The Ultimate Lifecycle Marketing Guide: Reengagement Programs

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1 WHITE PAPER DECEMBER 2011 Best Practices in Marketing The Ultimate Lifecycle Marketing Guide: Reengagement Programs Proven strategies for implementing, testing and optimizing effective reengagement programs

2 PUBLISHED BY US Headquarters StrongMail Systems, Inc Island Drive, Suite 200 Redwood City, CA P: +1 (650) F: +1 (650) UK Headquarters StrongMail Systems UK Ltd. St. Clements House Clements Lane London EC4N 7AE United Kingdom P: +44 (0) APAC Headquarters XCOM Media Unit 1 15 Lamington Street New Farm Queensland 4005 Australia P: Copyright 2011 StrongMail Systems, Inc. All rights reserved. No part of the contents of this publication may be reproduced or transmitted in any form or by any means without the written permission of StrongMail Systems, Inc. STRONGMAIL and the STRONGMAIL logo are registered trademarks in the United States, other countries or both. All Rights Reserved. StrongMail Systems UK, Ltd is a company registered in England and Wales at 5 New Street Square, London EC4A 3TW. Reg. No VAT # GB Trading Address: St. Clements House, Clements Lane, London EC4N 7AE.

3 Table of Contents Introduction... 4 What is it?... 4 Why It s a Good Idea... 4 Getting Started... 5 Five Steps for Launching an Effective Reengagement Program...5 Optimizing the Effort... 6 Five Optimization Best Practices for Reengagement Programs...6 Anatomy of an Effective Reengagement Program Required Technology... 9 The Pay Off About StrongMail... 10

4 The key to successfully reengaging customers is the ability to discern why they disengaged in the first place. Introduction This handy guide for getting started with an effective reengagement program is the third in a series of "Ultimate Marketing Guide" whitepapers focused on lifecycle marketing. In the pages that follow, you will learn the insights, strategies and tools that are necessary to implement, test and optimize a compelling winback program for reengaging customers and subscribers who have become unresponsive to your communications. What is it? Reengagement programs seem to have a number of definitions and even more variations of approach that are dependent on who you ask. But no matter how you look at it, the fact that it is less expensive to maintain an existing customer than it is to acquire a new one, makes the prospect of reengagement efforts all the more appealing. The key to successfully reengaging customers is the ability to discern why they disengaged in the first place. The data analytics on this piece is important in driving the situational approach to each categorical segment as effectively as possible. Sometimes it boils down to just how well you know and understand the cyclical nature of your business. Why It s a Good Idea The goal of any program should be engagement however, that element is entirely defined by you. But what s the point of continually sending if no one is opening, clicking or converting in any channel? It becomes a futile effort. Historically, the prevalent attitude among marketers has been that since sending is so inexpensive, it's not worth the trouble to suppress inactives. Not too long ago it was less important than it is today but that has changed. Now, more and more inbox providers are leveraging engagement metrics such as open, click and reply as metrics for determining inbox placement. While it was once true that there was no punishment invoked for sending to nonresponders that is no longer the case. Taking a holistic picture of your customers experience and interaction with your brand is imperative; it is often off-line actions that could be impacting the on-line behavior. For example, a bad customer service experience via telephone, failure to accept a coupon instore, or maybe losing someone s luggage during air travel could all impact or influence the recipients desire to engage with your communications. If they are mad at you, they aren t likely going to want to receive your promotional communications at least not at that moment in time. Scenarios such as these make it even more important to have one, cohesive view of the customer, because responding to those situations in a realistic amount of time can go a long way in correcting the dismay, or at least minimizing it some. 4 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

