E-mail is the lifeblood of the online marketer, but there is little room for those who do not take the time to get it right. That's what Concord, Mass.-based online health products retailer MotherNature.com found out. Just like a lot of other dot coms, MotherNature.com learned this year that a promising IPO does not guarantee long-term success. The company is not yet turning a quarterly or overall profit, but is passionate about communicating with customers and knows that customer loyalty is the key to success. Even in the second quarter of 2000, when MotherNature.com attracted 69,000 new buyers, existing customers still accounted for nearly 60 percent of revenues, a trend that is growing with the customer base.
Wendy Cebula, director of retention marketing for MotherNature.com, and her marketing analysts are certain that they know how to create a loyal customer. According to their data, once people buy from MotherNature.com three times, they're hooked. To encourage customers to join that elite club, her staff designed an intricate series of marketing messages. The pitches, which are delivered in a monthly e-mail newsletter as well as in special mailings on a permission basis, come in three flavors: informational (promoting a product in vogue or in the news); event-driven (capitalizing on a customer's relationship history, such as expressed interest in a particular product or a post-sale follow-up); and lifecycle (specially tailored for customers based on the length of their history with MotherNature.com).
The Old Drill
MotherNature.com believes its marketing strategy is sound. Execution, however, has been bogged down by inefficiency. Cebula's two marketing analysts worked for days at a time to segment the audience of hundreds of thousands of registered Web site visitors into the precise groups that received each campaign. "A great deal of my time was spent with data queries and targeting algorithms," says James Connolly, marketing analyst at MotherNature.com.
Connolly would have to plan the selection criteria, write raw SQL database query code, then place the results in SPSS, a statistical analysis tool, and run complex sorts on the data to come up with a group for each mailing. "It allowed us to target at a very granular level," says Cebula, "but it was also very labor-intensive. You try to hire the best and brightest analysts, and you can only keep them interested in repeating that process for so long."
Not to mention that the best and brightest analysts don't come cheap. Cebula and her superiors were genuinely concerned about the cost of staff time invested in each marketing campaign. The process was also vulnerable to error because of all of the manual data tasks. "I don't want to send a 'new customer' offer to an old customer because someone missed a greater-than-or-equal-to sign," says Cebula. "I'd rather have my smartest people working on strategy and offer development than running queries on the database and building lists."
Down the road in Lexington, Mass., around the time Cebula was puzzling over the problem of needing more targeting with less staff investment, software developer MarketSoft was putting the finishing touches on its new eOffers suite and looking for customers. Tim Kinsella, New England account executive at MarketSoft, was given new orders. MarketSoft, generally known as a provider only to the biggest marketing organizations, launched a pricing promotion at small but high-growth companies, and Kinsella wanted MotherNature.com to take part.
"We figured if we priced it right to make it attractive, the deal size would grow as they do," Kinsella says. The program consists of a restricted-feature "try before you buy" period, along with a relatively modest monthly price for the full ASP-hosted version.
MarketSoft designed eOffers to fit the needs of aggressive online marketing organizations. The software can query a standard marketing database, build personalized e-mails from a library of approved marketing offers, check the list and the offer against company-defined rules governing the frequency and content of e-mails and then launch the campaign, with no human intervention. Compared with MotherNature.com's labor-intensive process, Kinsella knew he had a sale waiting to happen. "It was taking two analysts two weeks to produce the [marketing] newsletter," he says, while eOffers would be able to send daily campaigns without breaking a sweat.
Cebula considered other vendors, including Digital Impact and Annuncio, but quickly settled on MarketSoft. She was particularly unimpressed by a number of offerings from other firms that essentially amounted to e-marketing outsourcing. "Your ability to run a campaign on the fly is pretty limited [with an outsourcer]," she says. "It's not just limited by your resources, it's limited by the outsourcer's resources." MarketSoft's ASP pricing, involving a smaller monthly bill rather than a large up-front implementation price, was also compelling.
MotherNature.com agreed to become a beta implementation site for eOffers in early May, and was up and running in about six weeks, with production-quality offers going out a few weeks after that. MarketSoft sent a team of four, including manager of client services Cliff Lee and CTO Chris Bergh, to work with Cebula and her staff. Normally, Bergh would not do client implementations, but as Lee points out, "because this was a beta installation, it was 'all hands on deck.'"
How "beta" is "beta"? Lee had worked on a total of one other eOffers implementation--and that was for MarketSoft's marketing department. Despite the short implementation history, Lee says that the six-week implementation time is fairly representative, if perhaps on the long side. He predicts this time will not vary significantly for installed software (rather than ASP) implementations, because a great deal of the work is database conversion and network infrastructure, tasks that need to be performed in either licensing model.
