Analytics

Are Daily Deals Right For Your Online Store?
daily-deals-advantage

Daily deals are appealing for the eyeballs, email acquisition, and potential online sales. But are they really worth it in the long run?

With the rise in daily deal sites like Groupon and LivingSocial, there’s no question that this model can be an effective but it’s important to understand what you’re getting yourself into – for better or for worse.

Daily deals are short term sales that last anywhere from a few hours to a couple of days. The deals offered typically range on the higher side of typical discounts you’d see online. Instead of 10% off, we’re talking deals as high as 90% off of certain items in that limited amount of time. For many brands, deals are also limited in number, simply adding to the demand and urgency for purchase.

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What You Should Test in Your eCommerce Emails

This isn’t the first time we’ve discussed the value of testing your emails on the blog. Best practices can get you started and help you develop your instincts, but ultimately that all goes out the door once your emails land in the hands of a customer. From there, it’s all about what the data shows you and whether or not they open, they click, and whether or not those campaigns are driving a sale.

With this in mind, here is an introduction to testing for your email marketing as well as a few ideas for things you should be testing.

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How Growth Hackers Get A/B Testing Wrong
Email A/B Testing

A/B testing is amazing. It’s changed the face of online marketing, made software companies millions of dollars, and played a major role in presidential elections.  But amidst the 100′s of blog posts extolling the virtues of testing and the countless articles on how to analyze tests, there has been far too little focus on what to test, and this has meant that A/B testing has been dramatically under-utilized.

The problem with how so many “growth hackers” use A/B testing is that they aren’t testing the big questions. Testing has come to focus so purely on optimization that it isn’t being used to define overall strategy.

Tests focused on helping unearth the right major strategic choices aren’t the type that have a 20% impact – they can have a completely redefining impact that might mean the difference in a company succeeding vs failing or increasing your growth rate by 10X. Optimization is really, really important – but it isn’t enough.

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Why Email isn’t Dead: The Economics of Ecommerce Email Marketing

Economics of Email Marketing

There are many reasons stores should send email: to build stronger relationships with customers, to highlight new products, to stay top of mind, to make customers happy.

But there’s also the obvious reason: to get customers to return to their store and make a purchase.

The goal of this post is to quantify the value of email marketing for Ecommerce stores so they can benchmark themselves and to help stores who aren’t doing email marketing now understand how value it is.

 

A Quick Overview of Ecommerce Email Marketing

At Klaviyo, we break Ecommerce email marketing into two buckets:

  • Newsletters: Monthly, weekly or daily emails that are scheduled to go out to a list of customers.
  • Triggered emails (or Flows): Abandoned carts, welcome series, post-order follow-ups, cross-sell emails. Essentially any email that goes out to a customer based on what they have and haven’t done.

To take a look at each, we took a look at a sample of the 10’s of millions of Ecommerce emails that we send. Because Klaviyo is plugged into stores via their Shopify, Magento, Bigcommerce or custom Ecommerce platforms, every email sent is automatically tied back to whether a purchase was made (and whether the recipient had opened or clicked it beforehand).

 

The Impact of Ecommerce Newsletters

We found that the average newsletter made $0.18 per email sent.  Within that range though, we found tremendous variation:

The dollar value of Newsletters

60% of emails made just less than $0.10 per email, while 3% of campaigns made $1-2 per email sent.

With any newsletter campaign, there are lots of reason it might work better or worse: timing, whether it includes a promotion or sale, whether it’s a big new product launch, whether it had great content, the price point of the items featured.

Within results, we saw that campaigns could vary significantly week to week for an individual store; however, we did see that stores that were great at email had consistently great performing campaigns.

The take-aways:

  • It should also help you get a sense for how valuable it is to think of ways to grow your newsletter
  • If you are, it should give you a sense of how you compare.
  • If you aren’t sending campaigns, this should give you a good sense of how valuable they could potentially be.

This doesn’t mean that you should just email your customers more. We’ve clearly seen that if you don’t consistently provide content your recipients love, they will abandon you (which is a topic we’ll cover in a later post).

 

The Impact of Abandoned carts

The typical abandoned cart email goes out a few hours to a few days after a customer starts a checkout but doesn’t complete it.  As Dan Wang mentioned on the Shopify blog a few weeks ago, nearly 70% of carts get abandoned.