5 Getting Started In order for a subscriber to become disengaged, they had to have been previously engaged at some point in time. If you have an audience of subscribers who have never opened or never clicked on a message then were they ever actually engaged? The question often hinges on how long a subscriber should sit in engagement purgatory before they become un-mailable. It is actually fairly difficult to define. No one wants to forgo the opportunity to talk to a customer who was once engaged but you have to be mindful of your reputation and refrain from automatically sending to all prior customers who haven't yet unsubscribed. A good rule of thumb is no more than 12 months but 6 months can be preferable depending on factors related to the seasonality of your business. Five Steps for Launching an Effective Reengagement Program The following five tips will help get you started on the right track. Often, it is necessary to look outside your standard metrics to determine what disengagement means for your company. 1. Develop Your Definition of Disengaged Defining an unengaged subscriber can be tough. Just because a subscriber did not open and click on your communications doesn t mean they did not purchase from you or engage via other channels. Often, it is necessary to look outside your standard metrics to determine what disengagement means for your company. Common metrics to look at include: open, click, conversion, web site log-in, online purchase, off-line purchase and subscription renewal. But these may not be the only metrics you ll need to use. That is especially true for many consumer packaged goods companies (CPGs) that don t distribute or sell their products. Engagement is situational to an organization, and sometimes even at a product level, so be sure to spend ample time uncovering what it truly means to you before moving anything forward. 2. Identify the Audience That Meets the Definition and Analyze Once you have identified what disengagement means, you need to apply that definition to your database and sequester the audience that meets the criteria for further analysis. Yes, further analysis is necessary. Depending on the size of the audience and how tight the definition of inactivity is, you may need to narrow in on elements that can be leveraged in the positioning of the effort. For example, you may find that a group of subscribers had no engagement activity in the past 12 months and no purchases. However that same group was both active and made purchases during the 12 months prior. This would indicate that the customers have a predication to be active with your brand as indicated by their activity 24 months ago, but not in the last 12-months for some reason. As a result, they may be a good group to talk to. 3. Determine an Approach That Will Resonate with the Audience Just saying, we miss you, may not be enough anymore. Brands are starting to use this type of sentiment in s more frequently than they once did, which can water-down the impact it has on a recipient when seen in the inbox. This is where the knowledge of your brand and your customer must be leveraged heavily. Is there a seasonality that needs to be considered? Is the competition fierce and loyalty low? What drives the desired behavior? Understanding any of these or countless other contributing factors will help you achieve success with your reengagement program. 5 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

6 4. Craft and Test a Solid Subject Line It is true that if the customer has been inactive in (e.g. not opening or clicking your communications), driving reengagement via may not be the most successful way to go. But, it can and does work all the time. It s about the strategy, approach and testing of your subject line. You need to give the recipient something to get excited about, a few carefully crafted words that will grab their attention in an over-crowded inbox and ultimately drive engagement. If a group of subscribers is actively not opening your , then it stands to reason that the same type of subject line will not work effectively for a reengagement. Testing here is very important. Small nuances in the subject line could drive a significant lift in program performance such as including the phrase valued customer versus not. The power of the pen continues to exist and copywriting subject lines is a great place to apply that power. 5. Establish Metrics and KPIs for Success Measurement There is no way to tell how well your program is performing if you do not have a baseline with which to measure the performance against. Define your hypothesis and the longterm goal of the program first, and then make sure the metrics you need to prove your theory are attainable. For example, maybe you want to drive incremental purchase behavior from 30% of a previously inactive audience. In order to prove you ve achieved this, you need to have the data available. So keep it realistic and make sure that what you are trying to accomplish is a goal that your organization as a whole can get behind and support. Optimizing the Effort Now that you have the map for your reengagement program, it is time to get it up and running. These programs can vary greatly in frequency, content and purpose but there are some key points to consider that are applicable across the board. Testing these best practice tactics during the implementation process will help you get the most out of the effort, while simultaneously learning what works for your unique customer base. Five Optimization Best Practices for Reengagement Programs 1. Avoid the Take-Away Close Not everyone appreciates what you do and the value you bring, as much as we would like to believe they do. So avoid statements that may be perceived as condescending like, we can see by your lack of interest in our that you just don t want to save 75% off at local stores. Not only is this unprofessional, it borders on being childish and could have a negative impact on the brand long-term. 2. Diversify Your Subject Line from Your Norm If a group of subscribers is actively not opening your , then it stands to reason that the same type of subject line will not work effectively for a reengagement campaign. You need to be inventive. Have some fun with it but keep it in line with the branding. And for certain, test, test, test. It could be a slight modification or minor tweak that makes all the difference. Be sure you find the right combination of From name and subject line to spark the interest in opening and reading on. 6 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

7 In some cases incentive messages convert at a higher rate, but that is not always true. 3. Test an Offer In Exchange for the Desired Behavior Many marketers believe that incented behavior may not result in long-term or repeat behavior from the same subscriber, but it is still worth testing. Many brands will test an incentivized version versus a non-incentivized version to see which drives a higher conversion rate. In some cases incentive messages convert at a higher rate, but that is not always true. It is going to be dependent on your unique situation and relationship with the customer and is an approach worthy of a test. This could be something as simple as, update your preference center today and receive 100 points (or 25% off your next purchase). 4. Reset the Value Proposition and Expectations Remind the customer why they loved you in the first place. People have short-term memory more times than not, especially when it comes to brands they do business with they may have completely forgotten some of the terrific benefits you provide so don t be afraid to toot your own horn. A friendly reminder of all that you do may just well be the nudge the subscriber needed. 5. Provide a Way Out If they don t want your , then they don t want your . But rather than ignore you perpetually, it is a great idea to provide a mechanism for unsubscribing from your communications officially. Call it out, make it easy and let them self-suppress from future communications. 7 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

