What Are Email Open Rates and Why are They So Important?

When calculating email marketing metrics, one of the first things all marketers measure is the email open rate. This is the percentage of how many of your recipients actually opened the messages you sent. 

Open rates help you to understand if you are reaching a suitable amount of your customer base. Are you prominent in their inboxes? Are your subject lines resonating? Is your content relevant? How many active contacts are on your email list?

This article will break down how to calculate and compare your open rates against the rest of your industry (particularly retail) and detail specific, proven ways to help them improve going forward.

How Do I Calculate Email Open Rates?

Calculating your email open rate is very easy and straightforward to do.

Email open rate = (Number of Emails Opened / Number of Emails Deployed – Number of Emails Bounced) x 100

For instance, let’s imagine you sent out a series of 100 emails. Of those 100, 17 bounce, and 35 are opened.

Here’s how you calculate your rate:

(35 / 100 – 17) x 100

35 / 83 = .42

.42 x 100 = 42 percent.

This means that your open rate for this particular campaign is 42 percent.

What is a Strong Email Open Rate?

A MailChimp study found the average open rate across all industries to be 21.33 percent.

Meanwhile, after sampling 25 million emails across 28 different industries, HubSpot deemed the average open rate to be around 32 percent. 

In reality, this number varies greatly across different industries. Depending upon your audience and the type of goods you’re selling, a strong open rate for you could be well above or below this figure.

Therefore, the best way to calculate the success of your campaigns is by comparing your rates against your industry average.

Average Email Open Rates for the Retail/Shopping Industry

The same HubSpot study found that from a sample of over 312,000 emails, the average email open rate for shopping companies is 41%. This spans companies that labeled their industry as:

• Retail

• Apparel and Fashion

• Consumer Goods/Services

• Luxury Goods and Jewelry

• Arts and Crafts

• Sporting Goods

• Supermarkets

• Wine and Spirits

MailChimp’s study, however, found the average open rate for retail to be just 18.39 percent. However, MailChimp’s data was pulled from a much larger number of emails (hundreds of millions) compared to HubSpot’s.

Set Your Own Benchmarks

Always keep in mind that no two email lists are exactly alike – even in the same industry.

When analyzing figures like these, be sure to take into account the size, scope, and region of each study. 

Keep your external research up to date, but also track your own open rates and and set your own benchmarks. Chart your open rates from the past few quarters, look for patterns, identify which creatives performed better than others, and set your own realistic goals and objectives. 

How Can I Improve My Email Open Rates?

If you find your average open rate to be lagging behind the industry average, or if you just aren’t getting the level of engagement you had in the past, the following 9 steps are excellent ways to boost your open rates. 

Personalize with Sender and Recipient Names

It likely comes as no surprise that emails addressed directly to the recipient by name are more likely to be opened than ones that aren’t. Emails that are  personalized for individuals, by individuals, are the ones that form stronger connections.

Use the recipient’s first name in your opening, and design your creative as if your are speaking to them directly.

When it comes to sender name, you can certainly try a few different approaches. For instance, if you send emails more than three times per week, you can change up the name so it doesn’t become redundant.

Develop the Best Subject Lines

Treat subject lines in the same way you would treat headlines. Like any article headline, the subject line is the greatest determining factor that persuades a recipient to open your email.

Like the body of your emails, personalize your subject lines and make them as relevant to the reader as possible. 

While your subject line should be an extension of your email body, it still shouldn’t give too much away. Pique their curiosity and give them a good reason to click through.

Never use misleading headlines just to get a click. If readers feel they have been tricked, they certainly won’t be as willing to open your messages in the future.

Do not use all caps to try to get the reader’s attention. It comes across as overly pushy and winds up turning people off.

Test Consistently

Testing various aspects of your campaigns (including subject lines, timing, and creatives) is an essential practice for optimizing your open rates.

To deploy a subject line test, send two different subject lines to a subset of your customer base. Then, analyze which one resonates the best.

The more you test, the more informed you’ll be for the next campaign.

Character Count

The optimal length for subject lines is around 50 characters. Take note of when your email provider cuts off your subject lines (most stop around 25 characters) and keep the most important, relevant words towards the beginning.

Use Direct and Curiosity Subject Lines

Direct subject lines tell the reader exactly what the rest of the email will be about.

An example is: “Save $10 off your next order.”

Meanwhile, curiosity subject lines persuade recipients to open your emails by hinting towards something inside.

An example of this is: “We have a special surprise for you…”

Incorporate a steady balance both of these kinds of subject lines in your email marketing campaigns to keep readers on their toes and maintain their interest.

Choose the Right Time

Finding the best time to send emails is one of the most critical factors of a successful email marketing campaign.

While there is plenty of data on the subject, the truth is that there is no undisputed best time of day, week, or month to send your emails.  As stated before, no two email lists are the same. 

Therefore, the best time for you to send emails is largely based on how well you know your subscribers, their lifestyles, and their behaviors. Consider both your audience and your product offerings.

Segment Your Lists

Make sure you segment your list based on demographic, geographic psychographic customer information. Blindly blasting the same creatives to your entire list will surely bring down your open rates. 

This is because different groups of people can have entirely different tastes and preferences based on their personal backgrounds/lifestyles and your variety of product offerings. 

If you are going to expect a reader to take time out of his/her busy day to open and read your email, make sure you are speaking to the right person, at the right time, with the right pitch.

Optimize for Mobile Devices

These days, more people read their emails on mobile devices than ever. Statistics show that over 60 percent of emails are opened on mobile devices, which is a huge leap from earlier in the decade.

In turn, it is imperative that all of your messages be fully optimized for mobile. If not, they will not only remain unopened, but will likely wind up being deleted altogether.

Clean Up Your List

A clean email list consists of emails that are active, engaged, and receptive. The simple practice of establishing a cutoff for non-openers can have a huge positive impact on your open rates. You can either unsubscribe them altogether, or relegate them to another list that you only email on rare occasions.

Regularly get rid of inactive email addresses belonging to individuals who have not engaged with your messaging for an extended period of time. In fact, some of these addresses could purely be out of use – making them dead weight. 

The more inactive or abandoned addresses you have, the lower your overall delivery/engagement rates will be. This can damage your reputation and increase the odds of being relegated to spam.

Avoid Spam Filters

Simple logic dictates that if your emails aren’t being delivered, there is zero chance of them being opened.

Of all of the factors and tools that govern email deliverability, one of the most critical is spam filters.

Be wary of using SPAM “trigger words” and terms in your subject lines. These include “Free,” “Act now,” and “Cheap.”

Click here for a more comprehensive breakdown on how to avoid spam filters.

Conclusion

Determining your average email open rate lets you gauge how successful your campaigns are, and how you can refine your approach to boost your engagement down the road. 

Of course, ensuing factors like click-through and actual conversion rates are what lead to actual revenue for your company, but none of those matter if your messages are never opened in the first place.

Without a clear understanding of how to analyze this critical metric, you’ll never know if you’re performing better or worse than the rest of your industry, and could be stuck settling for less than what your business is truly capable of.

What is a Purchased Email List?

A purchased (or shared) email list is any grouping of contact information obtained by a third party vendor or affiliate.

A simple Google search reveals plenty of tempting ads from organizations pitching seemingly legitimate lists that claim will help expand both your customer reach and profits.

After years of working with retailers and sending out massive amounts of targeted emails, we often get asked the question: “Should I buy an email list?”

The answer is simple: absolutely not, and we will detail the main reasons why.

Afterwards, we will break down what it takes to build a strong, reputable email list that will actually help bolster your brand and drive sales.

