about your brand is driving engagement from your customer, what makes them want to purchase from you," Ellis said.

The biggest result has been a better dialogue with customers because "the big thing for us is learning about what interests our customers, so that we can have that effective relationship with them," she said.

The results the Kentucky Derby was able to garner from this campaign were:

An average read rate of 37.35%

An average clickthrough rate of 19.44%

A reduced opt-out rate of 64%

Overall wagering on Kentucky Derby was up by 1%, and website visits were up 19%, Ellis said, adding that the knowledge they have ascertained will have a great future effect.

"I even envision where we can speak to you emotionally because the Derby is a really emotional brand. We want to connect on that aspect, and we want to connect with our customers where they're interested in that, so I see even getting more and more focused," she said.

Adjust to what subscribers are telling you

"For me personally, I was surprised by how engaged customers were with our lifestyle content. They really did want to hear about the hats or see who the celebrities are that were coming. That was a huge one," Ellis said.

People wanted to know information, such as who is singing the national anthem or what celebrities they can expect to see on the red carpet, so it opened up a whole new line of questioning for the team.

"It helps us as marketers … to know our customers are really interested in what celebrities are coming. How do we get that information to them faster? How do we get it sooner? How do we know who they are and utilize that so that our fans know?" she said.

The team learned concretely that they need to be featuring lifestyle pieces more heavily, such as fashion, celebrities, food and drink and parties.

"We need to be keeping fashion boards on Pinterest. We need to be getting food and beverage recipes so that people can have it at their party," she said.

The team also confirmed that the horses and leader board are of consistent interest to customers, even the ones that showed more interest in Lifestyle pieces.

"A big goal is not really to sell [Derby] tickets because we're sold out, but we do have some other ticket offers, specifically to events related to the Derby or the week of Derby. We saw increased sales whenever those things were mentioned in our newsletter," she said.

The Kentucky Derby will be speaking on this campaign at MarketingSherpa Email Summit 2015, held February 23-26 in Las Vegas.

This case study has also been selected as one of five finalists for the MarketingSherpa Award — Reader's Choice Email Campaign.

Keep reading MarketingSherpa newsletters to see case studies from other finalists, and then in a few weeks, we'll ask you to vote for your favorite on the MarketingSherpa blog.