When using email to recover abandoned carts, we saw an average of ~$12 recovered per checkout abandoned. Again, the variation was tremendous:

Dollars Recovered per Abandoned Checkout

While most stores recovered just under $10 for each abandoned checkout using email, 5% of stores were able to recover an average of ~$30 per abandoned cart. One very surprising finding: for 5% of stores the emails made almost nothing.

Our conclusion: every store should consider trying cart abandonment emails. While some stores worry about bothering customers, by striking a helpful tone, focusing on making your brand shine through in the email, and sounding like a human, you can give your customers a great email to bring them back.

If your results aren’t as good as others, a few ideas:

  • A/B test your content – particularly to try a simple and more personalized message or different subject lines.
  • Try sending different numbers of emails (1 vs 2)
  • Experiment with different lengths of time after checkout was abandoned
  • Consider segmenting your abandoned cart emails with different content for first-time buyers vs those who have bought before

 

The Impact of Sending Win-back Follow-ups to Lapsed Customers

One of the most effective emails we’ve seen our customers send is the “win-back” email specifically targeted at bringing back customers who have bought before but not recently.

More than other emails, we see way more variation in what these emails look like, whether they include discounts, whether they go out after a month or after 6 months.  While we didn’t collect data on win-backs in this sample, we’ve previously seen win-back emails drive $9 in impact per email sent.

If you haven’t started sending win-backs, try starting with a short personal email 90 days after someone purchases encouraging them to come back and potentially offering a discount.

 

Welcome Series, Cross-Sell, Product Reviews, etc

In addition to newsletters, abandoned carts and win-backs, there are a whole series of other emails that Ecommerce stores send that drive significant purchases. We didn’t quantify their impact as part of this sample, but we’ll revisit them going forward. Either way, the point is that the economics of the emails we’ve looked at shouldn’t fully address all of the eonomics of your email marketing programs.

 

Estimating the Impact of Ecommerce Email

Our goal in doing this analysis was to give Ecommerce stores the information they need to evaluate how important email marketing is to them.

Based on size, number of checkouts, customers, etc, you should be able to do some back of the envelope math to get a rough idea of the impact of email marketing on your store – and you’ll generally find that this potential impact is too big to ignore.

It’s easy to see how a 5,000 person newsletter list leads to $50,000 in sales in a year (with 2 emails a week for 52 week,  $0.20 per email per person, etc) – and more when you add on win-backs, abandoned carts and many of the other emails like welcome series and cross-sell offers we didn’t discuss.

Email marketing is certainly not a dead channel for email marketing – in fact, it’s hard to find a more vibrant area of innovation and growth. There is a lot of need for better emails (and spammers have given email a bad name), but the reality is that it’s still a great way to reach customers that can be good for everyone.

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How Consignd uses Klaviyo for Segmentation, Email and Analytics

We recently caught up with Gabe Flateman, one of the co-founders of Consignd, about how they’ve been using Klaviyo for segmentation, targeting and analytics (and what led them to choose Klaviyo in the first place).
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Why Senders Matter: A Look at my Last Year in 63,961 Emails

Emails Per Day over the Year

In the last year, I’ve received an average of 175 emails per day excluding what ends up in my spam folder.  Assuming I spent an average of 30 seconds per email, that’s 90 minutes per day, 10.5 hours per week, and 22 days of my year. Give or take, this means I spent about 6% of my year on email.

While I only have the data to understand my email experience, pulling apart this number yields some anecdotal nuggets that might be useful in improving that 6% of my life that’s spent on email. If my email is at all representative, I’d propose we need a solution that both helps the receivers (who are consuming the email) and the senders (who are using email to send notifications, newsletters, etc).

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FREE!: What the Obama Emails teach us about Email Marketing

Having previously found that the Obama campaign ended 1 in 6 of their email subject lines in colons, I decided to dive into the last 30 days of election emails (available online thanks to ProPublica) to see what they might tell me about Americans and how we respond to email more broadly.

From free car magnets to exactly which friends we should tell to vote, I realized that the emails we get are about to radically change as political campaigns and businesses get even more sophisticated at poking our psychological triggers and leveraging our social networks.

