Online retailer profits from personalizing its outbound marketing

There's no doubt consumers worried about the economy are going to be cautious this holiday season, but you can still turn them into buyers by putting into practice the lessons of current research on personalization, discounting and the importance of an exceptional overall customer experience. We did, and Scentiments.com is already realizing the benefits.

From blind email blasts to personalized alerts

As an online fragrance retailer, we compete with dozens of other sites selling similar products. My personal philosophy is "no gimmicks, just great deals," so that is how I run my day-to-day business. To attract buyers and turn them into loyal customers, we've learned that you need to combine a range of business practices designed to ensure a rewarding and engaging customer experience. Sure, having highly competitive prices and a wide selection (we have 8,700 SKUs) is critical, but it's not sufficient by itself to deliver sales results in line with our goals.

Before mid-2008, our email marketing program consisted of sending promotional emails about once a month. They went to everyone on our list, and focused on seasonal specials or clearing overstocks and we did see an increase in sales in the days following the blast.

In mid-year, we decided to make a shift and implemented personalized product recommendations on our Web site ("web recs") and personalized email alerts. We had not taken advantage of personalization technology until then because we didn't have the internal staff time or expertise to do so. Since we found a pay-for-performance service, we decided to try it.

We knew that personalization could deliver improved results, and were further persuaded by the findings of a recent study that our partner, MyBuys, commissioned from Harris Interactive. The study among 2,382 U.S. adults focused on their preferences and reactions to retail promotions in light of the current economy. The results indicate that while sales and discounts are broadly popular, marketers must go beyond blanket price reductions, which can annoy customers, and complement offers with personalized promotions, which move shoppers to buy. We decided to test that finding right away.

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Moving 100 units in five hours at an off-peak time

We had negotiated an excellent wholesale price on a delivery of Alfred Sung perfume for women, one of our more popular brands. So we lowered our already discounted price by several dollars and the recommendation engine identified the right customers to receive an email alert regarding the price drop. Those customers were identified by analyzing a range of factors, including their purchase history, browsing patterns, and stated preferences for brand, category and price threshold.

So this was a specific test case that followed the research recommendations — combine personalization with an attractive discount to maximize response. The result? We sold 100 units within five hours of sending the alert at an off-peak time — an exceptionally successful promotion. Our regular Alfred Sung customers appreciated the alert and knew a good price when they saw one. How do we know? Because they opened the email, clicked through, and bought the product!

The risks of not personalizing your communications

In addition to establishing the benefits of personalization plus discounts, the study pointed out that there's a risk to making recommendations customers perceive as not relevant. The study found 62 percent of online adults have been influenced to purchase an item after learning it's on sale and 54 percent are more likely to pay attention to promotions about discounts given the state of the economy. But retailers who promote price cuts without personalizing the message may not see sales jump — and could even lose customers. In fact, nearly half (48 percent) of adults are annoyed by online promotions that are irrelevant to them and 43 percent say they would consider not visiting a Web site in the future if a promotion irritated them.

The bottom line? Consumers appreciate deals, but want them on products they actually want to buy. So while sales and discounts are broadly popular, marketers must avoid annoying customers with irrelevant messages. The secret is to use personalization techniques to go beyond blanket price reductions and complement offers with personalized promotions.

Our practices at Scentiments.com bear this out. To ensure a positive overall shopping experience there are a few key things we have in place: Our site is graphically pleasing, easy to navigate, includes product reviews written by customers (in fact we have over 50,000 reviews and motivate people to fill them out by offering them a chance to win $1,000), and we feature attractive discounts on name-brand fragrances. Plus, we personalize our sales promotions with web recs and email alerts. As a result, we've increased revenue by 11 percent over the past three months.

Is it going to be a challenging holiday season? You bet, but if you take advantage of the technology and marketing intelligence now available and offer attractive discounts on specific products, then notify the right prospects via Web recs and email alerts, you can beat the odds and turn cautious consumers into loyal and happy buyers.

Mr. Wyner is CEO of Scentiments.com, an online fragrance retailer based in South Florida that also operates three brick-and-mortar stores.