MGI wanted to use the opportunity to diversify from its shrinking-margin retail sales and sell direct. The problem was, the company maintained all registration and transaction information in several large independent databases that were rarely used for relationship management. As the company amassed its large OEM registration base, it also saw cross promotional opportunities for such partners as Sony, Kodak and Canon.

The company's solution was to retain the email marketing firm, Inbox Marketer, and develop a permission email strategy that could mine this database of prospects and groom them into paying customers.The campaign objective was to increase the perceived value of products, immediately up-sell newer versions, cross-sell other related products, educate about technology, invite feedback and increase online revenue.

The campaigns began with testing a quarterly newsletter highlighting new products, user tips, and special offers. Three newsletter deployments indicated open rates and click-thru rates within industry averages, but conversions were relatively low. Inbox responded with a revised contact strategy of highly targeted transactional messages for different customer segments. A new template incorporated traditional direct mail principles such as johnson boxes and P.S salutations in a shorter format.

Segmentation: The next step was segmentation of MGI's very large and rapidly accumulating database. MGI wanted to increase the level of relevant contact delivered on a more regular basis in order to generate a higher proportion of online transactions. Using a data-driven approach, Inbox segmented MGI's database into four behavioral categories (such as most active, lapsed customers, etc) and identified the segment gaps/opportunities. It then helped MGI design segment offers to their existing customers and trial users.

Database segmentation also allowed for highly effective targeting. MGI segmented its original database of over 500,000 records into smaller targeted groups using the key segmentation variables of product and tenure. These fields allowed Inbox to clearly identify the prospect and customer opportunity.

Testing: Using a phased testing approach, Inbox sequentially tested creative, subject lines, timing and price points in order to determine the optimal “transactional” control package. Unlike offline campaigns, email allows for rapid deployment and almost instantaneous response. These results were immediately analyzed, providing the key learning that was incorporated to create the optimal MGI control package. This test methodology was designed as a weekly phased approach. The following is an example of that phased approach as it was applied to a series of VideoWave 4-5 upgrade messages.

Phase 1 - This test within a test focused on customer tenure and subject line testing. Inbox segmented a random sampling of opt-in recipients into four cells. Each cell had identical creative, with two cells positioned at a lower price point. Statistical validation provided direction for the subsequent phase 2 tests.

Phase 2 - Using the best creative from Phase 1 - the control package - Inbox conducted a second test involving price. Note: These two new groups were also used to compare mid-week vs. end-of-week deployment dates, helping determine the ideal deployment day.

Phase 3 - MGI could now determine the optimal creative, price point and deployment day. Testing not only measured CTR rates but also conversion. Rollout commenced two weeks following the initial tests.

Phase 4 - The firm deployed an offer reminder message several weeks after the rollout message to all campaign recipients minus any who had purchased in phases 1 thru 3. It collected purchase data and rationalized from a variety of sources including, MGI’s call center, online store, and through retail product registrants. All new registered customers that received the rollout message were flagged for removal and didn’t receive this reminder message. Additionally, the reminder messages were timed for inbox delivery during the final week of the offer, creating an increased sense of urgency.

Creative: MGI has much brand equity within the consumer software market and wanted email messages that didn't simply serve up light versions of the existing Web site. Intent on wading through the increasing 'inbox clutter', Inbox developed a series of test messages designed to mirror traditional direct mail. It then successfully tested a variety of creative elements including; subject lines, johnson box headlines, body copy, creative icons and offer.

Inbox designed a series of brief, benefit driven messages. Key creative elements shared by all messages included a two line johnson box headline (usually driving traffic to the conversion URL), a short introduction paragraph followed by a series of 3-5 bullet points (product features and benefits), a graphic representation of the product and a lower text call-to-action.

To minimize confusion and click-thru dilution, each message was limited to a maximum of 3 URL's, all of which directed the consumer to the purchase page. MGI placed these URL's strategically at the top, middle and bottom of each message. All messages were deployed as multipart HTML, ensuring that each recipient received either a plain text or HTML version of the intended message.

Results: MGI's entire campaign doubled projected forecasts, increasing online revenue 31% vs. the same period the previous year on sales of almost 4,000 units. Response rates doubled and transactional open rates averaged more than 50%. Average cost-per-sale was $9.25 on a average order of $46.28.

Learning: Testing multiple creative elements such as price, graphical icons, highlighted text, formatting and subject lines incrementally improved the control package. For example, the lower call-to-action, or P.S, generated over 30% of the total CTR. In one campaign, price sensitivity pre-testing improved click-thru performance by over 500%, generating a substantial increase in incremental campaign revenue. The campaign rollout, to over 80,000 recipients, outperformed the test results by an incremental 1.7%.