Do vs. Believe

I decided to create two word clouds out of the subject line to see how the language of each campaign differed.  For each campaign, I took all of the email subject lines, took out the candidate names and extremely common words / combined words with the same meaning, and then sized each word based on how many times it was used.

Take a look at the word cloud at the top.  Which campaign do you think it’s from? Now, look at this next word cloud:

The top cloud is President Obama, and the bottom is Mitt Romney.  The most common words in Obama’s emails were share (or forward, like an email), calls and free – compared to America, help and love in Romney’s emails.  Many of Romney’s email subjects wouldn’t have been out of place on motivational posters, while Obama’s would fit better as the names on Facebook buttons.

1. Jump on Facebook, 2. Make some Calls

Diving deeper, this change seemed to be reflected in the purposes of the emails sent.  Nearly half (46%) of Obama’s emails explicitly asked the recipient to do something in the email subject line – whether that was to make phone calls, forward a message to friends, or sign-up for something – compared to 28% of emails.

Romney’s emails tended to focus on ideas:

  • “A Strong America”
  • “This is a time for greatness”
  • “We Will Recover”

While Obama’s focused on taking action:

  • “Three Things you can do right now”
  • “Forward this:”
  • “RIGHT NOW: President Obama Needs you to make some calls”

These emails represent strategic choices and differences in voter base certainly, but given the deep sophistication of the Obama campaign covered elsewhere, it’s very likely that giving people you email a direct next step in the subject is actually just more effective in many cases.

Tell Jason, Jim and Leah to Vote

One of the most interesting emails from Obama came on election day and had a personal list of your friends in swing states you should encourage to vote – all mined from your Facebook account if you’d given the campaign permission to access it.  Based on other accounts, the Obama campaign knew who the voters on the line were in swing states – and based on these emails, it looks like they also knew which of their friends could encourage them to vote for Obama. 

FREE Shipping (and $5 off!)

At varying points in the campaign, Obama was offering free t-shirts, free car magnets, free tickets to see James Taylor and Dave Matthews, free shipping – all to get people to donate.  While the idea of free stuff to get people to do things isn’t new, the prevalence of these offers in the campaigns may mean that it’s poised to take over all the marketing emails we get.

3 Key Trends in the Future of Email Marketing

  1. More and more marketing will come through people we know. By getting people to engage their friends, marketers are able to increase their reach and give a personal touch to an otherwise impersonal ad or email. From mining Facebook data to tracking your demographics and actions around the web, marketers will know who you are, who you know, and what message will be most likely to resonate with you and your friends.
  2. Direct and clear next steps will become more pervasive. As social psychologists and marketers have long known, giving people an explicit action to take significantly increases the likelihood of them doing it.  The Obama campaign emails suggests more and more advertising might include a direct call to action that is tailored explicitly to you.
  3. Marketing will become better – and harder to resist. As marketers become more sophisticated and metrics-driven, they’ll be able to stop sending you marketing that doesn’t have an impact.  If I show that I like celebrities and contests, more of my emails may include free contests to hang out with celebrities.

If the 2008 election was the first election where donations of the masses played a bigger impact than the donations of the rich, then the 2012 election might be remembered as the election where email meant that even the concept of the masses has ceased to exist. We’re entering an age when political campaigns (and business) will send us personalized emails based on who we are and what we like – and they’ll ask us to bring our friends along with us.

Follow Klaviyo on Twitter for more analyses like this on the changing role of email marketing.

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Re: “Hey:” – An Analysis of the Obama/Romney Emails

Early in 2012, I signed up for the Barack Obama and Mitt Romney campaigns’ email lists with a rarely used old email address. While I knew that this small dataset couldn’t reveal the extreme sophistication of their email strategies, I set out to analyze the emails I’d received (and rarely read) – and discovered some surprising differences in strategy (at least as it related to the emails I was sent).

The Emails in Numbers

From June 1st through November 5th, I got 35 and 37 emails from Mitt Romney and Barack Obama respectively (see chart above showing cumulative # of emails sent to me over time since June 1st).

There are two main differences you’ll notice – first, the sharp daily dose of Romney emails right after June 1st.  Second, the month-long gap that immediately followed them. This gap began June 18th – the same day that I clicked the unsubscribe button on the Romney emails from another email address (once I realized I was signed up twice). While I can’t prove it, impressively, the Romney campaign seemed to realize I might be close to unsubscribing and put me on pause for a month.