Why Buying an Email List is a Bad Idea

The List Quality is Uncertain

First off, the credibility of companies who sell email lists should always be put into question. They  can make bold, dishonest claims with language specifically geared to make their lists appear more viable than they actually are. 

Do not believe words like:

• “Clean”
• “Verified”
• “Real Time”
• “Targeted”
• “Opt-in”

There is a high probability that any list you choose to purchase with have loads of issues and inconsistencies right off the bat. These include:

• Missing, incomplete, or recycled data
• Out-of-date information
• Illegally harvested addresses

Non-Exclusive Lists

Not only are email list contacts highly likely to be unqualified for marketing outreach, most are also non-exclusive.

This means that there are other companies out there blasting emails to lists that are identical to yours. 

Think about it: What is stopping these companies from sharing the contents of your email lists with other businesses as well? 

That means that (if the address is even qualified to begin with) you could be lumped into a pile of other brands sending unsolicited mail that they never asked for in the first place.

This is a surefire way to be labeled as SPAM, which leads directly to the next reason.

You Will Violate Anti-SPAM Laws

Sending unwanted, unwarranted emails to recipients who did not specifically opt in to your list directly violates prominent anti-spam laws like CAN-SPAM, GDPR, and the CCPA. 

If you are found to have violated any of these laws, you will be subjected to substantial fines. For instance, organizations failing to comply with any of the act’s stipulations are subject to hefty penalties and/or fines.

Your Engagement Rate Will Suffer

Even if you are able to increase your email list by 10 or 15,000 names overnight, that does not automatically mean you will get more sales.

In fact, engagement/click-through/response rates can be far lower than average with a purchased list. 

While average open rates should be between 15% and 25% for a healthy list, purchased lists can be far less – even lower than 5 percent.

Simply put, the odds of someone converting (let alone opening) an email from an unfamiliar brand is highly unlikely. 

You Will Get In Trouble With Your Email Service Provider

Any legitimate, respectable Email Service Provider (ESPs) never lets you send emails to members of lists you’ve bought. 

From a pure business standpoint, ESPs cannot meet their goals of high delivery rates and click-throughs if they have users sending unauthorized emails. 

In turn, your account could be closed, you could be subject to fines, or even worse – you could be subjected to legal action. 

You Can Damage Your Brand’s Reputation

Your online reputation is as critical as it is fragile. Buying email lists, barraging people with unwanted emails, and diminishing your open rates can not only hurt your brand awareness, but also your Internet Protocol (IP) reputation.

From there, it can take months, or even years, to regain your sender score and IP reputation.

Renting Email Lists

Renting email lists is also an unreliable way to reach more customers. While you can consult with a list provider and select segments of people to reach, you still do not technically own the list. 

As a result, you cannot actually see the email addresses of the people you are sending to, making the entire process even more disingenuous.

There is No Such Thing as Buying an “Opt-In” Email List

When browsing rented or purchased lists, you might encounter suppliers who claim that their email list is “opt-in” – meaning that the people actually consented to receiving email messages from someone at some point.

However, it is critical to understand that this does not mean that they specifically chose to accept messages from your brand in particular. In such cases, there was usually a portion of their form that vaguely indicated they elected to receive emails from businesses other than the original company they registered with.

Again, if anyone on your list did not specifically indicate that they wished to accept messages from your brand, you cannot actually consider them your own subscribers.

How to Build a Strong, Reputable Email List

Target and Form an Audience with Useful, Engaging Content

The best way to draw prospects into your business is to carefully target exactly what types of customers you wish to acquire and entice them with strong, valuable content.

Content that is practical, relevant, unique, and shareable helps foster  genuine relationships with people. If readers enjoy following and ingesting your content, they are much more likely to trust you.

Therefore, they are far less likely to have any issue with sharing their personal contact information with you and subscribing to your email list.

Create a Lead Magnet

A lead magnet is a stimulus, or motivating factor that you offer prospects in exchange for their email address. 

These can include gated, exclusive pieces of content like webinars, eBooks, videos, case studies, and eBooks. The more varied the content, the greater the chance that you will draw in a wider range of customer segments.

For instance, this blog has multiple forms of lead magnets in which you can exchange your email address for other, more in-depth content that you could not access otherwise.

Place Multiple, Highly Visible Opt-In Forms on Your Website

Give prospects plenty of standout, enticing ways to fill out opt-in forms on your website. Obviously, don’t overwhelm them, and make sure you strike the proper balance.

Even if someone would potentially like to subscribe to your brand’s messaging, they can’t do it if they can’t see it! 

A/B Test Different CTA Buttons and Creatives

Your CTA is the last hook that drives your customers to subscribe, so it is well worth the time and effort to craft one that works best.

In this case, no detail is too small to test, and even seemingly insignificant shifts can generate much different results.

Many companies test the size, shape, color, wording, and placement of their CTA buttons. 

Here are just a few examples:

Convert Your Social Media Following Into Email Subscribers

People who follow you on social media are already more likely to subscribe via email than others. Make sure you take advantage of this opportunity to reach that audience more directly by incorporating sign-up forms (complete with incentives and special offers) on your social media pages.

Use a Reputable Email Service Provider (ESP)

If you are not sending messages through a dedicated IP and sending large volumes of email, you are probably sharing your IP with multiple other senders.

On Shared IPs, if one sender gets banned or has a low sender score, this impacts every other sender. Therefore, reputable, Dedicated ESPs prohibit email campaigns designed for purchased email lists.

Conclusion

There is no reason whatsoever to buy an email list. Not only is it a poor, unsustainable alternative to organic email list building, it can harm your brand, reduce email deliverability, damage your sender score, and have many of your messages marked as SPAM.

In email marketing, the goal should always be quality over quantity. While it may take more time to build a true, wholesome list, the effort is more than worth it. You can rest easy knowing that each email you send is going to a qualified buyer who actively chose to receive messages from you.

This is the path to true marketing success and building a strong, dedicated, loyal following of Most Valuable Buyers (MVBs) – the ones who both engage with and purchase from your brand consistently, more often than the rest. 

The end result is optimal engagement and conversions, without any of the negative impacts of buying lists.

Why Are Your Emails Going to Spam? & Best Practices To Avoid Email Spam Filters

Despite all of the time and effort you put into curating and delivering the best email campaigns possible, none of it makes a difference if your messages go straight to the spam folder – out of sight and out of mind.

Of all of the factors and tools that govern email deliverability, one of the most critical is spam filters. Failure to follow spam guidelines can negatively impact your number of opens, clicks, and – most importantly – sales.

Therefore, it is imperative to have a comprehensive understanding of what spam filters are, how they work, and how to consistently bypass them. 

What is a Spam Filter?

Spam is defined as unsolicited bulk email (UBE) sent as a mass mailing without the recipients’ permission.

Statistics show that approximately 45% of  emails sent each day are classified as spam. That amounts to 14.5 billion spam emails per day.

With numbers that high, it makes sense that programs like spam filters were designed to identify spam and block such intrusive messages from making it into inboxes.

However, spam filters can negatively impact email marketing performance, forcing marketers to jump over multiple hurdles just to make it into inboxes in the first place.

Why Emails Go to Spam Instead of the Inbox

The CAN-SPAM Act

The Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act was a critical law passed in 2003 that set new national stards for email. The law instilled requirements for commercial messages, affording recipients the right to cease receiving emails from any company.

The following is a breakdown of CAN-SPAM’s main stipulations.

• Do not use false or misleading header information.

• Do not use deceptive subject lines.

• Clearly identify your message as an advertisement.

• Inform recipients of your location 

• Educate recipients how to opt out of receiving future emails from you.

• Honor opt-out requests expeditiously.