8 Anatomy of an Effective Reengagement Program The following winback campaign from Travelocity targeted a segment of existing subscribers who booked in 2009 but had not booked in Travelocity engaged StrongMail's Agency Services team to help with the strategy, creative and management of the program, which included creating compelling imagery and testing different subject lines and offers. The program was wildly successful, generating higher than anticipated engagement. In terms of revenue and conversions, the generated 2 to 3 times greater ROI than similar campaigns, outperforming some of Travelocity s targeted upper-funnel campaigns. In terms of campaign performance, the approach resonated well with the audience, and testing efforts helped to increase Travelocity s bottom line by 12.3%. Identify unengaged segments based on type of customer and length of unengagement Test multiple offers before deploying to the whole list Test compelling subject lines to increase open rates Create a uniquely branded experience 8 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

9 Required Technology Unlike traditional outbound batch-and-blast marketing campaigns, reengagement programs need to be first triggered via integration with customer databases, web analytics systems and/or other external systems. Once that is achieved, it is then important for the messages to be assembled dynamically based on the information available and finally, be delivered in the timeframe you've determined to be most effective. This entire process requires a transactional or triggered solution that not only ties into your data warehouse and other systems, but that also provides you with in-depth reporting to gauge deliverability and engagement, as well as full HTML customization capabilities to ensure visual consistency with your other communications. Sending a reengagement program is most easily accomplished with a lifecycle marketing solution that allows you to schedule various iterations based on length of disengagement, current lifetime value, demographic information, preferences and other relevant variables. If you aren't currently able to dynamically assemble and send event-triggered s with full tracking capabilities, you should look at upgrading your system to present your customers with a positive experience when asking them to reengage. Marketers should also seriously consider a system with lifecycle marketing capabilities that will allow you to easily create a flow that maximizes engagement with your brand. Below is an example of a simple reengagement program designed with StrongMail's drag-and-drop lifecycle marketing solution. As illustrated below, a reengagement program can integrate wait" steps and actions that generate different flows (which can be tested for maximum engagement). In this scenario, the reengagement program is kicked off by disengaged customers who meet the criteria of having no click activity and no purchase activity in the six months, but that did have previous engagement in the six months prior. The group is then split to test which content and offers are most effective for reengaging customers, including incentive and no-incentive approaches. The program then waits five days to register any click activity to reactivate their subscription. The system then puts clickers back into a normal mail stream and automatically unsubscribes and suppresses non-clickers. Create multi-stage programs with drag-and-drop simplicity Define an optimal "wait" interval for receiving responses to sent Proof programs by sending test messages for every possible path Trigger messages via real-time integration with external systems Test multiple offers against a control group to maximize performance Automatically add to normal mailing stream or unsubscribe based on click activity 9 The Ultimate Lifecycle Marketing Guide: Reengagement Programs

10 The Pay Off Reengagement programs, if done properly should leave you with two very distinct audiences of subscribers those that reengaged and those that did not. For those that did not, you need to start asking yourself some very serious questions about how to handle them moving forward. They didn t unsubscribe, so do you keep mailing them? Maybe in a limited or less frequent capacity maybe. Or maybe you suppress them altogether. The choice is yours and will be dependent on how the program was devised. But if they did reengage the real fun begins! Not only were you able to drive incremental behavior out of an inactive audience, but you now have a customer Petri dish just waiting for testing. Tracking this audience to determine their long-term commitment and engagement to the brand versus other equally engaged customers will help you determine the long-term impact on the effort. About StrongMail Every day, StrongMail is empowering leading companies to connect and grow their customer base through and social media. From the world's largest retailers to the hottest daily deal sites, StrongMail is helping smart marketers boost the performance of their programs with cutting-edge lifecycle marketing capabilities and the ability to deliver millions of personalized messages in 10 minutes or less. Our products and services provide end-to-end solutions for such notable brands as Travelocity, Netflix, Macy s, McAfee, Viacom and T. Rowe Price. To find out what we can do for your company, visit or contact us today. StrongMail Toll free U.S. +1 (800) Toll U.S. +1 (650) Toll U.K. +44 (0) info@strongmail.com 10 The Ultimate Lifecycle Marketing Guide: Reengagement Programs