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1 Behavioral Retargeting Campaigns: Five Things You Need to Know , Listrak By Megan Ouellet, Director of Marketing June 28, 2010 Forrester Research reported that 154 million people in the United States, approximately 67% of the online population, made online purchases totaling $155.2 billion dollars in 2009, an 11% increase over 2008 sales i. More importantly, $917 billion in retail sales were influenced by online marketing efforts last year. And the numbers are on the rise. Considering that 98% of your website visitors leave your site without converting ii, and, according to Forrester Research, 51-66% of your online customers begins but doesn t complete an online purchase, you can see how great of an impact a behavioral retargeting campaign can have on your bottom line. Behavioral retargeting campaigns use historical data, campaign, CRM, and clickstream, to build highly relevant messages that are delivered at the right point in the sales cycle. The idea isn t new web advertisers have been using remarketing and retargeting campaigns for

2 years to ensure visitors receive appropriate ad content based on past search criteria. And as marketers continue to shift away from batch and blast to personalized, engaging messages, they are following these same concepts. Campaigns with relevant messaging based on subscribers interactions typically garner 30% higher conversion rates and prolong customers lifecycles, raise subscriber value, and increase overall profitability. ecommerce retargeting campaigns are designed to persuade a customer to purchase complete an online transaction they began but didn t finish, replenish a previously purchased item, or purchase a complementary item. When done correctly, these campaigns are the most targeted and engaging messages you can deploy as they re not only based on profiling attributes but also on precise customer behavior. However, the campaigns can be tricky for many businesses as online shoppers value privacy and autonomy. While the majority of the online population understands that their browsing behaviors are being tracked and monitored for marketing purposes, it can still feel intrusive and pushy if the s aren t crafted with beneficial messaging. You must also update your online privacy policy to include a statement that your site collects cookies which you use to tailor your marketing messages, and give your visitors the ability to opt-out if they desire. Retargeting Campaigns that Increase ROI Shopping cart abandonment campaigns are extremely effective at recouping lost revenue. When customers abandon carts, you know several things about them you know which products they re interested in, you know they have a need, and you know they re ready to purchase. This information makes it very easy to reach back with relevant, beneficial messaging. Yet, in a recent poll including 200 of the Internet Retailer 500, only 14.5% have a shopping cart abandonment program in place resulting in a lot of lost revenue. The process has been proven to significantly increase sales. Movies Unlimited, an online movie retailer, implemented an automated shopping cart abandonment program that has an 11%+ sale conversion rate and returns a 28% higher average order value than its regular marketing programs. But it s not the only retargeting campaign you should be running. Replenishment campaigns are another type of retargeting campaign that you should consider. Like shopping cart abandonment campaigns, you know which products the shoppers are interested in and you can estimate the buying cycle based on the average product life or past purchase behaviors. These campaigns are extremely important in enforcing brand loyalty, as well as increasing customer 02

3 03 lifetime value. When it s time to restock a product, it is very easy for shoppers to perform a simple online search and choose the lowest price instead of returning to the retail site where they made the original purchase. A lot of online retailers don t do enough to differentiate their product offerings and transactions from their competitors so in many cases shoppers might not even remember where they made the original purchase. However, if you send them an at the time when they re likely in need of a product, say a week or two before your identified purchase cadence; and you give them an easy way to repurchase the item, the shoppers will have no need to search competitive sites. This strategy not only generates additional revenue, but it lengthens your customers lifecycles and increases their value to your organization. Similarly, you could create a predictive retargeting campaign surrounding cross-sell or upsell opportunities using your own purchase history data or a product recommendation engine to create targeted, individualized product alert messages. Because these s are based on historical purchase data analysis, the messages are extremely accurate and highly likely to convert to a sale. As you develop your behavioral retargeting campaign strategy, here are some things to keep in mind: 1. The campaigns don t have to be complicated to work There is a misconception that retargeting campaigns are difficult to implement and even harder to maintain. That s no longer the case as the technology needed to run these campaigns is more accessible than ever before. Web analytics tools, keystroke capture, triggered solutions, and product recommenders are affordable and straightforward. As for the campaigns, they should be relevant and focused on the single goal of completing the sale while not coming across as if you re spying on your online visitors. For example, if someone browsed through the cabernet sauvignons offered on your website but didn t purchase, it would be alarming for that person to receive an regarding those wines a moment later. However, if you send them an hours later regarding Napa Valley red wines and feature the wines the visitor was researching, the is relevant and has a higher chance of capturing a sale. This strategy is referred to as a blind luck campaign as the messaging is targeted and timely without being overly complex.

