The $100 bill on the sidewalk
These days, I am often reminded of a story my Economics professor told in grad school to illustrate how theories can get in the way of making money (in this case the efficient market hypothesis). The story goes roughly like this:
An economist and a businessman are walking down the street. As they walk, they come across a $100 bill lying on the ground. The economist doesn’t miss a beat and keeps on walking. The businessman stops, happily picks up the bill and puts it in his pocket. When he catches up to the economist, the businessman asks “Did you see that $100 bill back there?”
“Yup” replies the economist.
“Why didn’t you pick it up, then?” asks the puzzled businessman.
“I didn’t pick it up because it was an illusion.”
“Well, I knew it was an illusion because if it really was a $100 bill on the ground then someone would have picked it up already!”
Ok, not exactly Aesop’s fables but you get the point. Sometimes there really is very easy money to be made but people still hesitate because it seems too good to be true.
Why am I reminded of this story these days? Personalized email marketing. As this is CQuotient’s focus, I think about this topic a lot!
By personalized email marketing, I specifically mean being highly tailored in both the audience to which you market and the messages you send such that every email is personally relevant to every recipient. Personal and relevant – sounds like motherhood and apple pie , right? What retailer doesn’t want to do that? And email is absolutely perfect for this. It is the dominant way retailers speak to their customers between purchases, it is the strongest mobile channel (40% + of emails are being opened on mobile), it is inexpensive and it is easy to vary by segment or person. And the results from being more tailored are undeniable. This is the proverbial $100 bill.
If you listen to the media and tech vendors out there, you would think that everyone was already doing this. I just got back from the NRF show in New York and that was certainly the message. But my favorite moment from the show was when Deb Weinswig from Citigroup interrupted a panel discussing all the benefits of knowing your customers, by saying (I am paraphrasing): “Hold it. I just looked at my personal email box where I get emails from hundreds of retailers (it is my job to follow retailers), and NONE of those messages are tailored to me. NONE. And I can’t think of when I ever have gotten one like that. ” The rest of the panel looked a little aghast at her for saying it, but no one disagreed. And she is right. I too subscribe to many retailer’s email messages and I can count on one hand the number of times I have received a message tailored to me.
Why is this?
After talking with lots of retailers, vendors and analysts, my explanation is that to date the economist has been right about email personalization – it is too good to be true. The hype about 1:1 marketing and “knowing your customer” got too far ahead of the real capabilities. So when retailers tried things with great expectations they were either disappointed in the results they saw, shocked by the level of effort it took (particularly on the creative side), or both! Being rational decision makers, retailers stopped doing it except in a few limited situations like “triggered” emails where a specific behavior (i.e. abandoning something in your cart) is both an immediate trigger for communication and gives you clear insight on the message (“do you want to purchase item X that you left in your cart?”). While effective, these triggers are only a very small part of the marketing approach (only 2.6% of email send volume in Q3 2012) . The lion’s share of the email mix is the standard, “batch and blast” message to every customer with an email, as often as you dare.
Not to be immodest, but CQuotient is now offering that $100 bill, and it is real.
For the past two years we have been been building our technology, working hand and glove with a select set of large retailers, and we think we have cracked the code on email personalization. Hyper-personalization, in fact. The results we have shown from our approach are very very strong, and we have pioneered ways to make the execution for retailer marketers really easy without taking short cuts that reduce the effectiveness (short cuts like ignoring brick and mortar activity because there is no browser cookie associated with it). Starting with eTail West in Febraury we are going to be making a big push to tell retailers that now is the time to pick up that bill. It is going to be an exciting time!