SUMMARY: Do you use email newsletters or sales alerts mailings to market to your prospect and customer lists? Check out this Case Study on Budget Rent a Car to hear how they have improved their results through testing.
It was the high cost of sale in their traditional channels that drove Budget Rent a Car's initial interest in email marketing.
They used email to cut postal costs on loyalty program communications, and boosted conversion rates (bookings to actual rentals) by sending email confirmations to customers.
Telephone reservation centers, for example, would ask for a customer's email address, and permission, and then send a confirmation email with a reminder of the rental, and useful info such as directions to the pick-up point.
If you are sending customers email, why not take the opportunity to make a few offers, too?
Eric Schlanger, Budget Director of Marketing, says, "When we sent emails we would include an opportunity to trade up to a larger car and/or buy incrementals."
Impressed by the response to these offers, the team decided to see if promotions would work for the pre-reservation process, too. They tested a simple email outreach program designed to increase online transactions and sell "distressed product."
The result was the HotDeals email newsletter (see below for sample link), a monthly offering featuring special offers and last-minute deals on rentals. The team implemented five tactics to ensure its success.
-> Tactic #1: Newsletter-only specials
The whole point of email is to proactively reach customers rather than rely on them browsing your prices at a website or in a newspaper. Unlike a lot of its competitors, Budget is very much a retail operation. They have to sell people individually on the value of their deal.
Schlanger and his team combined these two concepts, took them one step further and decided to send email-only specials. The deals featured are not accessible through the website or anywhere else. (Traditional e-newsletters and email promotions tend to only feature offers already promoted at the website.)
-> Tactic #2: Build sign-ups
Sign-ups come from three main sources; promotion on the Budget home page ("click here for email deals too hot to advertise"), an opt-in opportunity during the online reservation process, and another reminder featured in the post-reservation confirmation email.
The sign-up form requests nothing but an email address to maximize take up. Says Ken Klispie of Budget's interactive agency Indigio, "We just want to make it as simple as possible so it encourages people to do the sign-up."
-> Tactic #3: Develop a winning format and layout
Research suggested that only about 3% of all email readers are not HTML capable and the team were also unconvinced of the ability of a text-only newsletter to sell well to their marketplace. They settled on a HTML-only format prior to the August, 2002 launch.
Each email follows a typical layout and offer presentation:
1. Three or four special deals offering discounts of between 20% and 40% off standard website prices.
The deals cover a cross-section of cars and rental durations, designed to fit the different needs of subscribers. Each month is a mix of weekly and daily specials for SUVs, vans, trucks, premium and compact cars.
A typical newsletter has one main featured deal, with the remainder appearing in a right-hand column.
2. Last-minute specials
These appear in a table format below the main deals and offer larger discounts (up to around 60%) for specific vehicles and locations (letting Budget promote distressed inventory).
3. Ancillary specials
Offers for related services appear at the bottom of the mail, such as ads for the loyalty program or hotel promotions. Since the majority of Budget rentals are for leisure purposes, the hotel offers play an added-value role, and generate revenue through reciprocal deals or booking commissions.
Klispie explains, "It's a matter of saying, hey while you're getting your car, we're also adding value to you by presenting some hotel offers that you probably couldn't find anywhere else."
-> Tactic #4: Track results through to the final transaction
Results are tracked through all the key metric points: Subscriber numbers, delivered mail, opened mail, click throughs, bookings and actual paid rentals.
-> Tactic #5: Test, test, test
The team are still experimenting with the presentation of the offers, by splitting the subscriber base into three or four equal segments and sending mails to each, with each set of mails differing in one key characteristic.
Currently, most testing has addressed the subject line. A recent test, for example, involved three different lines, each one sent to a third of the subscribers (the content of the mail was otherwise identical). The tested taglines were:
- "Save up to $100 on a 5-7 Day Rental from Budget Rent a Car" - "Great Savings with HotDeals from Budget Rent a Car" - "Special Email Only Offer from Budget Rent a Car"
Budget's January '03 newsletter delivered 14.3% click through rate (unique visitors as a proportion of emails sent) with a conversion rate (reservations made as a proportion of emails sent) of 5.6%.
Schlanger says, "We are very, very pleased," and adds that the email approach: "Is more bang for the buck and more efficient because it's a 'sharper nail' rather than more expensive."
Some other insights Schlanger and his team learned:
-> Subject line testing is crucial. Although Budget would not release specific results, a typical test like the one above sees CTR from the best performer anywhere from 33% to as much as 100% higher than the worst performer.
Klispie will say that they have found that the more specific information you put in the subject line about the contents of the email, the less likely readers are to open it.
-> Make things obvious. Initial mailings, for example, used airport abbreviations for the location column in the last minute specials table. Then the team noticed that some destinations were getting high clickthroughs, but low conversion rates.
Klispie's explanation, "We think people thought STL was Seattle rather than St Louis." Now the locations are spelled out in full.
-> Get the sale first and then worry about upsells. Early landing page testing has found that some customers abandon the transaction if upsells get too distracting. Klispie says "It's better to have them buy and not upgrade, than not buy at all."
The testing process continues, with the team now looking at the impact of, for example, pricing, offer layout and the timing of delivery (the current mid-month schedule is not by deliberate design).
In the future, Budget wants to personalize the service more and tie email delivery and content to the stated interests of subscribers.
Klispie explains, "There are huge market analysis and research benefits if people tell you, 'hey, I'm looking for a car in Miami next month, let me know when you've got a special.' Then you can plan inventory reallocation, especially if you see a trend developing."
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