Who Sends the Emails

When we break the emails down by who sent them, the results get interesting:

Percentage of emails from each candidate by who sent them

The Obama campaign is twice as likely to send emails from Barack Obama (49% of overall emails coming from him) than the Mitt Romney campaign is to send them from Mitt Romney (23% of overall emails coming from him). While the campaigns are roughly equal on the number of emails coming from Michelle Obama vs Ann Romney or Joe Biden vs Paul Ryan, there is a major difference in the use of others – a bucket largely made up of Zac Moffatt and Matt Rhoades (other Romney staffers) and his son Tagg.

A few hypotheses for why this might be true:

  • A difference in strategy to add increased importance to emails from the candidate by sending fewer of them.
  • Less candidate allegiance from Republicans in this election (and a greater emphasis on the party).
  • Individual targeting or testing differences based on who I am. Had I exhibited some personal behavior that I liked emails from Obama but would prefer other people on the Romney campaign to Mitt? Is there someone out there who see the exact opposite of what I see?

The most interesting aspect of this finding is that it may reflect very real perceptions of what drives voters for each candidate – namely, more voters relating to Barack Obama on a personal level, and more potential Romney voters holding deeper party than candidate allegiances.

The One Word Subject Line

In a similar vein, while none of Romney’s emails had single word subject lines, about 1 in 7 of Obama’s did. Examples:

  • Joe
  • So
  • Hey (this was a common one)

The one word subject line evokes a certain casualness and personal relationship and this difference seems to parallel many of the media portrayals of the candidates.  Are the one word subject lines actually less effective for Romney? It’s hard to say, but what might be most clear is that the campaigns have developed real stylistic differences in how they talk to their constituents – and those could be rooted in the real differences of who their constituents typically are.

 The Enigmatic Colon

Very unexpectedly, 1 in 6 of the Barack Obama message subject lines ended in colons (and none of the Romney subjects). Here are a couple of examples:

  • Real Quick:
  • Urgent:
  • This Matters:
  • Deadline:

Given how high this number is, my guess is that the Obama campaign has tested (and shown) that ending a message in a colon makes people more likely to read it.  While the circumstances of a presidential campaign are obviously very unique, this isn’t a piece of advice I’ve heard elsewhere (and certainly not one that the Romney campaign has acted on in their emails to me).

The Future of Email may contain more Colons

First off, all of these analyses are based on a single person, and as ProPublica’s attempt to reverse engineer email strategies is starting to show, there are wide variations in what you’ll receive based on where you live, how old you are, whether you’ve donated, etc. As these systems get more complex, it will become more and more difficult to analyze any company or campaign’s email strategy – because that strategy might actually be 300 million different strategies.

That said, the emails will likely always say more about the particular cultures and moods of a campaign or organization at a given point in time. Would Obama letting Biden send more emails have changed how much money was raised? Would a “Hey:” from Mitt Romney have increased his chances of winning my vote?

The email strategies of the political campaigns are among the most sophisticated in the world and are a great indicator of how email will be changing as companies get better at linking the emails they send to the behavior of consumers. Just as Obama and Romney know what makes you press the donate button, companies are getting better every day at knowing how to make you purchase. In the future, it might not just be presidential candidates who are ending emails in colons and varying senders to figure out who you connect with – it might be your local farmers market stand.

 

Please tell us more about the Obama and Romney emails you’re receiving in the comments and if you want to know more about the future of email marketing, check out Klaviyo. And – go vote. 

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Analyzing the Impact of the Ecommerce Newsletter

“A lot of people will tell you that sending newsletters isn’t worth the effort. They’ll say it’s time consuming, expensive, and doesn’t provide enough of a return on investment. I disagree.”  - Opening lines from the Guide to Email Newsletters by Mark Hayes on the Shopify blog

The line above is a pretty accurate summary of the opinions on whether any business should put the time into sending a newsletter.  In a world where content and quality is very important, sending email newsletters isn’t free, but many of us have a sense that they are worth that effort.

Ending the debate

The problem is that both viewpoints make a lot of sense and each is probably right for some businesses. So what do you do?  At Klaviyo, we’ve been spending a lot of our time lately figuring out how businesses can understand the impact of their emails on the metrics that matter (look out for more on that soon from us). We’re convinced the answer is measuring the impact of newsletters on purchases (as well as opens, clicks, website visits, unsubscribes, etc though all of this is secondary).

