Retailers tap e-mail to pull in customers

Stores find direct approach trumps Facebook,Twitter

— Even as retailers debate the efficacy of social-media marketing on Facebook and Twitter, they have no doubts about the power of a decades-old technology to drive sales. The killer app is called e-mail.

Retailers as disparate as Williams-Sonoma Inc. and Home Depot Inc. have become much better at tailoring e-mails to specific customers rather than the one-size-fits-all blasts that once dominated this type of marketing. Measured by sales per dollar spent, e-mail outperforms social-media advertising 3-to-1, according to the Direct Marketing Association, a trade group founded to provide accurate marketing data. That explains why retailers will send 19 percent more e-mails this year.

Compared with socialmedia, e-mail marketing will never be sexy, said Ted Wham, a vice president at Responsys Inc., a San Bruno, Calif., firm that helps companies build digital relationships with customers.

“But it depends on what’s sexy to you,” he said. “In my opinion, making a high profit rate and bringing in a lot of incremental dollars is very sexy.”

Competition is fierce this Christmas shopping season as the National Retail Federation predicts sales will rise 4.1 percent to about $586.1 billion in the period, compared with a 5.6 percent increase in 2011. Online sales may grow to a record $43.4 billion in the last two months of the year, a 17 percent increase from last year, according to research firm ComScore Inc.

At the same time, the number of Black Friday and Cyber Monday shoppers making purchases after clicking through from social networks such as Facebook, Twitter, LinkedIn and You-Tube declined by at least 26 percent this year from 2011, even as online sales soared, IBM Digital Analytics Benchmark said last month. Socalled social sales contributed less than 0.5 percent of online revenue both days.

Major retailers are on track to send subscribers an average of 211 promotional emails in 2012 compared with 177 last year, according to Responsys. The boom in smart phones means consumers check e-mail more often, at a time when data and Web tracking are becoming more mainstream and easier to use.

The numbers drive a case for that - e-mail provided $39.40 in sales per dollar of advertising this year, followed by $22.38 through Web search, $19.71 from Internet display ads and $12.90 fromsocial networks, according to the Direct Marketing Association, a trade group.

Home Depot has been honing its targeted marketing, sending e-mails that incorporate customer preferences and previous behavior, because it’s 10 times more effective than blasts to a general audience, Chief Marketing Officer Trish Mueller said in June.

For instance, if customer data show that electricians are no longer subcontracting the painting portion of remodeling jobs and are doing the work themselves, an electrician that just bought copper wire may soon receive an e-mail for a discount on paint, she said.

In the past, that person would get an e-mail offer relevant only to their known skills, she said.

Williams-Sonoma’s e-mail and browsing data are so expansive that the company can use them to drive product recommendations bycustomer to specific stores, Patrick Connolly, the San Francisco-based company’s chief marketing officer, said in October.

Retailers also are using email as “portals” to a flurry of ads across the Web, said Chris Saridakis, president of eBay Inc.’s GSI Commerce, which provides e-commerce services to hundreds of retailers.

Once a user clicks from an e-mail to a retailer’s website to see a product, third-party trackers called cookies recall the activity.

Later, while visiting a news website or Googling “clothes,” consumers may see banner or Google Inc. ads designed to lure them back to those retailers’ sites.

“It extends the life of an e-mail, and we see that driving an incredible amount of return behavior back to the retailer’s site with a higher conversion rate,” Saridakis said in a telephone interview.

Williams-Sonoma may use as many as 200 different Internet advertisements per brand to re-target customers after they leave the company’s websites, which, while potentially surprising, is “very effective,” Connolly said in October.

It can take a lot of e-mails to hit the mark. A successful e-mail campaign may result in a 20 percent open rate with 5 percent of people clicking through and 1 percent making a purchase, though figures vary around targeted messages and holiday specials, Chad White, research director at Responsys, said in a telephone interview.

On the other hand, about half of consumers will read postcards, the most effective form of direct mail, which is pricier, according to a report from the Direct Marketing Association.

Facebook Inc. has signed on retailers including Brookstone Inc. and Dean & DeLuca Inc. to a new gifting service this year as the company looks beyond advertising to monetize its more than 1 billion users.

Facebook Chief Operating Officer Sheryl Sandberg said in an October earnings call that a third-party analysisshowed that more than 70 percent of 60-plus marketing campaigns on its website generated a return on ad spending of three times or better.

Separately, data from Nielsen show that clickthrough rates are not correlated to returns on marketing investments, Elisabeth Diana, a spokesman for Menlo Park, Calif.- based Facebook, said in an e-mail.

While the social network’s power as a sales driver remains unclear, letting customers use their Facebook accounts to sign onto a retailer’s website is an effective way to harvest e-mail addresses, according to Matt Kritzer, vice president of ecommerce for underwear maker Tommy John.

Facebook and Twitter “are more awareness activities,” Kritzer, the former director of e-commerce for L’Occitane, said in a telephone interview. “That’s why you need this glue of e-mail that ties it all together.” Information for this article was contributed by Danielle Kucera of Bloomberg News.

Business, Pages 19 on 12/24/2012

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