• Monitor what others are doing on your behalf.

Companies that fail to comply with any of these provisions are subject to penalties of up to $42,530 for each and every individual email sent. Needless to say, these figures can add up very quickly.

For more information on the CAN-SPAM act, visit the Federal Trade Commission (FTC) website.

Common Reasons Why Emails Go to Spam

You Weren’t Given Permission to Email

You must always receive permission to add someone to your email marketing list. Failure to do so will not only guarantee that your emails end up in the spam folder, it could also lead to greater issues – like legal concerns and substantial fines.

In order to ensure that you have the full consent of all recipients, design an opt-in form on your website that explicitly clarifies that your website’s visitors are actually subscribing to an email list. 

Never, under any circumstances, add emails to your marketing list that have been collected from offline sources, such as business cards or via contacts made at conferences. If you wish to add any of these leads to your list, you are legally obligated to send a personal email requesting permission.

You Have Low Engagement Rates

Nowadays, inbox providers like Gmail, Outlook, and Yahoo utilize a sophisticated set of engagement metrics to determine the likelihood of whether or not users actually want to see your emails.

Positive engagement signals include when recipients open your emails, send a reply, and add your contact information to their address books.

On the other hand, negative engagement signals include ignoring your messages, transferring them to the junk folder, or deleting them altogether.

Make sure you send emails specifically designed to maximize engagement. If you have low engagement rates and are sending negative signals, you are much more likely to wind up in the spam folder.

You Included Attachments in Your Emails

While it is common practice to include attachments in emails to people who are expecting to hear from you, doing so in bulk will trigger spam filters.

This is because actual spam emails typically contain harmful attachments. In turn, spam filters are designed to detect and remove emails with attachments. Spam also increases the size of your email – making them longer to load.

All the information you need to include should be in the body of the email. If you wish to incorporate any additional material, do so with a link to another page rather than an attachment.

Email Content: Too Many Images & Not Enough Text

Since spam and phishing emails tend to be short, emails with insufficient text are likely to be flagged as spam.

However, do not overcompensate and make your messages too long, either. Research data suggests that the optimal email length is between 50 and 125 words. As a rule of thumb, you should always keep your emails under 200 words.

Meanwhile, emails that contain mostly images may be considered spam, so only use images that are essential to the email content.

A common guideline for text to image ratio is the 60/40 rule, in which your messaging has a minimum of 60 percent text and a maximum of 40 percent imagery.

Also, be sure to keep your font size, style, and color consistent.

Your Sender Information is Inaccurate or Misleading

Sender information is the information that appears to subscribers in the following fields of an email:

• “From”
• “To”
• “Reply-to”

You must use accurate sender information in both your email body and sending domain. Whether it is intentional or not, misleading people with inaccurate sender information is illegal. 

In addition, do not include any numbers, exclamation points, or other eye-grabbing characters as a ploy to get the reader’s attention.

At the bottom of each email, include a name that subscribers can easily recognize and trust. This could be the name of a company employee, your company name, or both.

Do not use “noreply@yourcompany.com” as your “reply-to” domain.

Instead, use an address that people are able to respond to, such as “feedback@yourcompany.com.”

The Email Didn’t Include a Physical Address

The law dictates that you must always include your company’s physical address in your emails. 

Therefore, always include your current business address, a PO box registered with the national postal service, or a private mailbox.

You Didn’t Include an “Unsubscribe”/”Opt-Out” Link

You are always required to give people a chance to “unsubscribe” or “opt out” from the emails you send. Failure to do so can lead to penalties and fines like those listed in the CAN-SPAM act.

In the body of your emails, include elements that comply with unsubscribe link regulations. For instance:

• Make it as simple and straightforward as possible to unsubscribe. It should be easy for readers to locate the link and follow a 1-click process.
• Any unsubscribe request must be processed within 10 business days.
• Only ask for reasons why readers are unsubscribing after they have been removed from the list.

The logic is simple. If readers do not wish to receive emails from you and have no way of opting out, then they are far more likely to report your messages as spam.

Incorrect Spelling and Grammar

Since most junk and phishing emails are poorly written, spam filters analyze emails for spelling and grammar mistakes.

Sending an email with typos and grammatical errors will likely send your emails to the spam folder

Even if they don’t get flagged by spam filters, sending emails with these errors will not be appreciated by people and are likely to manually report it as spam.

Always proofread and double check emails for spelling and grammatical errors before sending.

You Used Spammy/Red Flag Words

Never use spam-centric words in any portion of your emails. There is a firm list of words in either your subject line or body that will trigger spam and be blocked by filters.  

Here is a list of red flag spam trigger words and terms:

If any of your messaging requires the usage of any of these terms (like when running a promotion) then try to use synonyms of red flag words to communicate your point. If your offer is strong enough on its own, there is no need to be blunt in your wording.

Also, refrain from using ALL CAPS or Exclamation points!!!

You’re Emailing Inactive Addresses

Inactive email addresses can belong to individuals who have not engaged with your messaging for an extended period of time. 

There can be a number of reasons for this. While they could be using their address regularly and simply ignoring your content, the addresses themselves could also not be in use anymore.

Be on the lookout for hard bounces, auto responses, or notifications that your messages were either not delivered or the particular address was not found.

Spam filters will flag your emails if you are constantly sending emails to inactive addresses. In turn, make sure that you keep your email lists up to date by monitoring and removing any inactive addresses.

How to Prevent Emails From Going to Spam [Best Practices]

Never Buy An Email List: Always Build Your Own

Never buy, rent, share, co-register an email list from a third party, or harvest email addresses online. Not only do these practices constitute a clear invasion of privacy, they directly violate the aforementioned CAN-SPAM Act.

Although it will take more time and effort, always build your email list organically using an authentic, foolproof opt-in process. While it may seem appealing to build a list more quickly, it won’t make a difference if you wind up in spam folders, break the law, and become blacklisted. 

Use a Reliable Email Service Provider (ESP)

Always use a trustworthy, reputable, reliable ESP, since the IP addresses associated with them are trusted and less likely to be flagged as spam.

Use Segmentation to Send Targeted Emails to Relevant Audiences

Effective segmentation can significantly increase the impact of email marketing campaigns. Therefore, segment your email list to target individual subscribers with content that is highly relevant to them. 

If you are going to ask a consumer to spend his/her valuable time and money purchasing your product, make sure you are speaking to the right person, at the right time, with the right pitch.

The more relevant it is, the less likely people are to either mark it as spam or delete it, and the more likely they are to open your message and positively engage with your brand.

Provide a Double Opt-In & Ask to Be Whitelisted

In order to be safe, Google recommends implementing a double opt-in subscription process to fully ensure that recipients wish to receive messages from your brand.

An efficient way to do this is to issue subscribers with a welcome email that they must confirm – either by clicking a link or pressing a button – before they are formally added to your email list. 

The second opt-in email can also be a way to request subscribers to whitelist you by adding you to their contact list. Being on their approved senders lists gives full assurance that your future emails will never get flagged by spam filters.

This is a simple extra step that guarantees your subscribers truly wish to hear from you. It also helps keep your email list clean and relevant – positively impacting both your reputation and standing in the eyes of inbox providers.

Regularly Clean Your Email List

Make it a part of your workflow to consistently audit and update your email list. The more inactive or abandoned addresses you have, the lower your overall delivery/engagement rates will be. This can damage your reputation and increase the odds of being relegated to spam.

In turn, if certain subscribers have not engaged with your emails for an extended period of time, consider removing them from your list.