Defining Success

A good first step is figuring out what your goal with your newsletter is.  If you’re going to send a newsletter no matter what anyways, measurement is a good way to compare which content does better than other content…but measurement is a lower priority because you can get the basics from opens and clicks.  That said, if you’re either strapped for time and debating the value or you’re store has been off the ground for awhile, there’s a good chance measurement can generate sizeable profits.

Based on what you decide, you should also get a sense for whether your goal is short term gain (meaning purchases alone are probably king) or long term customer engagement (in which case unsubscribes, opens, clicks and website visits gain in importance).  Track what you think is important.

Next steps

Most importantly, you need to stop debating, get emails out the door and then commit to listening to whatever analysis result you get back. You can always dismiss measurement based on methodology or specific circumstances – so if you don’t commit not to do this ahead of time, don’t waste lots of time doing analysis.

At the end of the day, you write newsletters for the customers.  Make them happy.

———————————–

Try Klaviyo today to measure the impact of your newsletters and other customer outreach with our 2 week no commitment trial.

 

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How to Measure the Impact of Customer Lifecycle Marketing in 5 Steps

You are almost certainly losing money based on the emails you don’t send to your current customers. For some businesses, you are losing a lot of money.

From what I’ve seen, companies tend to fall into one of three buckets regarding customer lifecycle marketing emails:

  1. They don’t send them because they think customers will find them annoying.
  2. They don’t send them because they don’t think the value of setting them up will outweigh the cost in terms of time.
  3. They send too many and those have limited impact on customers.

These aren’t acceptable buckets to fall in.  In each of these cases, they can know the answer by testing and then measuring what happens.

 

Here are 5 steps to help you get started:

Step 1: Implement something.

If you are reading this and haven’t put anything in place, stop immediately and go identify a set of customers and send them an email.  One starting point is everyone who used to be very active but hasn’t been recently.   If you’re worried about putting too much time into, focus on the simplest group possible and don’t worry about automating it.

Step 2: Pick a group as a baseline

In short, you want a group who lets you know what would happen if you didn’t implement the email you are planning on sending. For many of us, a great starting point is to just use what’s happened historically as this benchmark.

Over time, you probably want to consider holding out a set of customers as a control group who joined at the same time, from the same channels, etc. It’s not worth worrying about perfecting this at first.

Step 3: Measure Quantitatively

Once you’ve been sending emails, it’s time to see what’s happened. Two key things here:

  • Focus on multiple metrics – sales, profit, site visits, unsubscribes, purchase size, etc. Even if a customer doesn’t change their buying or usage patterns immediately, you want to see if there are related positive (or negative) effects.
  • Focus on impact over time, not just what’s immediate.  Because it’s easier to track, too many companies focus just on the impact they see from clickthroughs, but you really care about what happens over the next 7, 14 or even 30 days.

The simplest way to do each of these is to look at average performance of customers at different times frames – 24 hours after email, 3 days, 7 days, 14 days, 30 days – of both the customers who received the email and those who didn’t.  Over time, you’ll want to get more accurate and detailed about this, but this is a good starting point that will likely get you 80% of the right answer.

Step 4: Measure Qualitatively

It’s also worth identifying a random subset of customers and having quick conversations with them. The goal is to better understand the customer impact but also to generate new hypotheses about emails or approaches they might find helpful.  Something to keep in mind is that what people say doesn’t always match with what they do.  When Google initially tested many of their ads, they found that people reported not liking them when explicitly asked, but they also reported being happier on pages with ads than those without ads.

A final note – we have seen that offering a small token of appreciation (gift certificate, shirt, etc) helps engage people more quickly than otherwise.  Depends on your business, but if you’re struggling with low response rates, might be worth considering.

Step 5: Automate

If it worked, go ahead and implement it.  If you’re unsure, increase the size of the group or modify the email to try to create a test that you’ll be more certain about.

Summary

The main barrier is sending the first email. Measurement is a great way to figure out what’s working, but if you take it too far, it too can become a barrier to getting started. Good enough actually does tend to be a great place to start – once you know how your first efforts went, you can focus on optimization later.

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