Using Split Testing and Retargeting to Boost Mobile Conversions

Dec 28, 2012 10:39 PM  By

Back in 2010, even with all the recession-fueled belt-tightening, retailers were delighted to find that holiday sales had jumped 5.5% between early November and Christmas Eve.

That was the best news retailers could have gotten after widespread economic pain drove down end-of-year sales in the previous two holiday seasons. Sales during the 2011 holidays saw another bump, of 4.1%. And this year analysts are expecting yet another increase, to a record $568.1 billion.

Clearly, consumers aren’t easily deterred from their annual quest to snag the top toys, fashions and electronic gadgets. Brands and retailers are trying to keep up. They’re predicted to devote twice as much money this year as they did last year to reaching holiday shoppers on their ubiquitous mobile devices.

It’s evident, however, that some mobile messaging campaigns, whether push notification, SMS or mobile email, aren’t increasing sales. Why? Because the messages can be irrelevant, ill-timed or excessive. 69% of mobile phone users drop marketing updates due to message overload while irrelevant messages drive 60% to unsubscribe. Today, brands and retailers have the power to better connect with consumers and keep them engaged during the holidays – and year round – by measuring the effectiveness of their messaging.

Here’s an example: a well-known toy maker with a mobile app is offering 15% off on the hottest movie tie-in action figures. The brand deploys two versions of the same message to app users who fit the profile of a mom with a grade-school son:

A: “Holiday Special 15% off on Smash Hit X action figures!”
Message A had a 40% open rate and a 20% coupon click rate. For every 100,000 messages sent, 8,000 coupons were clicked.

B: “Hey Moms! 15% off on all Smash Hit X gift items!”
Message B had 30% open rate and a 30% coupon click rate. For every 100,000 messages sent, 9,000 coupons were clicked.

Message B wins even though it had a lower open rate, because it had a higher coupon click, or “conversion” rate (9% vs.8%). That’s A/B split testing, sending out different variations of a message to see which yields the highest ROI. It’s long been in use in traditional and online media and is now making inroads on mobile.

Our fictional toy maker isn’t quite done, however. The company wants to refocus its push notification efforts to reach particular message segments. These include moms who did not open any messages, and moms who did open a message but did not convert.

The company “retargets” those consumers, using gathered data to make follow-on messages even more relevant and boost conversions further, while avoiding the main pitfall of mobile marketing: being seen as “spam.”

I recently had a conversation with an executive at a major retailer who told me the company does not have an app and does not do mobile marketing. Why? They are so afraid of having their messages perceived as “spam” and alienating customers, it’s kept them from making the leap.

That retailer is doing well, but not every company can afford to make the same decision. Mobile is expected to overtake desktop as the primary point of Internet access by 2014. And the National Retail Federation predicts that over half of all online revenues will be made through mobile by then. Smartphones and tablets, those most personal of devices, will be the surest way for brands to reach consumers.

Mobile messaging analytics, as part of a well-thought out mobile marketing strategy, can help brands and retailers gain actionable business intelligence. They can then use that data to craft push, SMS and mobile email messages that are relevant, add value and are selectively timed.

And this is true all year round, not just during the end-of-year season. Brands and retailers can use analytics to drive retention, conversions and ROI during any gift-giving holiday, such as Mother’s Day and Valentine’s Day.

So, be it toys to place under a Christmas tree, a new necklace for a sweetheart or a new iPad for Mom, gift-giving holidays continue to draw mobile-toting consumers by the millions. By giving these consumers their space and targeting them only with offers that matter, brands and retailers stand to reap the sales rewards of consumer goodwill – and of powerful engagement that lasts all year.

Brendan O’Kane is CEO of OtherLevels.