Monitor Your Engagement Metrics & Sender Reputation

Continuously monitor your email campaign engagement and make adjustments as quickly and efficiently as possible. Key metrics to track include open rates, click through rates, delivery errors, and spam complaints. This

For instance, a high number of delivery errors is a sign to clean up your email list.

Or, if you have low open rates, test out different subject lines until they improve. If the issue persists, consider retooling your strategy altogether.

Additionally, persistently monitor your sender reputation to ensure your email servers IP address has not been blacklisted

There are multiple tools online that can analyze your IP address and domain to check if you have been blacklisted by any inbox providers. If you have been blacklisted, submit a request as soon as possible to be reinstated.

There are also a variety of spam checking tools that can analyze your sending reputation and allocate a score – typically from 0 to 100. The higher the score, the less likely that your emails will be flagged by spam filters. 

They include:

• Mail Tester

• Litmus

• Emailables

• Sender Score

• Talos

• Reputation Authority

• Barracuda Central

• Trusted Source

• ISnotSPAM

Send Useful Content

The key driver behind every successful email marketing campaign is the dedication to sending useful, intriguing content to your subscriber base.

Never send emails just for the sake of it. If there is no clear intent behind your messages, your engagement will drop and spam rates will climb. 

No one likes content that is too salesy – particularly if the pitches do not match their personal tastes. Segmenting your list among different groups and life stages allows you to send targeted, personalized, and valuable information to distinct members of your audience.

Conclusion

There are many factors that make up a successful email marketing campaign, and spam filters can have a much larger impact than you think.

Simply being aware of the red flags and sticking to best practices detailed above will ensure that you are maximizing your critical engagement metrics while gaining an advantage over your competition.

Remember, higher open and click through rates don’t just lead to more sales, they send positive signs to inbox providers that help secure your rightful place in subscribers’ inboxes down the road.

What is Browse Abandonment?

Browse abandonment emails are used to retarget consumers who navigate through your site but leave before putting anything in their carts. 

Browse abandonment is a powerful tool that tracks real-time customer behavior in order to gauge the intent of each visitor. If a customer demonstrates enough interest, a subsequent reminder/offer can help bring them back into the fold.

When viewers navigate through certain category or product pages, browse abandonment autonomously deploys personalized email messages specially designed to drive them further down the funnel towards the ultimate goal – a sale.

However, in order to successfully deploy a browse abandonment campaign, it must be implemented the right way. Improper timing, frequency, and types of messaging can easily have the opposite effect and turn off potential buyers altogether.

How Does Browse Abandonment Work?

When a person visits your website, a range of factors (typically best determined through the use of Predictive Marketing Automation) – including dwell time and the number of times a product or category was viewed – are used to identify the items with the highest rate of intent to buy.

All of this data is compiled to generate an email displaying an image and description of the viewed product(s), along with a Call To Action (CTA) link to the product or category landing page. From there, all the recipient has to do is click the button and be one step away from checking out and making their purchase.

What are the Benefits of Using Browse Abandonment?

Although browse abandonment campaigns tend to have lower conversion rates than cart abandonment campaigns, they offer the opportunity to reach much larger groups of people at once. 

They also help you focus more closely on what is going on higher up in your marketing funnel, giving you a better understanding of the behavioral tendencies of your overall customer base. The knowledge you gain from here can help inform your strategies and messaging tactics at all levels. 

Plus, even if your recipients don’t actually wind up making the intended purchase, it’s still a great way to entice them to come back to your site. The longer they stay online, the greater the odds that they will wind up buying – just like in physical stores.

When is the Best Time to Send Browse Abandonment Emails?

Setting the right time and cadence for browse abandonment emails is crucial to the success of any campaign. 

Certain standards that qualify customers for this type of messaging should also be firmly established. Namely, set the criteria for what constitutes true signals of purchase intent. These include:

• Checking out a single item multiple times.

• Viewing assorted items in one category.

• Using your site’s search engine to jump to a specified product or category. 

• Clicking on a product suggestion from another email or message.

Browse abandonment emails should not be sent too long after someone leaves your website. Typically, your first email should be sent within an hour or two after they leave your site, with 24 hours afterward being the maximum. 

How Often Do I Send Browse Abandonment Emails? 

Aligning the level of interest to email frequency can literally make or break the success of any campaign.

The goal is to reach your subscribers without barraging them with superfluous messaging or trying to accomplish too much. Keep in mind that they only browsed a product, and are still higher up in the funnel than someone who actually put an item in their cart.

No customer should receive more than one (possibly two, but be careful) browse abandonment emails within a 48 hour period. Even if they browsed 5 different categories, it would be excessive to flood their inbox and send reminders for each one.

In turn, establish triggers and a set of firm standards for both the timing and cadence of your messaging. Remember, you don’t want to overwhelm your audience, but you also don’t want to miss their purchase windows.

Browse Abandonment Email Examples

Design, Tone, & Subject Matter

Since just browsing for an item alone is not a substantial indicator of intent to purchase, maintain close awareness of your tone when addressing each browser. Just like a store employee asking if you need help finding anything, keep the dialogue light, unassuming, and informal.

The example above checks off a number of key content rules to follow. It has a clear, image-dominant layout with an accessible call to action that plainly states your objective without being overpowering.

In addition, be sure to include a personalized header with the customer’s name and an image of the product (or type of product) they were viewing. 

We also highly recommend A/B testing different subject lines and forms of messaging to determine what works best for your target audience.

Product Recommendations

There is a wide range of possible reasons why people stop browsing. While some weren’t ready to buy in the first place, others may not have actually found the right item they were looking for.

If the browser is still thinking of buying the original item they were viewing, they still have that option. However, a browse abandonment email is also a great opportunity to showcase alternative (or additional – known as cross-selling) personalized recommendations within the same product category. 

We also suggest adding star ratings next to recommended products. Most shoppers take ratings into high consideration when contemplating purchases, so feel free to showcase when other customers were satisfied with their own purchases. This is known as “social proof,” which can be incredibly powerful.

Discount Offers

An appropriate, well-placed discount can be the determining factor that convinces a browser to take the next step and actually buy.

When you offer free shipping and returns, shoppers are more inclined to give the product a try. Even if the price did not initially play a role in their decision to bounce off your page, a markdown can incentivize certain customer segments and increase their odds of buying. 

Don’t be afraid to add a sense of urgency as well. For instance, you can make a popular discount expire within the next 24 hours, or highlight certain items that are running low in stock.

Conclusion

Browse abandonment can play a key role in any conversion rate optimization (CRO) strategy, leading to greater sales, customer engagement, and revenue.

The more you analyze and understand your audience’s behaviors, the better you will get at knowing when and how to guide them further down your marketing funnel.  

Whether it’s a subscriber you want to help make their first purchase, a one-time buyer you want to push towards the second sale, or a high value buyer who has visited your site but has not bought in an extended time period, browse abandonment emails can maximize the value of each customer while keeping them engaged with your brand.

How Dylan’s Achieved Greater Engagement, Loyalty & Profits

BuyerGenomics’ CEO Mike Ferranti was joined by Dylan’s Candy Bar’s Kevin Cohen at the NEMOA (National Etailing and Mailing Organization’s) directXchange Fall Conference in Chicago, IL. 

At the event, they presented a Case Study detailing Dylan’s success in partnering with BuyerGenomics.

Prior to engaging BuyerGenomics, Dylan’s Candy Bar was experiencing many of the problems plaguing the retail industry today — including the struggle to consistently acquire and retain high-value customers — also known as Most Valuable Buyers (or MVBs).

Dylan’s improved their new customer acquisition substantially by leveraging Customer Intelligence and CRM insights through BuyerGenomics Predictive Marketing Automation (PMA) platform. Dylan’s succeeded where other retailers have not, by acquiring net new customers at scale, with higher potential value than their average customer previously. 

