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May 22, 2012
Case Study

Marketing Automation: 416% higher customer lifetime value from auto-email strategy

SUMMARY: Online retailers and consumer marketers might turn a deaf ear to automation and lead scoring, but these tactics apply beyond B2B. In this article, a complex-sales strategy earned great results for one consumer-facing company.

See how the company's system of 170 automated emails earned a 416% increase in average customer lifetime value, alongside the tactics that make the automated sends more personal and effective.
by Adam T. Sutton, Senior Reporter

Marketing automation, lead nurturing, lead scoring -- these tactics are often associated with complex-sales marketing. They're used by B2B companies to nurture leads for weeks or months to sell big-ticket items.

But, that's not the only place they're used. The team at Hear and Play Music, a provider of music lesson products, uses automated lead nurturing and scoring to turn prospects into customers and repeat customers.

Many of the company's products cost less than $100, and the system has been incredibly effective, says Jermaine Griggs, founder, Hear and Play Music.

The program launched in 2009 with five automated messages. The team has since expanded to more than 170 automated emails and achieved the following:
  • 416% increase in customer lifetime value

  • 67% increase in clickthrough rate from the best prospects (increased from 24.73% to 41.28% for subscribers with the highest lead scores)

  • 18.4% improvement in lead-to-purchase time

"Even if my profit and customer value had not increased the way they did, I'd still be better off," Griggs says. "I'd have customers that like me and trust me that much more, and who will stick around longer."

We sat down with Griggs to understand why Hear and Play's system is so effective. He shared these seven insights:

Insight #1. 'Automated' does not mean 'robotic'

One of the primary drivers of the program's success, Griggs says, is that Hear and Play's emails have a personal tone, even though they're automated.

"People get so hung up on this word 'professionalism.' They think it means that you have to have a certain detached tone without any feeling or exclamation marks," Griggs says. "I take the opposite approach."

Each email is written as if sent by Griggs, who is the public face of the company as well as the founder. The emails maintain a personal, one-to-one tone by including:
  • Letter format

  • First name salutation

  • The founder's image, signature and sender address

  • Casual language and personal anecdotes from Griggs. For example, here's the first line from one email: "I was around 8 years old when I got my first chance to play in church."

Insight #2. Follow the customer's path

Hear and Play's leads typically complete a series of steps before purchasing. There is another series of steps to become a repeat customer. Through careful analysis, Griggs' team uncovered the key steps in this conversion funnel and targeted them with automated messages.

For example, the team knows that most leads need to spend time on the site and watch several free lessons before converting. A few ways leads are encouraged to do this:
  • People who enter Hear and Play's database by registering on the homepage receive an instant welcome email.

  • If they do not log in to watch a free lesson, leads receive a reminder email several days later.

  • If they watch one video lesson, they'll receive an email encouraging them to watch a second.

The emails guide leads through each step, reminding them to act and encouraging those who do. The emails' calls-to-action gradually increase their level of commitment (first, it's watch a free video, later it's order a free CD) and eventually leads receive offers to buy products.

Insight #3. Track the hottest leads

Each lead is scored by behavior, such as whether the person watched a video, clicked an email, or made a purchase. The team uses the scores in many ways. Here are four Griggs mentioned:
  • Timed offers - Leads with high scores that are nearing the team's average lead-to-purchase date are sent offers for products. Leads with lower scores are more likely to be sent emails pointing to free content, such as videos or blog posts, to increase their lead scores (thereby increasing the likelihood they'll respond to a later offer).

  • Targeted direct mail - "When a time comes to spend real money offline by sending direct mails to your best prospects, it’s just as easy as sorting by lead score and picking the top 20%, or whatever the budget allows for," Griggs says.

  • Gauge frequency - The scores are used to estimate each lead's tolerance for volume. For example, leads with higher scores are assumed to be more likely to open emails and less likely to mark them as spam. Those leads may receive one email every three days, whereas leads with lower scores might receive one email every 10 days, Griggs says.

  • Customer care - The team sends gifts, such as Starbucks gift cards, to its best customers, and a good lead score can help someone get onto that list. Lead score is also considered when resolving some customer service issues. A customer who wants to return a product beyond the company's grace period will have more luck if she has a high lead score or customer lifetime value, Griggs says.

