Retail Email Marketing Embraces Product RecommendationsFebruary 23rd, 2009 by Matt Thomson
For a long while, it seems as though email marketers have followed the idea of nothing ventured, nothing lost when it comes to email marketing. There was simply no reason to get better at email marketing because it didn’t cost all that much more to send out 1000 more emails. So what did it matter if the clickthrough rate could be optimized? It was easier just to buy 1000 more names and blast them all. Extra names = increase. Right? Well, now that every retailer out there is sending more emails, it’s making the forest that much thicker - and the path to your product that much more difficult to navigate. Couple that with the fact that a poor economy is just about the time that acquisition seems too pricey and we have a perfect climate for belt-tightening via smarter use of technology. Behold, the age of product recommendations has come to email.
The email forest is becoming thicker for your customers
First, let’s address the fact that the…er…forest is becoming thicker with email. This is easy, really. According to the Retail Email Blog’s Reportlet “Holiday Email Volume Sets Record”, email marketing was steadily growing until the Xmas season this year. Then, boom: an increase of 43% during the holiday season (Nov. 8 - Dec. 16). There is obviously way more email out there during the holidays but, more importantly, this jump coincides with a 15% year-over-year increase in email, meaning that 2008 saw the highest promotional email traffic ever.
The reason that we see this increase is the cost-effective approach that email constitutes. Emarketer does a nice job showing this in Why Retail Loves Email. After all, despite email constituting such a small portion of revenue, the low spend necessary gives it an ROI of $43.52, nearly 4 times that of other direct marketing efforts (which come in at $11.74). For risk-averse companies that are looking to mitigate costs in the current economic environment, direct marketing methods that are both cheap and which have proven effective will obviously get an increased workload. Email marketing currently wears this halo.
Customer acquisition just isn’t affordable right now
Our multichannel retail clients have outright told us that they’re scaling back acquisition efforts right now to optimize what they already have and take a look at customers that exist in their file but just haven’t been buying. After all, it’s going to cost less to make your former-customers buy than going out and finding an all new crop of potentials. Picking up the pieces of their databases is exactly what retailers need to do in this environment.
Product recommendations for email are here. Some signs.
Brian Walker from Forrester recently stated that automated recommendations will become “ubiquitous” this year. Well, I’m not totally sold on all that “ubiquitous” talk. But Forrester is right when they say that this is the year that product recommendations start to really take off. Partly because the burden of proof for product recommendations has been reclassified as mounting evidence. Moreso, however, because recommendation engines are coming down in cost and have stopped trying to be Amazon wannabes. Not all retailers have months to tag web pages, set up complex mappings, and get their data in shape. Multi-channel retailers, specifically, need a solution that lets them wet their toes while not going all in. After all, a survival economy is a bad time to go all in on anything that promises ROI six months down the road. Nope. Multi-channel retailers need a product recommendation engine that give immediate ROI.
It is instructive to note that some notorious larger players in the analytics space are moving more thoroughly into the product recommendations area. Omniture, for example, announced its Omniture Recommendations the other day in an increased effort to find use for all of the data it tracks. If Omniture is going to get more heavily involved in this area, it clearly means that many of its customers are clamoring for a recommendation application. Omniture notably states that email and mobile marketing are two of the areas where their recommendations are most effective.
All in all, this seems like a perfect environment for retailers to get more serious about how effectively they market to their current customers via email. And, in this corner, a cheap, easy-to-use recommendation engine appears to be the most intelligent way to go about doing this.
Add Personalized Product Recommendations to Your eCommerce Site
Istobe is a powerful recommendation engine that makes it easy to add recommendations to your eCommerce site. How powerful? Shoppers who click on Istobe recommendations spend 20-50% more than the average visitor.