Sweet Results

Ferranti and Cohen co-presented this Case Study at NEMOA, detailing the success in acquiring high-value buyers through a unique combination of cloud computing, machine learning, and predictive marketing – in large part enabled by Dylan’s thoughtful implementation of BuyerGenomics. The end results were some of the “sweetest” Dylan’s had achieved to that point.

Executive Summary

• In this Case Study, we’ll cover how Dylan’s implemented BuyerGenomics’ Predictive Marketing Automation (PMA) platform to solve problems that traditionally takes months, in a matter of days. As a result, Dylan’s time, energy, and investment was focused on taking action and generating conversions.
• Mike Ferranti and Kevin Cohen discussed and illustrated how the Best Customers You Have Today are actually the root of The Answer to Acquiring Net New Customers that not only spend more, but more often than the rest.
• Cohen elaborated on specifically how Dylan’s developed a dramatically deeper view and understanding of the customer, developed new unique cohorts that explained the heterogeneity that existed in their customer base, and identified in high resolution who their Most Valuable Buyers really were — which then drove the target definition of for net new customers.

Table of Contents

The presentation began with Mike introducing Kevin Cohen to the stage before a packed audience, and laying out the 6 core phases of the process, from the problem definition all the way up to the solution and ensuing results.

• The Business Situation – While Dylan’s was generating high consumer traffic, they lacked the high-value, repeat buyers that would drive their business.

• The Approach – BuyerGenomics designed an intelligent, actionable data-driven campaign that specifically targeted net new customers who spent most like the best of their current base.

•  Our Methodology – Within just three weeks, Dylan’s was able to generate a clear view of its customer base and implement a “Buy-A-Like” acquisition campaign.

• The Solution – A multi-step omni-channel campaign was used to reach the right customers, at the right place, at the right time – driving engagement and understanding the motivating factors that led customers to purchase.

• The Results – Dylan’s experienced massive increases in new valuable customer acquisition, conversion rate, average spend, and repeat purchase rate.

• The Future – Dylan’s continues to grow as a vibrant, dynamic business, and BuyerGenomics continues to support Dylan’s growing high-value customer acquisition campaign.

Did Dylan’s Have a Problem Worth Solving?

There is an old saying, “Spend 90 percent of your time defining the problem, and you only need 10 percent to solve it.”

Therefore, the first question Dylan’s and BuyerGenomics asked was whether there was a problem worth investing in solving. Ultimately, they decided that based on the high cost of acquisition, it was deemed a requirement that the customer they acquired be of higher value – particularly given the historic norm of acquiring “one and done” or one-time buyers.

Takeaway: If you’re trying to solve the wrong problem, don’t expect much of an outcome. If you’re targeting just “conversions” – don’t expect much in the way of “high value relationships.”

The Business Situation:
High Consumer Traffic & Trial, Low Customer Loyalty

During several working sessions and utilizing insights from Dylan’s BuyerGenomics Customer Intelligence analytics, we were able to define the business problem in uniquely high resolution. 

The ability to dissect and segment our customer base on value, tenure, frequency, demographic, and lifestyle data was eye-opening to say the least.

Imagine you had a store footprint in high traffic areas, with a unique concept, and a constant flow of consumer traffic. In that context, most retailers would reasonably believe they achieved what most only wish for.

But, as is often the case in retail, location and traffic alone simply is not enough. While Dylan’s had great locations, they were struggling with both one time buyers and exceptionally low repeat purchases.

Dylan’s One-Time Buyers: High Traffic, Low Customer Loyalty

Omnichannel food and  lifestyle brands like Dylan’s often experience transient, lower-loyalty customer traffic, small transaction sizes, and the “One and Done” – or One-Time Buyer Problem.

The above chart illustrates the percentage of repeat buyers as less than 5 percent. In many ways, Dylan’s had become a one-time “tourist brand,” where customers would buy when they were in town, and never buy again. 

Dylan’s One-Time Buyers: High Consumer Traffic, Low Customer Loyalty (Cont’d)

As this chart illustrates, Dylan’s YoY customer base continued to exhibit a troubling trend.

Tourists were making up the majority of the business, and not generating the level of profit desired. These are buyers on vacation in a major city who merely try the brand as part of the trip, and cease any further engagement or spending once the trip is over.

Many categories and verticals have these customers in their base, and since Dylan’s stores are a “destination” of sorts – they had a lot of them. This needed to change.

The Approach:
BuyerGenomics Buy-A-like Acquisition

To move the brand and customer base forward, Dylan’s needed not just a new strategic approach, they needed a new high value customer. 

Specifically, one that spent like the small cohort of their base did. Historically, they felt this exclusive customer type could only be found on the uber-affluent, upper west side of Manhattan, and couldn’t be reproduced readily anywhere else. If that were the case, Dylan’s would have a structural problem.

BuyerGenomics’ Strategy

BuyerGenomics curated a simple approach to help Dylan’s:

• Launch a customer intelligence platform on BuyerGenomics to rapidly enable the accurate quantification and targeting of high-value opportunities.

• Launch a targeted prospecting campaign that utilized the most advanced forms of customer intelligence, machine intelligence, and automation.

• Shift the mix of net new customers to those who spend more and are more likely to become repeat customers.

• Implement a multi-channel approach.

Our Methodology:
The 70, 20, 10 Axiom

A tried and true axiom that guided BuyerGenomics’ approach at Dylan’s was a long used formula for success – the “70/20/10” – which still works every time.

“70% of the marketers success comes from getting the target right, 20% of success comes from getting the offer right, and 10% comes from getting the creative right.”

While Dylan’s consistently had the creative right, as an exceptionally creative brand experience is core to the business… but this one 1 out of 3..”

You could have the best creative in the world, but it is ultimately ineffective when delivered to the wrong customer. These are the ones who lack the means, motivation, and means to shop, repeat purchase, and grow in loyalty and value.

While its possible there are edge cases where the the creative alone may carry the day, on balance, if you had to market with only one of these dimensions – the target will outperform every single time.

Rapidly Produce Highly Actionable Customer Intelligence

Cohen then discussed Dylan’s Customer Intelligence Platform.

Here are a few facts he shared:

• The range of available intelligence and insights we have available is truly astounding, relative to all previous experience. We know exactly who our MVB really is, and we don’t rely on anecdotal narratives like we used to.

• Cohen provided examples of demographics, psychographics, lifestyles, purchasing behaviors, channel behaviors, predictive analytics, and much more.

Dylan’s was now able to answer from the most fundamental questions through the most challenging ones about the customer from the day it was spun up:

• Who is the customer?

• How should we talk to them?

• How to engage them over time?

• How to avoid stagnation and increase repeat purchases? (Today, 1-time buyers make up the bulk of customers)

• How to build the direct to consumer relationship?

• How to drive in-store retail traffic?

Rapidly Create Actionable Loyalty Measures

Customer purchase patterns were identified by automated algorithms that leveraged the wealth of available historical data. Meanwhile, the Buyer Lifecycle (BLC) engine tracked customer shifts along its six stages to track shifts in engagement and value.

Full production usage was available upon startup. And, moving forward, we captured every detectable customer interaction – allowing the machine intelligence to get smarter over time.

Discern What Makes the Customers More or Less Homogeneous

By autonomously linking Personally Identifiable Information (PII) to third party data, our target became crystal clear – almost immediately.

We informed our messaging based on who we were really talking to, and they responded in kind.

We also utilized test & roll and automated intelligence in order to fine tune communications and maximize each customer’s value.

