Recently Modeling a Beautiful Thing for Discount Beauty Center

Oct 01, 2010 9:30 PM  By

ONLINE RETAILER DISCOUNT BEAUTY CENTER already has in place a reactivation program that will no doubt help its emails receive favorable placement in inboxes, thanks to their relevancy and effectiveness. Working with email marketing services firm Listrak, Discount Beauty Center created a modified recency/frequency/product (RFP) model to reactivate customers who had not made a purchase in at least 30 days.

First it broke out past purchasers into three segments: those who had not made a purchase within 30-60 days, those who had not bought in 61-360 days, and those who had not made a purchase in more than 360 days. It then applied what Listrak CEO Ross Kramer calls a discount ladder. Those who had ordered most recently — the 30-60 day group — were sent an email offering them $5 off a $25 purchase.

The next group, those who hadn’t purchased in at least 61 days but within 360 days, received an email entitling them to 10% off their order. The coldest group, those who hadn’t bought from Discount Beauty Center in at least 361 days, were emailed a code good for 15% off their next purchase.

In addition to the offers, the emails included references to the types of items the customers had last bought. For instance, if a customer’s previous purchase had been a Ralph Lauren fragrance, the email’s messaging included links to Ralph Lauren products.

Discount Beauty Center sent a follow-up email to those who did not respond to the initial message. Although the subject line was tweaked, the message creative and the offer remained the same, which Kramer says kept the cost of redeployment to a minimum.

The average clickthrough rate for Discount Beauty Center’s emails is about 1.5%, according to Kramer. The clickthrough rate for the initial emails sent to the coldest segment was 2.8%, with 12.0% of those who clicked making a purchase.

For those who hadn’t bought in 61-360 days, the clickthrough was 4.4%, with 21.3% of those making a purchase. And among the most recent of the nonbuyers, those who hadn’t bought in 30-60 days, the clickthrough was 8.9%, with 13.6% of those responders making a purchase.

“What still amazes me,” says Kramer, was the response to the follow-up emails sent to those nonbuyers who had not responded to the initial offer. Among the coldest buyers, the clickthrough was 2.4%, with a conversion rate of 14.4% — a higher conversion rate than for the initial email to this group.

Among the middle sector, those who hadn’t bought in 61-360 days, the clickthrough rate was 3.3%, with a 25.5% conversion rate — again, a higher conversion figure than for the first email. The redeployment was least effective among the most recent of the nonbuyers, with a clickthrough rate of 4.8% and a conversion rate of 10.0%.

Discount Beauty Center is continuing with its RFP model on an ongoing, automated basis. “As soon as someone falls into one of these buckets, they will get an email autodeployed,” Kramer explains. “That’s the real ROI power from [RFP] automation.”

The other contributor to return on investment is that Discount Beauty Center doesn’t lose margin by offering discounts, or larger than necessary discounts, to customers who would have bought without the monetary incentive.

“A lot of the industry has been talking about relevancy, but it hasn’t given people a lot of practical insight into how to do it,” Kramer says. “We haven’t done a lot of models for it either.”

Segmenting customers by how recently they made a purchase and how big a spender they are or what they bought is one way to start.