June 25, 2013

Case Study

Email Marketing: Segmentation, triggered sends generate twice the revenue with half as many email sends for furniture company

SUMMARY: Just a year ago, Smart Furniture was sending mass emails, and whatever it was segmenting was pulled together manually.

After switching email service providers, the team at Smart Furniture was able to grow from five to 30 list segments and implement a welcome, cart abandonment and post-purchase email series. Read how they grew open rates to 311% by developing this action-triggered series.

by Courtney Eckerle, Reporter

Based on a customized, "design on demand" concept, Smart Furniture was launched in 2001 with the hopes of marrying "the old world of furniture with the advancements and technology that are available through the Internet," said T.J. Gentle, President and CEO, Smart Furniture.

The company allows customers to customize furniture at a speed and convenience "comparable to how they would receive stock, standard items," Gentle said.

He added, "We want to give customers the best experience possible by allowing them to go online to customize furniture to best suit their needs and preferences."

A goal of revamping the email program to embody Smart Furniture's business model and diversifying consumer base soon developed — but was floundering under an email service provider that was unable to adapt with them.

CHALLENGE

Originally, for the first seven or eight years in business, "pretty much 100% of what we made we manufactured ourselves," Gentle said.

However by 2009, the company was able to grow into strategic manufacturing partnerships allowing it to expand its product lines, adding names like Herman Miller, Steelcase and Haan to their digital shelves and thus, their customer interests expanded as well.

However, the business has grown, and "the segments of customers that we had developed started to diverge … and they were all meaningful differences," he said.

Gentle and Gil Cayab, Vice President of Marketing, Smart Furniture, wanted the email program to reflect the same customization and speed as the business, but the company's email service provider at the time was stalling evolution.

"The problem that we had was that there was a lot of manual segmentation that we were having to do, there was no automation — there was just a lot of creating a campaign and sending it out," Gentle said.

The result was as the email list was becoming larger and more diverse, "we needed very specific, targeted marketing messages to each different segment and we didn't have the capacity to do that with [the previous] platform," Gentle said.

CAMPAIGN

Enlisting a new ESP, Gentle and Cayab had to develop a plan to integrate the automation timed to specific activities and segmentation they had been lacking previously for their list of 60,000 active names.

They needed to set up a system of meaningful list segmentation reflecting the groups their customers were now filling.

Triggered emails — such as welcome, cart abandonment and post-purchase emails — were all developed and swiftly put into action upon switching.

By evaluating their product offerings and customer needs, the team was able to develop a personalized and segmented email program no longer leaves customers on the table.

"The more granular we can get to a certain point, the better we are able to serve our customers, and they will reward us with buying more and continuing to shop with us," Gentle said about their efforts.

Step #1. Analyze gaps in consumer life cycle

"We were just sending a bunch of email blasts out that may or may not be relevant to our customer base, so the first thing we had to look at was how we wanted to segment our customers," Cayab said.

Once they understood that, he added, the team's first priority was simply sending more relevant messaging through both their regular email blast, and understanding when customers would most benefit from an action-triggered email.

"Previously, Cayab said, they were sending two emails a week to their main customer group, perhaps three during a sale or promotion.

Gentle said the team would try to manually segment the lists, but it became "unmanageable … very time consuming. So, the default would be, we would send it to a broader customer base than was necessary."

They realized an issue was the team was sending products with a lower price point of $50 to $100 to "design enthusiasts that were buying $7,000 lounge chairs, and very high-end premium products."

While those customers may be interested in value-based shelving products, Gentle added, generally "those two groups were so divergent that if we sent one email to both of them, we're going to lose a disproportionate amount of one of the two, or be relevant to neither."

They began developing smaller segments for their emails, a few of which are:

Small business customers buying office furniture

High-end furniture

Value-based apartment furniture

After "evaluating what we needed to do strategically," Gentle said the team decided on criteria that led them to a new ESP, which promised to provide all of these elements:

Would easily segment customers into different groups

Set up campaigns that were thought out and targeted at a particular customer action: general welcome series, post-purchase series along with other lead generation emails that could be sent "without an extensive amount of manual work"

Be able to monitor the performance of all of the campaigns in a strategic way

The second criterion came about when Cayab and Gentle had a realization after looking at their customers visit history "from start to finish" on the website.

Cayab said the team noticed "we were just hitting them basically at the very beginning of their visit," and not reaching out very much after that initial contact.

"We had no method for capturing those customers that were closest to converting, we had no shopping cart abandonment strategy in place, or no methodology in place, and we realize we were leaving a lot of opportunities out there," he said.

Developing a meaningful strategy for a welcome, post-purchase and cart abandonment became top priority after switching, in an attempt to pick back up the customers the team had been letting slip away.

Step #2. Begin with a welcome series

Previously when a customer signed up to receive email communication from Smart Furniture, they "would just get bucketed and not segmented at all," Cayab said.

Upon switching, Cayab and his team developed two welcome emails. Once a customer clicks to sign up to receive emails, "they would get first, a base welcome email," Cayab said.

It greets newcomers to the list with, "Welcome to the Smart Furniture Family, We're Thrilled That You Could Join Us!"

The welcome message encourages the reader to connect on social media sites and "Start Shopping." Directly below is a standard bar "Why Shop Smart," and provides reasons to shop with Smart Furniture, including: Returns 365 days a year, free shipping, no tax and "lowest price."

A second email acts as a preference center, with the subject line, "Your Email Subscription at Smart Furniture," so customers can click preferences to begin the welcome series.

Segments to choose from include home office, apartments and lofts, dining room, bedroom, living room, patio and outdoor and kids' rooms.