"Those numbers help in analyzing if this is a customer we want to keep around or if this is a customer who's problematic."

Insight #4. Avoid 'batching and blasting'

Sending a single email to an entire database (also known as batching and blasting) can erode the quality of the list over time. Triggered, automated emails like those used by Hear and Play are typically:
  • Sent individually

  • Targeted to a lead's behavior (high relevance)

  • Higher performing than batch-and-blast emails

Griggs has nearly eliminated what he calls "broadcast emails" from Hear and Play's marketing. The only emails sent to a broad audience are those promoting the team's teleseminars, and even they are sent only to a portion of the database.

"I have sent a broadcast when there is a newsworthy event, but for the most part, we hardly send them," Griggs says.

Insight #5. Segment before you send

Hear and Play offers courses in several instruments, but most of its products and email marketing focus on the piano. Instruction is offered in several types of piano music, including:
  • Blues

  • Contemporary

  • Gospel

  • Jazz

  • And others …

Each of these categories are separated into beginner-, intermediate-, advanced- and teacher-level courses.

People can indicate a preferred style and skill-level on the homepage sign-up form. The team uses that information to segment the database and deliver targeted messages.

Insight #6. Go beyond email

Hear and Play integrates several other marketing channels into its automated and personal program. Here are a few examples:
  • Automated calls - Hear and Play will automatically call some customers after a purchase. The call is pre-recorded and comes from Griggs. Some have different messages for when the person answers the phone and when the call goes to voicemail.

    "I just say 'hey, this is Jermaine. I just wanted to thank you for your order yesterday and for trusting us with your business. You are going to have an awesome time with this gospel course' -- because I'll know whether they ordered gospel, or jazz. Or I'll have a different message if they're a new customer versus an existing customer."

  • Direct mail - Leads who request a free CD are asked for a mailing address. The team later uses that address to deliver postcards and other direct mail. For example, the team will time a postcard to arrive at about the same time as an email about a product, Griggs says.

  • Text/SMS - Leads who register for a teleseminar or webinar are asked for a phone number, which the team later uses to send text messages to some leads. The text messages are used similarly to the team's automated phone calls.

Insight #7. Test and optimize emails

Hear and Play tests its emails on an ongoing basis to improve performance. The team likes to see clickthrough rates above 20% on its most important emails, Griggs says, and it tests to improve them if the rates drop to single digits.

The most important emails, Griggs says, are those including offers. There are about 20 in the 170-email series. Because of the team's segmentation, almost no subscribers would receive all 20 offers (or all 170 emails, for that matter), and some offers are for free products, such as the CD mentioned earlier.

The team focuses on three areas in these tests:
  • Subject lines (to increase open rates)

  • Calls-to-action (to increase clickthrough rates)

  • Landing pages (to increase conversion rates)

For weekly case studies and how-to articles, sing up for the free MarketingSherpa Email Marketing newsletter.

Creative Samples

  1. Personal email example

  2. Welcome email

  3. Encouraging email

  4. Homepage sign-up form

Sources

Hear and Play Music

Infusionsoft - provides the team's CRM system

Related Resources

MarketingSherpa Email Summit 2012 DVD (includes Jermaine Griggs’ session at Email Summit)

Email Marketing: Triggered emails that target the conversion funnel boost revenue

Email Marketing: How a triggered alert program maintains 40% open rate, 60% click-to-open rate for millions of subscribers

Marketing Automation: SMB implementation improves lead generation 300%, reduces cost-per-acquisition 50%

Subject Line Test: 125% more unique clickthroughs

Marketing Automation Vendor Selection: B2B marketer reduces unqualified leads 341%

Email Marketing: Anti-newsletter strategy nurtures $1.5 million in leads in 4 months at Citrix

Trigger Happy: Why emails are the magic bullets of marketing automation and shopping cart recovery



Comments about this Case Study

Jul 26, 2013 - Brian Hansford of Heinz Marketing says:
Insight #4 is a big one. I am continually amazed how many orgs invest heavily in Marketing Automation and fall back on batch and blast! Nice article. Cheers, Brian Hansford Tw. RemarkMarketing



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