Nuts & Bolts: Case Study
Challenge: Generate incremental sales without expensive promotions.
Solution: Send product-specific e-mails to customer segments.
Results: Implementation has helped annual sales surpass the $50 million mark.
Since its launch in 1999, online jewelry firm ICE.com has been on a mission to make it as easy as possible for customers and prospects to place an order. The average price point for its jewelry is $150; a monthly payment plan is offered on every item; and all orders come with free shipping. And that’s before special offers come into play.
“Our site is laid out for impulse purchases,” says Henry Shih, ICE.com’s database marketing manager, adding that the typical shopping scenario is that of a customer browsing the site on her lunch break. The e-tailer has developed a persona for its archetypal customer. “We call her Nancy. She is a working woman between the ages of 25 and 45, with an average household income of $75,000. We describe her as an active business woman with a sense of style that is not too eccentric. We’re targeting women who are into the classics,” Shih explains.
To let customers and prospects know about new product arrivals, special promotions and jewelry trends, ICE.com drops about four general e-mail campaigns a week, says Shih, segmented according to: buyer/non-buyer status; contact frequency requests from customers; and list source, such as third-party and affiliate-generated names. Further, the contact pattern leading up to a major holiday—Christmas and Valentine’s Day are ICE.com’s two biggest sales periods—features a generic e-newsletter dropping about three weeks before the holiday. Then, as the event gets closer, additional efforts go out that showcase holiday specials, customer appreciation sales (say, 35 percent off) and, finally, free overnight shipping.
This e-mail communication plan drives the bulk of ICE.com’s sales, says Shih. But, he adds, the company knew it could drive incremental sales by leveraging purchase behavior to create more personalized e-mails that would appeal to customers. Using Lyris List Manager 9.0, an e-mail marketing software package from Emeryville, Calif.-based Lyris Technologies, ICE.com develops up to two customized e-mails per month. It segments its file based on purchases by product line (diamonds, sterling silver, etc.), item (rings, earrings, etc.) and/or event (holiday, anniversary, etc.). Targeted e-mails then are developed to spotlight products that might be of interest to customers.
“If someone bought a pair of green amethyst earrings, we would propose a green amethyst pendant to go with those [earrings] a few months down the line with a [customized e-mail],” explains Shih.
Another targeted e-mail campaign ICE.com started testing last month reminds anniversary gift buyers about nine months out that the anniversary date is coming up, so it’s time to look for a special gift; the e-mail also is personalized with jewelry appropriate for anniversary gifting. Surveys conducted by the e-tailer show that about 30 percent of its customer base makes gift purchases on its site.
Shih notes that success for these customized e-mails is not measured by comparing the targeted efforts to the generic drops. Rather, he says, the main metric gauged is whether these more sophisticated e-mails turn a profit on their own, based on the costs involved with developing and deploying them. “Essentially, any targeted mailing is considered successful as long as it doesn’t take us too much effort … to the point that it takes 20 guys a day to run a targeted promotion that generates $30,000. That’s not worth it. There are a lot of targeting ideas we rejected because the resources put in were not anticipated to produce a strong ROI.”