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Jan 11, 2011
Case Study

Email List Reactivation Incentives: Gift cards vs. whitepaper vs. nothing

SUMMARY: Email addresses are only valuable if you know something about them -- like whether or not their owners have opted-in to receive your messages. Without knowing their opt-in status or contact information, they're dead weight in your database.

Check out this test Cisco Systems ran to turn email addresses it knew little about into active subscribers. You'll see that offering nothing is sometimes more effective than offering a whitepaper.
by Adam T. Sutton, Senior Reporter

CHALLENGE

Cisco Systems had a massive amount of email addresses in its databases in early 2010. The communications technology and services provider had recently acquired a powerful analytical tool to more efficiently understand and leverage these lengthy lists.

One of the many insights the tool revealed was that only about 25% of the contacts were deemed "actively marketable" according to the marketing team's baselines. Some of the contacts had not been active for three to six years, and others did not have listed opt-in information.

"A contact has to opt-in before we can market to them," says Mike Bull, Global Database Marketing Manager, Cisco. "There were many thousands of contacts within our many millions of contacts that we had email addresses for, but there was not a flag to say whether they had opted-in or not."

Cisco's marketers knew that potentially valuable contacts were being left unused. Rather than leave money on the table, they wanted to turn these emails into potential leads and activate the highest-quality contacts without accumulating huge costs.

CAMPAIGN

The team crafted at test for the U.S.-based portion of the list to see if a few incentives offered through an email campaign could entice the dormant names to update their information. If the test worked, the team planned to roll out the strategy internationally.

Here are the steps taken:

Step #1. Select a test segment

Cisco's email databases contained millions of contacts, and the number of dormant contacts in question was also sizeable. The team did not want to fully launch a reactivation effort before proving the approach was effective.

The team selected about 14.5% of the unmarketable contacts for the reactivation test. The sample was big enough to estimate the approach's effect on a larger scale once the results were in, and was small enough to prevent a major problem if the approach failed.

Step #2. Match offer to contact's potential value

Since email is the "channel of choice" for the team's outbound marketing, Bull says, it was very important to get permission to market to these dormant email contacts -- particularly those in decision-making positions at their companies.

- Segment into three groups, craft offers

The team organized its database into two groups based on the contacts' positions at their companies: high- and low-level positions. The high-position group consisted of VP-level and above contacts. The remaining contacts were in the low-level group.

The team planned to email each contact requesting they indicate their current contact information and which emails they wished to receive (if any). The highest-ranking contacts were offered the largest incentive. The team evenly split the lower-level group to test two smaller incentives.

The incentives included:
o High-position group: $25 Starbucks gift card
o Low-position group 1: Whitepaper download
o Low-position group 2: No offer

Step #3. Craft emails for each segment

The team created three emails that asked recipients to update their subscription preferences and contact information. The emails had slight copy changes in relation to the incentives offered (see creative samples below).

The subject line for each email:
o High-position group: Get a Starbucks card by updating your profile
o Low-position group 1: Get a Collaboration white paper by updating your profile
o Low-position group 2: Update your profile to stay current

Overall, the emails were very similar and had identical:
o "Update now" call-to-action buttons which linked to the contacts' preferences page
o Headline text: Get Connected, Stay Informed
o List of member benefits
o Cisco logo
o Image of office workers

The emails were sent to all three groups on the same day.


RESULTS


"The reactivation tactic has re-opened marketing dialogue with a large number of contacts previously deemed as unmarketable, and at a very low cost," Bull says.

Overall, 2.3% of the test's dormant and incomplete contacts were activated, which was several times higher than the team expected.

Here are the results from each email:

High-position group / Gift card offer
Open rate: 17.10%
Clickthrough rate: 7.60%
Conversion rate: 6.10%

Low-position group 1 / Whitepaper offer
Open rate: 12.10%
Clickthrough rate: 2%
Conversion rate: 1.40%

Low-position group 2 / No offer
Open rate: 18.30%
Clickthrough rate: 6.50%
Conversion rate: 3.90%

- "No offer" is the best offer

While it is not surprising that the "gift-card" offer was the top performer, the team took note that the "no offer" email achieved a response rate almost three-times higher than the "whitepaper" email, and it required a much smaller investment than the "gift-card" offer.

The team has since used the "no offer" approach for reactivation in other markets -- even though the "gift-card" offer had a higher conversion rate. By ensuring access to relevant information rather than "bargaining" for an updated profile, response rates averaged 2.66% overall after three reactivation efforts. The team considers this above the industry average.

Useful links related to this article

CREATIVE SAMPLES
1. Gift card email
2. Whitepaper email
3. No-offer email

Members Library -- Email Tests: 100% to 400% improvement for website relaunch announcement

Alterian: Provided the team's database analysis tool

Cisco Systems

See Also:

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