4 The same is true for shopping cart abandonment campaigns. Your message can include pictures of the items left in the cart, a link to the cart, a special discount, even recommendations for items that complement the products in the cart. However, a simple stating that there are items in the cart and offering support for completing the transaction or stating when the cart will expire works, too. In this case, the fact that you reached out to the customer at the right time can be enough to close the sale. The more targeted and timely your messages are, the better they ll perform. If you re sending replenishment campaigns the same rules apply. These campaigns should include pictures of the previously purchased items and an easy way to purchase the items again, and these campaigns should be automated. No matter what type of retargeting campaign you re sending, be sure the s are straightforward and contain one clear objective. 2. It might take more than one reachback There is a lot of debate regarding the right time to send a shopping cart abandonment campaign. Some people insist that the s should be sent immediately; others think 24 hours should pass before the s are deployed. However, no one disputes that it could take more than one reachback to close the sale. A series of messages might be necessary to maximize profitability. A series could consist of two, three, or more messages designed to work together to motivate shoppers to complete a purchase. One simple trick you could try is to resend the first message with a new subject line if the recipient didn t open it within a certain period of time. Or you could build a multi-touch campaign beginning with a simple product reminder, then offering a discount, and finally stating that the offer will soon expire. When deploying a series you must monitor the results carefully in order to set the right number and cadence of messages. Different retargeting campaigns will generate different results so be sure to test to find out what works best with your customers. 04

5 3. Special discounts aren t always necessary Many online retailers fear that offering a discount in their shopping cart abandonment campaigns will train customers to abandon carts and wait for the discount. There might be a few people who try to game the system, but even at the discounted rate the sale should still be worthwhile. However, to maximize your profitability you could follow Jim Novo s Discount Ladder Jim Novo s discount ladder iii Customer inactive for 1 month: when determining which Response rate = 20%, discount = 5% customers receive an offer and how much. The idea Customer inactive for 2 months: Response rate = 10%, discount = 10% behind the discount ladder is simple the customers who Customer inactive for 3 months: purchased recently are more Response rate = 4%, discount = 15% likely to purchase again and, Customer inactive for 4 months: therefore, do not require a Response rate = 1%, discount = 20% large discount to influence purchasing decisions. The money you save by offering this segment a smaller discount should be applied to customers who haven t purchased in a while as they are the customers who need more incentive to buy , Listrak By segmenting your lists by recency of purchases and offering discounts accordingly, you ll not only increase your sales but you ll increase your profits per sale. 4. Measure results beyond click-through rates Like every other campaign you re sending, you should test the different factors that go into your retargeting campaigns as well. That way you know for sure what works best for your customers. When performing tests, it s imperative to look at your conversion rates and profits and not just your click-through rates. Sometimes it s easy for marketers to rely on the click-through as the final performance indicator but retargeting campaigns are all about raising profits so you must look beyond the metrics to your bottom line.

6 For example, Movies Unlimited performed an A/B split test for their shopping cart abandonment campaign. The messages contained the recipients names, the items left in their carts, and individualized recommended products the only difference was that version A offered a $5 off coupon and version B did not. While version B generated a click-through rate that was 2% higher than version A, version A generated a 36% lift in sales and a 59% lift in the number of products sold. If they only looked at the click-through rate, they would have missed a big revenue opportunity. 5. You already have all the data you need to get started Successful behavioral retargeting campaigns are reliant on customer data metrics, clickstream activity, past purchase history, and CRM data. Chances are you already have all of the data you need even if you haven t used it in this way in the past. At first it might seem like a daunting task to collect and use this much data. However, with data mining solutions and the ability to automate retargeting campaigns, you just need to find the right partner and then focus on the returns so you can tweak the campaigns as necessary. If you need help mining and using your data, Listrak has the services and solutions you need to create behavioral retargeting campaigns so your messages reach the optimal level of engagement. Contact us today to learn more. 06

7 07 About Listrak Listrak is a full-service marketing firm providing the solutions, services, and software to optimize the value of . Listrak combines strategy, service, creativity, and measurability to develop marketing that goes beyond the inbox to the individual to deliver the extra perfect in effectiveness and ROI. Listrak provides engaging marketing solutions for clients like Waterford, Movies Unlimited, Hitachi, Wolfgang Puck, and Motorola. Its intuitive platform is also available in an ASP model enabling marketers to build one-to-one conversations utilizing dynamic content, split testing, geographical and behavioral targeting, triggered and transactional , all backed by detailed analytics and reporting. i Forrester Research U.S. Online Retail Forecast 2009 to 2014 ii Internet Marketing, Inc. Behavioral Retargeting iii Jim Novo is an interactive customer retention, defection, and loyalty expert who has perfected the discount ladder to maximize profitability. Learn more at or download Listrak s Marketing Today podcast Episode 42.

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