Move From Initial Data Capture to “Buy-A-Like” Acquisition in Three Weeks

The capability gave Dylan’s a comprehensive portrait of its customers. This was unlike anything they had ever been able to achieve before.

The next question was: Now that we know who our customers are, how do we acquire more high-value ones?

The answer is simple. Ferranti and Cohen mapped out the BuyerGenomics methodology they used:

• Centralize online and offline data.

• Create a 360 degree view of the customer.

• Perform optimal target intelligence to define the MVB.

• Match the target with Buy-A-like targeting to acquire high potential new customers.

Buy-A-Like Targeting

By knowing exactly what their high-value customers looked like, we leveraged adaptive algorithms that executed buy-a-like targeting in a fraction of the time traditional approaches do.

Machine intelligence leverages 850 Demographic, Psychographic, and Lifestyle variables to create a Full 360-Degree Customer View.

This literally develops millions of potential models and validates those that select actual MVB’s from Dylan’s customer database automatically. The highest performer from back testing is the one used to run campaigns with.

Also, the BuyerGenomics target was shared with the social media agency for doing look alike modeling on Facebook and Google Display. The results of this kind of targeting are also dramatically better than the prior targeting used.

Therefore, we saved an incredible amount of time and resources by diving in and knowing who the MVBs are, as well as where (and how) to reach them.

Buy-A-Like Targeting (Cont’d)

For a multi-channel brand like Dylan’s, driving in-store traffic was key.

BuyerGenomics used Geo-Density Targeting around retail locations in order to drive in-store traffic based on drive time, on top of all of our other available information.

The Solution:
Omnichannel Campaigns “Surround” Buy-A-Like Prospects

Commencing with the expectation of an omni-channel program, we implemented a multi-step email, direct mail, and social media campaigns.

By doing this, we effectively “surrounded” the prospect by direct mailing the openers of email campaigns and retargeting display ads – in addition to email as well.

Omnichannel Campaigning – Drive Response and Understand Motivations for Responders & Converters

Our email campaign followed a logical campaign flow that involved using testing and learning to determine the best creatives that led buyers along the funnel to make a purchase.

Design Direct Mail Creatives [That Worked]

Cohen shared the direct mail pieces we used, featuring a Buy One, Get One offer that worked best at teasing high potential buyers into a trial purchase.

The Results:
Sweet Success

The Numbers Behind Dylan’s Scaling of Profitable Customer Acquisition

The results were not just eye-opening for Dylan’s, they were astounding. 

• 145% of New “Most Valuable Buyers” acquired vs. Goal.

• Over 225% Conversion Improvement (on 30% of Investment).

• Over 50% Increase in Average Spend.

• Over 63% Increase in Repeat Purchase Rate.

Needless to say, they were enthusiastic to scale up the program even larger, the program was so successful that it was shared in board meetings as an indication of the opportunities Dylan’s now knew how to act on.

How Dylan’s Can Scale Up
High Value Customer Acquisition

BuyerGenomics’ simulation forecasted an incredibly positive future state, with more of Dylan’s customers adopting them as a lifestyle brand:

They included an approximate 800% increase.

The simulation was based on solid evidence — just 1.3% of Dylan’s new customers historically ever became were 2+ Buyers. The rest were one-time, “tourist” buyers.

Afterwards, that number of 2+ buyers skyrocketed to 15%

How Dylan’s is Scaling Profitable Customer Acquisition

Through superior Customer Intelligence, optimal target definition, and methodical acquisition strategy, the MVBs acquired during Dylan’s campaigns (customers who make a second and third purchases within 12 months) are now projected to grow substantially over time.

Additionally, profitability scales up with higher-value customer acquisition, since customers that keep spending are customers that generate more profits sooner relative to their acquisition cost.

Dylan’s also found the rate of moving from the first to second purchase was materially faster than Dylan’s average In-Market buyer — one who was expected to make a purchase in the near term.

In other words, this strategy effectively produced unique, prime buyers.

The Future:
Just Desserts

So, what did the future hold for Dylan’s, and what were the next steps?

Next Steps:
Autonomously Grow Lifetime Value and Profit with Machine Intelligence

The next steps we aligned on were to manage the aforementioned Buyer Lifecycle of their customers while maximizing their Lifetime Value [LTV]

The above slide illustrates BuyerLifecycle in BuyerGenomics and the flow of customers from one lifecycle state to the next.

The “BLC” details the natural evolution of a customer/retailer relationship – depicting your customer’s relationship and brand engagement from the moment that they become a prospect, to an in-market buyer, and finally inactive.

BuyerGenomics PMA software utilizes email behaviors, past purchases, web behaviors and external data sources to understand how engaged and likely to purchase again individual customers are at any given point in time. Each individual’s Lifecycle Stage is re-assessed daily to take into consideration all of the touches and changes the BLC can observe.

These are the six steps through which BuyerGenomics classifies customers and tailors its messaging accordingly:

• Prospects – Not yet customers, signed up for an email newsletter, etc.

• Actives – Individuals currently engaged and/or spending with you.

• In Market – Buyers currently shopping for your products and are prepared/likely to buy again.

• Faders – Subjects no longer purchasing at the rate their customer profile suggests they can.

• At Risk – Buyers most likely to stop spending with your brand and fall into attrition.

• Inactives – Customers who have ceased purchasing your products.

Conclusions 

Dylan’s Candy Bar continues to grow as a vibrant business and marketer, and BuyerGenomics continues to support Dylan’s large customer base in their pursuit of the acquisition and growth of high potential customers. Meanwhile, BuyerGenomics PMA customer intelligence is constantly updated to keep progress on track and growing.

Want to learn more?  See how BuyerGenomics’ premier Predictive Marketing Automation capabilities can help drive results like these for your business. Schedule a demo and we’ll be happy to show you!

What is Predictive Marketing & How Does it Work?

Predictive Marketing is a modern marketing approach that makes use of data and advanced analytics deduce which marketing strategies, campaigns, methods, and actions have the highest probability of converting customers and sales.

These days, more businesses – particularly retailers – are utilizing predictive marketing to learn more about their customers, make their data more actionable, and stay ahead of the competition.

The following are 4 critical elements of Predictive marketing that showcase its benefits and range of functions.

1. Predictive Analytics

Predictive analytics is the utilization of data, statistical models and machine learning capabilities in order to pinpoint the probability of future results based on historical, demographic, and other behavioral data.

Through careful examination of what has happened in the past, you can determine who to message, what to offer once you have their attention, and which channel to reach out through.

Predictive models are built to fill in these big data gaps through data mining in order to obtain a cohesive, digestible, and actionable future outlook regarding buyer behavior. These can be used to model your best customer behavior and suggest which actions to take on a personal level. Some applicable modeling techniques include customer segmentation, customer lifetime value models (CLTV), product affinity models, response models, churn prevention models, etc.

This maximizes the power of your data assets and puts your business in the best position to succeed.

One critical function of a predictive model is to summarize and condense convoluted, seemingly disparate data points into simple, easy-to-read “scores.”

A basic, yet exemplary predictive modeling method involves generating a personalized likelihood score for each buyer – for example, on a scale of 1 to 10. In this case, the higher the score, the more likely the chance that person will engage with your business, gravitate to your products, respond to offers, and make a purchase via a specific channel (depending on the nature of the models).

For instance, all retailers deal with loyal and valuable customers as well as one-and-done bargain seekers. The latter are undesirables. Without a doubt, attracting the most loyal and valuable buyers (Most Valuable Buyers, or MVBs) who not only come back but continue to buy again over a long period – is the key factor of true retail success.  

2. Machine Learning

Machine Learning (ML) is a subset of Artificial Intelligence (AI) geared to improve data analysis and model building via pattern recognition.

Through ML, computers can get better at identifying patterns over time and make their own informed decisions as they ingest more data.

Predictive marketing utilizes ML to apply algorithms and statistical models that target specific buyer segments. From there, they proactively analyze (and ultimately aim to predict) not just their behavior, but their intentions as well.

In the age of Big Data, this necessitates a degree of speed, aptitude, and accuracy that is simply beyond the scope of human capacity. Thanks to advances in ML, the whole process can be implemented autonomously in real-time more efficiently than ever before.

Rather than sift through immense piles of data to try to get to know your customers better and generate personalized relationships, ML can swiftly cater to a customer’s wants and needs almost instantaneously.

While ML will not magically do everything for you, it is certainly a driving force in the marketing industry that is helping retailers acquire, retain, and satisfy customers at a higher, more consistent rate than ever before.

In addition, ML is helping businesses improve their marketing efforts to drive sales, increase Return on Investment (ROI), and improve the customer shopping experience.

3. Automation

This one is especially important. Even if automation on its own is not a “predictive” method, it is still critical in predictive marketing.

Why? The most important concern users of predictive marketing cite is “actionability.” Automation is the tool that allows you to take some action of economic value when you successfully predict what a customer is most likely to do next – whether it be a response to a form of communication like email, a purchase, or possibly fade into attrition.

Taking action on predictive marketing events (which can occur many times per day across any given customer base) is how marketers turn the critical corner from simply having data and tools to actually achieving predictive marketing success.

Automation allows marketers to synchronize, streamline, and execute omnichannel marketing campaigns from a single, centralized apparatus automatically through machine intelligence.

These days, the process of simply identifying and understanding the past, present, and future browsing/buying habits of your current and potential customer base is insufficient. In order to initiate a sale, that knowledge must transform into insights that are actionable.

Predictive marketing’s automation capacities allow marketers to reach the right customer, at the right time, on the right channel, with the right message. With all of the bases covered, this constitutes full stack automation – where the system is consistently fed new predictive information that has both material and monetary value.

In fact, the system predicts and detects peak changes in either the behavior or lifetime potential value of a customer as they transpire in real time. This enhances customer engagement, maximizes overall Customer Lifetime Value (CLTV) and increases sales.

4. Personalization

These days, consumers have come to expect – and even demand – a wholly comprehensive, personalized experience.

When executed properly, personalization becomes a core component of marketing success.  Simply put, relevant messages sell better.

Predictive marketing facilitates a fully personalized, relevant customer experience enhances trust, increases loyalty/retention, makes customers feel important, and further drives sales.  This is the most critical role of advanced analytics in a time of plentiful, but never complete data.

Of course, these pillars work together elegantly and seamlessly. Without the ability to make a valuable predication and automate the response, omnichannel personalization cannot be achieved across digital and offline communications.

Dual Domination of the Online Ad Market

All retailers have the same fundamental problem that they neither fully understand, nor have the ability to solve.

The problem is that in today’s age, digital advertising runs almost exclusively through just two sources: Facebook and Google. This makes customer acquisition extremely expensive, with many businesses seeing little return (if any at all) on their acquisition campaigns – especially when they mostly draw in customers who spend once and never come back again.

We have a simple solution to this growing problem. Instead of seeking to acquire any customer on Facebook and Google, you want to target the right customer.

Forcing Retailers to Pay More

Earlier this year, Google and Facebook’s share of the global online ad market was slated to increase up to 61.4 percent, up from 56.4 percent in 2018. In addition, there was a projected $176.4 billion in ad revenues – signifying a 22 percent spike from the year before. Meanwhile, ad spend outside of the two giants (i.e. the rest of the competition) was slated to drop by 7.2 percent.

It comes as no surprise to learn that for each of the past 10 years, both parties have raised the prices of their clicks. Meanwhile, retailers by and large have been forced to reluctantly go along with these increases, simply because they do not have any other options. As a result, digital advertising has become both increasingly expensive and oversaturated. Looking ahead, many speculate that there is still plenty of room left for growth, with estimates of downturns back in late 2018 proving to be wrong.

In fact, this cycle already happened years ago with Direct Mail, where the cost of postage increased to the point where no one could afford it anymore. A monopoly was in charge then, and eventually some businesses could no longer participate – which is exactly what is happening in the digital realm today.

The Solution: Acquire High Value Customers 

The only way to move ahead and succeed in this environment is to actively seek out the customers who spend more, more often than the rest. These are known as Most Valuable Buyers (MVBs), which starkly contrast to those one-and-done buyers who are both expensive to acquire and offer no value in return. 

Statistics show that MVBs actually drive 75-80 percent of a company’s profits – despite consisting of only about 15-20 percent of its base as a whole.

For example, if it costs $100 to acquire a customer that only delivers $50 in return, your efforts are not only in vain, they are detrimental to your bottom line.

On the other hand, if a high-value customer brings in $500, they were well worth the effort to secure the first purchase. This is precisely why it is so important for retailers to get the most out of their advertising spend by drawing in (and retaining) these MVBs.

The reason why the top fashion brands pay so much to have storefronts on Park Avenue is due to the greater value of each purchase made there. Statistically, the cost of each transaction made in those storefronts is greater than anywhere else – because of the sense of exclusivity that those premier locations exude – and their ability to bring in higher value customers.

How to Execute

Ultimately, this strategy is all about selecting the right targets and driving them to the trial purchase.

However, in order to justify the cost of acquiring any customer (particularly high-value ones), retailers must possess strong retention capabilities and processes. Specialized software like Predictive Marketing Automation (PMA) platforms will help to heighten the value of each new customer while also working to increase the value of their spending over time. 

Fundamentally, marketing is about getting to know your target audience and those within your customer base. Typically, brands implement a one dimensional approach in which they do not have the ability to actually know who their customers are – let alone accurately predict the probability of gaining subsequent purchases.

A PMA’s automation capacities offer an all-encompassing, 360-degree view of consumer behavior, allowing marketers to reach the right customer, at the right time, on the right channel, with the right message.

Conclusion

In this game, it is not about the number of customers you’ve acquired.  In reality, whoever has the highest value customers wins. With so many options out there, consumers are generally fickle, and most only purchase once. 

Great businesses are built on great customers, and MVBs form the backbone of any successful business. They are the ones who will help drive your business ahead of the competition. 

Equipped with the right technological toolset, you will be able to methodically, consistently increase your ability to acquire higher value customers at a rate that takes your business to the next level – free from the reigns of Google and Facebook’s duopoly.

What is Customer Lifetime Value?

Customer Lifetime Value (CLTV) is a metric marketers use to gauge how much a particular customer is worth to you over their lifetime relationship with your brand.

While this sounds like common sense, too many marketers overlook the importance of proper CLTV calculation. Or, they get it wrong altogether.

Statistics show that it is 5 times more expensive to acquire a customer than to simply retain one. Therefore, shouldn’t you spend your precious marketing resources obtaining the ones with the highest potential value?

If you blindly assume that every customer has the same potential value, then you are likely missing out on a range of opportunities. 

Let’s break down the key ways to calculate customer lifetime value in order to stack the deck in your favor and gain a distinct advantage over your competition.

Understand the Acquisition Source

You can learn a great deal of valuable information about a customer’s value by knowing which source led them to your brand. 

For instance, a customer found through a discounted offer on Facebook might have an average potential value, while the value of a customer who discovered you through organic search is likely higher since they were actively looking for you in the first place.

Frequently, the future lifetime value (FLTV) of customers is tied to both channel or media source that they were funneled through (i.e. email, paid/organic search, social media) and the type of message or call to action (CTA) that brought them into the fold.

