Retailers as disparate as Williams-Sonoma and Home Depot have become much better at tailoring emails to specific customers rather than the one-size-fits-all blasts that once dominated this type of marketing. Measured by sales per dollar spent, email outperforms social media advertising three to one, according to the Direct Marketing Association, a trade group founded to provide accurate marketing data. That explains why retailers will send 19 percent more emails this year.
Compared with social media, email marketing will never be sexy, said Ted Wham, a vice president at Responsys, a San Bruno, Calif., firm that helps companies build digital relationships with customers.
“But it depends on what’s sexy to you,” he said. “In my opinion, making a high profit rate and bringing in a lot of incremental dollars is very sexy.”
Competition is fierce this holiday shopping season as the National Retail Federation predicts sales will rise 4.1 percent to about $586.1 billion in the period, compared with a 5.6 percent increase in 2011. Online sales may grow to a record $43.4 billion in the last two months of the year, a 17 percent increase from last year, according to ComScore.
The number of Black Friday and Cyber Monday shoppers making purchases after clicking through from social networks such as Facebook, Twitter, LinkedIn and YouTube declined by at least 26 percent this year from 2011, even as online sales soared, IBM Digital Analytics Benchmark said last month. So-called social sales contributed less than 0.5 percent of online revenue both days.
The numbers drive a compelling case: Email provided $39.40 in sales per dollar of advertising this year, followed by $22.38 through Web search, $19.71 from Internet display ads and $12.90 from social networks, according to the Direct Marketing Association.
Home Depot has been honing its targeted marketing, sending emails that incorporate customer preferences and previous behavior, because it’s 10 times more effective than blasts to a general audience, Chief Marketing Officer Trish Mueller said in June. For instance, if customer data shows electricians are no longer subcontracting the painting portion of remodeling jobs and doing it themselves, an electrician that just bought copper wire may soon receive an email for a discount on paint, she said. Previously, that person would have gotten an email offer relevant only to his known skills.
While stores still use old tricks including limited-time offers, they’re increasingly tailoring message content and timing to demographics, previously purchased or viewed products, and items left in virtual shopping carts.
Williams-Sonoma’s West Elm urban furniture chain has sent emails to customers who have forgotten about items in their shopping carts with subject lines asking if they are still thinking about that particular merchandise, warning them to “Get it before it’s gone,” and “Don’t miss out on the things you love.”
They’re also using email as a “portal” to a flurry of ads across the Web, said Chris Saridakis, president of EBay’s GSI Commerce, which provides e-commerce services to hundreds of retailers.
Once a user clicks from an email to a retailer’s website to see that forgotten organic cotton duvet at West Elm, or to browse the 30 percent-off shoes at Asos, third-party trackers called cookies recall the activity. Later, while visiting a news website or Googling “clothes,” consumers may see banner or Google ads designed to lure them back to those retailers’ sites.
“It extends the life of an email, and we see that driving an incredible amount of return behavior back to the retailer’s site with a higher conversion rate,” Saridakis said.
It can take a lot of emails to hit the mark. A successful email campaign may result in a 20 percent open rate with 5 percent of people clicking through and 1 percent making a purchase, though figures vary around targeted messages and holiday specials, Chad White, research director at Responsys, said. On the other hand, about half of consumers will read postcards, the most effective form of direct mail, which is pricier, according to a report from the Direct Marketing Association.
Facebook has signed on retailers including Brookstone and Dean & DeLuca to a new gifting service this year as the company looks beyond advertising to monetize its more than 1 billion users.
Facebook Chief Operating Officer Sheryl Sandberg said in October that a third-party analysis showed that more than 70 percent of 60-plus marketing campaigns on its website generated a return on ad spending of three times or better.
While the social network’s power as a sales driver remains unclear, letting customers use their Facebook accounts to sign onto a retailer’s website is an effective way to harvest email addresses, according to Matt Kritzer, vice president of e- commerce for underwear maker Tommy John.
Facebook and Twitter “are more awareness activities,” Kritzer, the former director of e-commerce for L’Occitane, said in a telephone interview. “That’s why you need this glue of email that ties it all together.”