#EEC12: Haute Look (A Work-Related Post)

#3 in a series

Increase Profitability Within Your Inactive Customers
Erik Kirby, CEO and Founder, Connection Engine
Harvey Osher, Director of Member Engagement, Haute Look
Spencer Kollas, Director of Delivery Services, Strongmail

• Haute Look (purchased by Nordstroms) - flash sale - emails delivered between 7:50-8 am PST drives 60% of all traffic
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• For most marketers, 50% of a subscriber file is inactive/disengaged
• Problems with not mailing: loss of revenue, loss of contact potential
• Problems with mailing: deliverability; customer satisfaction, marketing waste
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• Recommend: Analyze inactive rate by domain. (could speak to deliverability issues or quality of customers at domain)
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• Options: Reactivate, Change Frequency but continue to mail, Suppress
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• How do we determine future value potential among inactives?
  Take what we know about them and supplement with external data
  Look at what best engaged customer looks like (demographics). Look for disengaged customer who has same attributes
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• Haute Look: 38 different lifecycles
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• Aggressively suppresses inactives to minimize deliverability issues
• Scores value potential of each new address daily!!! (uses external data source to learn more about email address)
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• "We Miss You" email contained a $10 off coupon.
• The lower value customers used the $10 off coupon far more often than the high value customers. (but otherwise remained mostly unengaged)
• The higher value customers were much more likely to open, click, purchase (and make repeat purchases) but far less likely to redeem the $10 off coupon.
• Another session says we've conditioned people to expect discounts in email. It may be that people who are Haute Look's best customers are more interested in brand, affinity and status and less about saving money (that it might go against the grain of the experience)
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• When to suppress? It depends.
• Map out your lifecycle (acquisition, active, lapsed)
• Then refine. A lapsed prospect may have less potential than a lapsed customer. (again, it depends)
• Warm them up to return. Just a hint to get them curious, to think about coming back.
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• Reengagement - why is it important? (not to you, but to the subscriber)
• Need to set expectations within company
• Define what an inactive subscriber is
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• Case study: A company that worked with Strongmail (not Haute Look) amassed a list of 5 years worth of suppressed inactives and then wanted to email them.
• Broke into three groups (at the recommendation of their ESP)
• 0-6 months - resulted in 20% response/lift/re-engagement
• 6-12 months - resulted in 3% response/lift/re-engagement (revenue did not cover costs of preparing marketing message/landing page/targeting, etc.)
• 12+ months - thrown away after seeing results of 6-12 month
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• If people don't want to talk to you (or listen to you), don't force a conversation. You wouldn't do this in real life.
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• Are your inactives really inactive? Are they still engaging through other channels, or is your email - even if unopened - causing them to engage online with you? (re: Gilt 87%, re: REI postcard)
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• Examine your source of disengaged subscribers. Was it a bad acquisition source?

Observations/Recommendations

• Analyze inactive rate by domain
   
• Analyze inactive rate by acquisition source
   
• Create/Identify Lifecycles
   
• If they've been inactive for awhile, avoid sending from master list (to avoid deliverability issues)
   
• Need to get buy-in from everyone before suppressing (why, when, criteria, etc.)
   
• After a certain point, inactive email addresses hold no value and attempting to send to them may cost you money (deliverability or just cost of getting the mail prepared, targeted and sent to them)
   
• Don't force yourself upon someone who doesn't want to converse with you.
   
• If you make targeting decisions in direct mail for cost, why would you consider email a free-for-all?