For example, a customer acquired through a sale offer on social media would generally have a lower FLTV than another who came through organic search. This is because the latter was likely actively seeking you out in the first place.

Paid Search and Social Media Analysis

When utilizing paid search via a search engine like Google for customer acquisition, you are given a complete overview of search terms tied to both your products and the types of customers that each one funnelled into your brand.

Equipped with this information, you can grant priority to the specific search that drew in the higher value customers.

Determine Acquisition Allowables

An acquisition allowable (or Allowable Acquisition Cost) is the amount you are able to spend to acquire a new customer in order to meet your Return on Advertising Spend (ROAS) goal. While every business has a different method for determining allowables, they are usually identified by both channel, offer, and projected CLTV. 

Let’s say you calculate that a customer is going to be worth $100, and your return on marketing spend has to be at least 100 percent. In that case, you can spend up to $50 on each customer that you acquire. So if you spend $50 on an acquisition and need a 100% ROI, then each customer must generate $100 worth of revenue.

Below is the formula for calculating acquisition allowable.=:

Acquisition Allowable = LTV/ AS x 100 > ROAS Goal

• LTV = Customer Lifetime Value, net of acquisition spend

• AS = Acquisition Spend

• ROAS Goal = Return on Acquisition Spend Goal Percentage

With acquisition campaigns, some efforts are going to be grand slams, while others can be strikeouts. Predictive Marketing Automation (PMA) platforms allow you to keep close track of promotion history, revealing how effectively you are spending your money while acquiring new customers by channel and offer. 

From there, you are in a position to improve the LTV of customers over time, adjust your allowable advertising costs, and optimize your marketing and media budgets. 

Predict [And Increase] Future Lifetime Value

A core element of customer acquisition is to not just seek to acquire any customer at all, but rather the ones with the highest projected future lifetime value (FLTV).

In turn, you can utilize a PMA to locate behavioral patterns or signals that indicate the relative likelihood of someone becoming a future Most Valuable Buyer (MVB). These are called predictors of Future Lifetime Value. 

The more one-time buyers (who have zero recurring value) you have in your customer base, the less profitable your company will be. 

On the other hand, your highest value customers (also known as most valuable buyers – or MVBs) are the loyal ones who both purchase more, more often than the rest of your customer base. Not only do they drive the majority of your revenue – they are the lifeblood of your business itself.

Don’t be afraid to spend to get high-value customers. You might be breaking even or losing on the first transaction, but the first transaction does not equal the full value of the customer over the lifetime of your brand.

Always strive to increase the LTV of your customers. If their projected value is increasing as a whole, you are on the right track. If it’s decreasing, reassess your strategy and make use of the tools at your disposal. 

For instance, a PMA dashboard (pictured below) lists the numbers in real time for analysis. From there, you can discern the causes behind your problems and adjust accordingly.

Key Takeaways

Ultimately, you should be able to answer the following key set of questions:

• What is the overall value of the customers we have? Is it trending upwards or downwards?

• Are we maximizing the full potential of each customer that we have in our database?

• How much should we invest in each customer down the road? Via which channel(s)?

• Who (and where) are our customers with the highest potential value? How can we acquire (or retain them)?

Equipped with this knowledge, you can tailor your interactions and offers accordingly in order to acquire (and retain) customers with both the highest LTV and longest lifespans. This pays huge dividends and by increasing both your profits and ROI.

*This blog contains references to a previous post: How to Get More Customers Through Targeted Acquisition*

Testing and Learning

A/B Testing is a promotion testing strategy in which the results of two separate marketing tactics are sent to your customer base and subsequently analyzed. 

Continuous, carefully calculated testing is an essential tool towards generating a successful lead generation campaign.

In an Econsultancy survey of 800 marketers, 82% of companies with a structured approach to testing and optimization experienced higher conversion rates.

Above all else, A/B testing (also known as split testing) helps you to better understand and connect with your audience while improving your marketing campaigns. They also demonstrate how even small differences can affect performance.

This article details 5 ways A/B tests can be utilized to improve your digital marketing performance.

Closing The Loop

Always strive to close the loop on your marketing campaigns by consistently testing different strategies and learning from them over time.

Below is a breakdown of this strategy:

Ultimately, if implemented properly, A/B testing can offer a wide range of benefits, including:

• Increased web traffic

• Higher conversion rates

• Lower bounce rates

• Decreased cart abandonment

There are a range of different types of tests to deploy. Let’s break down five of the key ones.

1. Subject Line

Your subject line is the first thing your customers see in their inbox, and a carefully crafted one can substantially increase open rates.

To deploy a subject line test, send two different subject lines to a subset of your customer base. Then, analyze which one resonates the best.

In this case, you can use a particular type of A/B test named test and roll. This is where two separate subject lines are deployed to a subset of your customer base (i.e. 30%) over a set period of time (i.e. 24 hours). Afterwords, the “winning” line with the best open rate is instantly sent to the remainder of your base.

2. Creative Content & Design

While subject lines are designed to increase open rates, strong creative content (graphics, text, length, layout, design) directly contribute to your click through rates.

While text and tone are certainly important, bold (but not abrasive) color schemes, font styles and image placement go a long way.

Here are two exemplary split test designs by Starbucks complete with different offers (more on that later):

3. Cadence

A perfectly designed message means nothing  if your target never sees it, which is why getting to the top of the inbox is so important. If you miss the mark and send your email just an hour or two away from the right time frame, you could quickly drop down the list – out of sight and out of mind.

Key factors to consider regarding cadence include:

• Day of week

• Time of day

• Number of emails per week

• Date of last open

• Long gaps since the last open can indicate customers that are fading away from your brand. If this gap continues to widen, consider dropping from them from your list. 

When your customer is either on the cusp of a purchase or on the verge of fading in loyalty, a simple nudge can make the difference between a sale and a missed opportunity. Machine intelligence can predict exactly when such opportunities arise and react autonomously.

A common pitfall is basing your send time on when your customers interact with your messages. Instead, base your send time on when you send your emails – not when your customers open or click them.

For example, while you have a noticeable high conversion rate on Saturday, does not mean that an email sent on Saturday caused the conversion. Instead, it could have been a message sent on Friday that simply had not been opened yet. Therefore, keep in mind that your customers might need a buffer period.

4. Offer (Pricing/Discounts)

Discounting is a  particularly effective way to engage/acquire customers who have never bought with your brand before, stimulate a second purchase, reactivate fading customers, and reward loyal customers.

Here are two separate “Today Only” discount templates from Kohl’s:

5. Call To Action (CTA)

Your CTA is the last hook that drives your customers to convert, so it is well worth the time and effort to craft one that works best.

Success is not measured by opens and clicks alone, but rather by the revenue gained or products sold.

In this case, no detail is too small to test, and even seemingly insignificant shifts can generate much different results.

Many companies test the size, shape, color, wording, and placement of their CTA buttons. 

Here are just a few examples:

Key Takeaways

When designing a test, keep all factors consistent. For instance, when running a subject line test, keep your creative content the same. Likewise, when testing creative content, keep your subject line the same across your emails. Testing too many templates at once means it will take longer to gather actionable data.

Not only do different customers have varying tastes, they also react differently to certain messaging tactics. While you may not initially know the best way to interact with different portions of your base, testing is the most effective way to determine what resonates the best. 

Persistent, accurate, and informed testing can greatly impact your conversions and bottom line. By engineering controlled tests and gathering verifiable data, you can determine precisely which marketing strategies work best for both your brand and your products. Keep in mind, if your company is not continuously testing and learning, you are much more likely to lag behind your competition.