September 10, 2008
Referrals can be a cost-effective way to grow your list and boost revenue. ‘Send this email to a friend’ is a common tactic, but few marketers go much beyond that tactic.
Take a look at one eretailer who tripled new customer referrals with three simple tweaks to their email strategy. The strategy also used well-timed emails to turn abandoned shopping carts into 129% more conversions.
Earlier this year, with consumer spending down, Matt Lindenberg, Assistant Director of Marketing, Diapers.com, and his team identified three areas of need:
- Boosting referral-based sales
- Tapping Web 2.0 influencers for brand evangelization
- Cutting the number of abandoned shopping carts
The latter, in particular, was a vexing issue for the baby products eretailer. “As with any ecommerce site, we were seeing customers drop off at various spots in the purchase process,” Lindenberg says.
Lindenberg and his team put the above needs on the front burner after doing some intense market research to settle on three strategies:
Strategy #1: Increase ‘Welcome’ referral incentive
The team had been using their ‘Welcome’ message to create more revenue with a referral incentive of $5 off an initial purchase plus another $1 off every time a referred customer purchased a product.
“We believed that if we could engage email subscribers immediately, we could get them involved,” Lindenberg says.
Still, they wondered if they were short-changing the referral possibilities, so they doubled the incentive to $10 off. The larger incentive was also applied to other ads, such as PPC and order inserts.
The ‘Welcome’ message used the following copy to encourage referrals: “Any new customers who enter your code (or your email address) when placing their first order at Diapers.com will get $10 off their first order AND you get a $1 credit EACH TIME they order.”
Strategy #2. Tap Web 2.0 influencers
Lindenberg and his team had set up accounts at MySpace and Facebook, but they wanted to dive even deeper into Web 2.0 waters. They forged a partnership with CafeMom.com and focused on two key areas:
o Banners that plugged the referral program
o Referrals in the site’s ‘private messages to members’
Next, they indentified influencers (e.g., ‘group owners’ on the message board) in the CafeMom.com community. To get them into the referral program as evangelists, the private messages included a $20 gift card.
“The messages detailed how they could try out the referrals program and build credit by getting others involved in their group,” says Lindenberg.
Strategy #3. Send timed emails to shoppers who abandon carts
Lindenberg and his team set their sights on shoppers who abandoned carts. They worked with service vendors to set up a system where any registered user who abandoned a cart was sent an email featuring the items left in it.
They followed the best practice of automating emails to go out at least 24 hours after abandonment. For instance, shoppers who abandoned at 9 p.m. on Monday would not get their emails until approximately 6 a.m. on Wednesday.
“We wanted them to get it on the second day after abandonment because many of our customers were online late at night. We didn’t want to send them an email right away the very next day. We wanted to give a little more space,” Lindenberg says.
The emails were personalized with the first name of the customer and consisted of three text paragraphs designed to get the core message through to recipients with images turned off. A “View Cart” hotlink appeared in the second graph. It allowed them to click through and finish the purchase.
“The question was: ‘What could we do at that point of the sales funnel?’ We wanted to remind them – with a service-based email – that they may need the products they had in their cart.”
In short, all three strategies worked.
o Raising the referral incentive tripled the percentage of new customers to 11%.
o The partnership with CafeMom.com saw a boon in message board discussions that drove referrals.
“When moms hear about our service from other moms, it makes all the difference in the world,” Lindenberg says. “Word of mouth is always the most effective sales tool. There’s a lot of synergy between their population and ours, and that is key.”
o The abandoned cart email produced a 129% lift in conversions compared to any previous marketing campaign.
o Open rates were 48% higher than any previous email’s best.
o Clickthroughs lifted 78% compared to any previous email's best.
o Messages sent after abandonement contributed 10.4% of the total revenue from their email marketing program even though they made up only 2.7% of the total volume in the first month.
“Once you get the system set up and running properly, the incremental effort is effectively zero,” Lindenberg explains. “And you are getting sales that, presumably, would have been lost.”
Useful links related to this article
Creative Samples for Diapers.com
Silverpop – their email services provider:
Coremetrics – their database technology vendor: