Aberdeen Study Shows Email Personalization Driving Higher Open & Conversion Rates

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Written by Amanda Ferrante

Monday, 25 August 2008 19:00

Personalization techniques help organizations deliver relevant email marketing campaigns by incorporating customer profile information, segmentation or demographic behavior, and other attributes from customer databases, according to new data from Aberdeen Group. While the report titled, “Email Marketing: Get Personal With Your Customer,” found almost unanimous agreement (96% of respondents) that email personalization can improve email marketing performance, it also found dramatic performance variations among leaders and laggards.

Looking at the organizations that Aberdeen deemed “Best in Class” in email marketing, the report found that leaders are posting substantially better metrics than the industry average, including:

51% average annual increase in email open rate and email campaigns;

45% average annual increase in email click through rate in email campaigns;

26% average annual increase in email conversion rate.

The report identified best practices in email marketing personalization by isolating the strategies, technologies, and processes that lead to superior email campaign performance in top performing organizations. The findings represent views/intentions of over 550 organizations.

By using channel behavior, purchase history, personalized product or service recommendations, online activity, and other attributes from customer databases, companies are delivering personalized marketing to prospects. One in three companies segment customers by demographics or behavior and market to these segments uniquely over email campaigns. One in five companies send personalized customer-specific emails based on individual profiles, purchase history, product recommendations, and other attributes, according to the report.

The Importance of Customer Data
Organizations need to have a clear understanding of their customers in order to maximize revenue, according to the report. BIC companies can tell how and when customers purchase, and why they purchase what they do. Personalized offers and messaging allows the BIC to create intimate interaction.

BIC companies constantly learn from customer behavior, and, more importantly, from the information customers willingly provide (through forms, surveys, and across customer channels like the call center, customer service, etc.). Top performing organizations are 2.3-times more likely than their peers to identify high value customer and market to them uniquely over email. High value customers are not necessarily the customers with the highest sales—but rather customers who willingly interact with the company, providing the BIC with valuable feedback on how the company can meet their needs most effectively.

“When a customer purchases a product AND opts in to newsletter or email distribution, they are not only telling the organization they want to communicate with them, but they are instilling a level of trust in the organization, says Ian Michiels, senior analyst for Aberdeen Group and author of the report.

“It's five times more expensive to acquire a new customer than it is to encourage repeat purchases from an existing customer,” says Michiels. “It's absolutely essential to isolate high value customers to maximize retention.”

“Companies should be isolating high value customers based on attributes that make them profitable lifetime customers,” says Michaels. “However, once identified companies should also identify the subset of these customers who knowingly accept interaction with the organization. These are the gems and are true high value customers that should be marketed to uniquely (which 46% of Best-in-Class actually do).”

The research demonstrated the measurable impact of more advanced personalization techniques. By looking at the performance variation after personalized email campaigns were implemented, the research showed:

Click through rates improved 14%;

Open rates improved 6%;

Conversion rates improved 11 percent;

Customer retention rates improved 8 percent;

Opt-in rates improved 5 percent.

While the research indicates a steady improvement across all email channels by implementing personalization techniques, all companies surveyed described their biggest challenges preventing them from adopting such techniques. 46% of respondents said creating personalized marketing content in itself is challenging.

44% said accessing data for use in personalized email is a challenge. 30% cite their lack of expertise in email personalization their biggest barrier; 41% lack the access to customer profile and behavior information for use in personalized emails. Some respondents (27%) are stuck because of their lack of technology expertise. 45% say creating personalized marketing content is their biggest challenge to personalizing email campaigns.

“Customers have come to expect a level of personalized interaction and they expect marketing to be relevant or it's just noise,” notes Michiels. “Best-in-Class keep very robust databases to help understand their customers, the buying cycle, the needs, desires, wants, behavior, etc. Customer purchase behavior and psychographic attributes don't necessarily need to play a role in one-to-one personalization in individual emails- very few best in class (38%) even personalize to this degree, but these components should play a role in developing the marketing message and segmenting the market into appropriate unique market segments.”

Click here to access the full report.

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