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Increasing e-mail-based sales by 5.5 times – a case study in segmentation

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One of the biggest opportunities we help our customers capture is converting infrequent purchasers into loyal customers. Today, we highlight the recent experience of one of our customers in the fashion industry (“Fashion Store”) and demonstrate how using email campaign segmentation helped them boost purchase conversion by 5.5x.

Creating a campaign strategy

Like many online businesses, Fashion Store has a number of customers who have made one or two significant purchases, but do not visit or buy on a regular basis. In an effort to inspire greater loyalty in this group, Fashion Store used the Canopy Labs lead generator to easily identify the customers who fit this “valuable but unloyal” profile, representing approximately 12% of their base. Many of these individuals had made a large purchase many months ago, but had not yet returned to the store. Armed with this lead list, Fashion Store quickly developed a special campaign thanking the customers for their past purchase and inviting them to purchase again with a small offer tailored to the segment.

Measuring success

One week after running the campaign, we measured the open rate, click rate, and purchase conversion rate. We compared these metrics to the directly previous email campaign that was sent to a broader, untargeted list:

Campaign results

 

While the open rate and click rate were both a respectable 1.4x higher in the new campaign, the purchase conversion rate was an astounding 5.5x greater. Comparing the campaigns on a dollar per email and total revenue perspective yielded similarly impressive results:

Sales results

 

Fashion Store found that not only were more people buying, but the size of their purchases were also larger than average. This explains why on a dollar-per-email basis, the new campaign yielded 15.7x higher sales. Finally, one common criticism of segmented email campaigns is that the segments are too small to justify the effort. However, in this example we can see how the targeted campaign generated absolute sales 2.4x greater than the previous “one size fits all” method, despite being sent to a much smaller list.

Implications

Fashion Store’s experience is not uncommon – many of our customers find that segmenting their email campaigns and sending targeted communications can materially improve sales. There are two core benefits that segmentation provides:

  1. Personalized content: by segmenting the list to contain customers that share a specific characteristic (e.g. made only 1 or 2 purchases), the campaign manager can speak much more directly to their customers and use language that feels more personal.
  2. Targeted offers: in a similar spirit, the manager can tailor the call to action and offer given to the customers to motivate a specific action (e.g. offer exclusive rewards for loyal customers, one-time welcome discounts for new customers)

Conclusion

Segmenting email campaigns can help online stores boost both relative and absolute sales without requiring a significant time investment. There are many other examples of targeted campaigns that are made possible through centralizing data and predictive analytics – let us know your own success story in the comments below!

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