From there, "they would start getting segmented emails that were following up … depending on what they're interested in," Cayab said.

Step #3. Catch customers with cart abandonment

A "big, big part of what we were missing is … there's a lot of people that shop on our site, they put something in their cart and they basically leave," said Cayab, adding, "we had to fight that dilemma — how do we get these people to convert?"

The obvious solution, he said, was a shopping cart abandonment campaign. Consisting of three emails, the campaign is sent across four days to shoppers who had designed and left an item in their shopping cart.

All three emails prominently feature the item left abandoned, along with the price and quantity — very similar to how their own shopping cart on the page would look.

Instead of a general photo, the image featured in the email is dynamically generated based on the customer's exact choices.

"What we have on our site is the ability for people to customize and see one of about 2,000 different variations," Gentle said, giving the example of a task chair sold by Herman Miller.

"That hopefully helps us, when they see … the exact thing that they designed, versus just a reminder with words or the standard imagery for that product," he added.

First email: It urges customers to "Checkout Now" and says, "visit your cart to complete your purchase, make some changes, or add another item or two and complete your space. Popular items sell quickly so make it yours …"

Second email: It begins "Decisions, decisions." Then, it goes on to again encourage the customer to "Checkout Now" by saying, "With so many great options to choose from, sometimes you just have to sleep on it to make sure you get exactly what you want. Not to worry though — we saved the items in your cart to give you some extra time to think it through!"

Third email: Offering 5% off as an incentive to purchase, the final email says, “Like a spoonful of ice cream on warm apple pie, there are just some things that give you an extra nudge. For a limited time, enjoy 5% off your order with the code. You can even use it with lots of other great products on the site!”

A/B cart abandonment testing

Gentle and Cayab wanted to discover if Smart Furniture should be "either be more aggressive, or less aggressive," according to Cayab with the shopping cart abandonment campaign.

The control, the more aggressive campaign sent three emails over four days:

Email #1: Three hours after cart abandonment

Email #2: One day after abandonment

Email #3: Four days after abandonment

The treatment was less aggressive campaign that took place over a week:

Email #1: 24 hours after cart abandonment

Email #2: Four days after abandonment

Email #3: Seven days after abandonment

The more aggressive control abandonment emails converted at 22% once a customer came back to the site versus 21% for the treatment campaign.

The aggressive emails generated 58% of the revenue versus 42% for the less aggressive treatment.

"When people are in the mindset of converting, that is when you really need to stay in front of them. So, keeping a more aggressive line as far as cart abandonment emails come was the winner hands down," Cayab said about the testing.

Step #4. Thank customers with post-purchase emails

The post-purchase program in total consists of three emails. Those customers are segmented based on two criteria:

The product that they purchased

Actions after purchase

The initial post-purchase email, welcomes the customer to Smart Furniture and says, "You're part of the family now. Some things to look forward to:" and invites them to shop sale items, meet staff or see all brands.

The customer's post-purchase behavior then comes into play. For example, if a customer doesn't come back to the site to buy anything else for the next 30 days, they will receive a thank you — and "remind them of their shopping experience with Smart Furniture," Cayab said.

After 90 days if they still don't make another purchase on the site, they receive another email to persuade them to try to purchase again. It features relevant content, tailored towards the previous purchase's product category.

Step #5. Stay in touch with other areas of the company

Gentle and Cayab are planning a lot more changes and testing, and many of the current and future ideas have come from communication within the company.

Along with placing product recommendations in emails, they may add content to post-purchase emails that has been suggested to them by the customer service staff.

Cayab gives the example of a product where "a lot of people ask about assembling instructions … so if this person buys 'product X,' one of the post-purchase campaigns would be 'thanks so much for your order, here are your assembling instructions in case you didn’t get them.'"

Testing and content ideas rely on "a lot of the feedback that we get from our customer service team and our sales team," Cayab said.

He added bringing multiple teams into the process creates a more informed and full final email product.

"It creates a better customer experience and it really shows that we are concerned about their entire customer experience from start to finish," Cayab said.

RESULTS

Smart Furniture currently has 30 segments among their 60,000 active names, up from five segments with their previous ESP.

Having targeted, segmented emails sent to customers keeps them engaged with Smart Furniture, Cayab said.

"We're gaining a lot more and losing a lot less, so it’s gotten phenomenally better compared to what we were using just a year ago," he said.

The results they were able to achieve, compared to the previous ESP’s general sends, were:

Welcome Series

Open rates: 311% increase

Clickthrough rates: 327% increase

Bounce rates: 0.97% (compared to average of 4% while using the previous ESP)

Cart Abandonment Series

Open rate: 41%

Clickthrough rate: 56% for those who opened email

Post-purchase Series

Open rates: 284% increase

Clickthrough rates: 295% increase

Bounce rates: 0.97% (compared to average of 4% while using the previous ESP)

Cayab, crediting the company’s current ESP's automated list hygiene functionality, said their emails have also seen "a pretty big drop in spam and abuse complaints with only about 1.2% of our entire customer list falling into this category."

"From a CEO's perspective … we sent about half as many emails to customers and got about twice the revenue," Gentle said, comparing the two month beginning of the campaign to previous years.

"So what that tells me is, we're being far more specific and relevant to our customers than we ever were before — and the results are far better for us," he added.

From an email marketer’s perspective, Cayab said, "our unsubscribe rates have been the lowest they have ever been, just because we’re relevant. We're not losing people left and right just because we’re sending them everything."

"Having a little more automation, in the long run has saved us so much time, and so much energy. It's great for our customers, it's great for us here, so it's definitely a win-win situation," Cayab concluded.