While IT considerations and database conversion took up much of the implementation time, MarketSoft also took time to train Cebula's two analysts for the pilot program. "We found that classroom training was not as effective," says Lee. Instead, MarketSoft guided Connolly and his colleagues through a model marketing campaign, including customer targeting and offer building, in three sessions over three weeks. By the middle of the second session, Connolly says he grasped the eOffers system.
MotherNature.com's marketing analysts were already familiar with event or "trigger"-based marketing from their earlier campaigns. But Lee found that the previously slow marketing cycle limited their imagination at first. He felt that they were too focused on data mining to look for profiles and trends and had difficulty adjusting to the power of responding to events in real time. "We had to put them into the mindset of being able to create and send offers automatically based on events such as a prospect or customer clicking on a Web page or achieving a certain spending amount," he says.
The immediate payoff for MotherNature.com came with the introduction of standing campaigns that can be run automatically, every day. "Unfortunately, one of the most critical elements in targeting is timing," says Connolly, and timing was certainly lacking before eOffers came along.
Cebula and her staff had developed a long series of lifecycle campaigns, such as sending a message 10 days after a user registers on the site but does not make a purchase, or a special offer 60 days after a customer's last purchase. In the past, these campaigns would be run infrequently, perhaps twice a month at best, meaning that some customers were well beyond the target date of the campaign. With daily campaigns that hit the target dates exactly, "it's marketing to them when they need it, as opposed to when it's convenient for us," says Cebula.
She estimates that even a simple lifecycle offer would have taken 90 minutes of analyst time each time it had to be run with the old marketing system. "It's not practical because we do lots of these types of campaigns," she says. "I can focus expensive analyst time on program evaluation and strategy development, not execution."
eOffers also gives MotherNature.com's monthly e-mail newsletter, the "Sunday Supplement," greatly expanded flexibility. While the newsletter has always been customized to a customer's known interests, eOffers makes the process of inserting relevant articles much easier. "There can be 500 different permutations of newsletters based on 40 to 50 different articles."
For the first time, MotherNature.com can also target marketing messages at users not only based on their expressed interests or purchase history, but on their history and responses to individual marketing elements. Cebula says that may be used to reward customers for responding to certain campaigns.
Cebula, Connolly and steinberg all agree that the implementation went extremely well. Cebula points out that MarketSoft was receptive and responsive to feature requests, turning them around quickly rather than advising her to wait for future versions of the software. "It's almost like we're getting a super-customized product and a development team," says steinberg.
MarketSoft's Lee concedes that the glowing reviews may be colored slightly by the fact that MotherNature.com is a prized early adopter. "Because it was a beta installation, we probably paid more attention overall, just to make sure we got off on the right foot," he says.
The company hopes to have about eight users on the system when the pilot program is complete and everyone is comfortable with the software. In addition to the two marketing analysts, staff from MotherNature.com's merchandising and newsletter content departments will be able to develop and launch campaigns. The eOffers Offer Broker coordinates these efforts, ensuring that no department overloads customers with e-mail or pre-empts a higher-priority campaign.
MotherNature.com previously relied on Advansys for marketing campaigns and has no plans to relegate that software to the dustbin. Currently, campaigns are roughly equally divided between Advansys and eOffers, although the trend will be to migrate more offers to MarketSoft. Cebula says that Advansys continues to be a good choice for high-volume, low-customization campaigns that she still wants to run from time to time. The idea was not to replace software, as "the only thing we're replacing is a lot of [analyst] time," says steinberg.
While Cebula is confident that eOffers will enable MotherNature.com to boost lifetime customer spending and profitability, she has no plans to put MarketSoft's product to work on customer acquisition as of yet. While the company has experimented with acquisition e-mail campaigns, she says they found it not to be very effective. Instead, she will continue to work with online acquisition partners such as ClickRewards and MyPoints.
MotherNature.com claims not to have any specific projections for increased revenue from the introduction of eOffers. On the subject of returns, Cebula says "my first indication is this: Are my analysts happy using the system, and how much time are they saving?" To that, Connolly points out that he has been able to avoid all contact with SQL code and SPSS while using eOffers. "With the amount of time I'm saving, I can analyze results and learn from previous campaigns, and spend more time improving our offers," says Connolly. He points out that with the biweekly or monthly campaigns, it was very difficult to adjust messages that weren't performing or that were leading to miscommunication with customers. With a daily campaign and instant results, MotherNature.com can quickly change offers, getting the right message to more people.
Cebula did share that conversion rates are up as much as 300 percent with the adoption of more timely and precisely targeted offers, and that they have seen a recent boost of nearly 50 percent in per-customer transaction amounts. Cebula hopes in the future to see instant ROI projections based on campaign goals, but for now is satisfied with anything that helps her get messages worth reading to her customers.
"We know that as people shop more on the Internet, they're opting in to all kinds of e-mail campaigns," she says. "Our theory is that people are going to be deluged. We're very focused on making sure that when our customers see an e-mail from us, they know it's relevant and targeted, so they're much more likely to read it."