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Email Segmentation StrategyEmail Segmentation Strategy

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Current Email StrategyCurrent Email Strategy

• Current Audience: Individuals who have registered via Half.com and are opted in to receive promotional emails

• Email Approach: Weekly emails based on specific promotional theme. Themes can range from product specific (I.e. Palms) to mixed meta emails.

• Segmentation Approach: Emails are sent to all individuals in current audience. Each individual receives same email treatment. Periodic emails are sent to special segments (I.e. Buyer’s of John Grisham novels)

• Frequency Approach-Individuals in the current audience can receive from 1-2 emails a week

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Email Results 2002Email Results 2002

• UGMS from all email campaigns-$5.7 million

• Average click-thru (all emails)- 1.47%

• Average Conversion (all emails)- 3.27%

• Average UGMS per recipient (all emails)- $0.02/email

• Special segment emails produced a higher average click thru and conversion rate.

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• Online retailers are finding personalization and segmentation are more effective based on action instead of demographics. –DoubleClick Feb. 2002

• Amazon tends to base a majority of their communications and personalization based on purchase history.

• Amazon and BN seem to send out 2 to 3 emails per week depending on the user activity.

• There are no major studies analyzing email segmentation and which approaches tend to work best.

Competitive ApproachesCompetitive Approaches

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Email Objectives for 2003Email Objectives for 2003

• Increase the relevancy of communications resulting in increased click-thru and conversion rates

• Manage the frequency of communications• Allow for enhanced managed cross selling• Increase GMS per email recipient• Minimize opt-outs and unsubscribes

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Proposed Email StrategyProposed Email Strategy

• Proposed Audience: Create targeted audiences (segments) based on demographic and buying data from current audience.

• Email Approach: Weekly emails based on specific product category. Create multiple emails to accommodate segments eligible for weekly email.

• Segmentation Approach: Emails will only be sent to individuals with a propensity to purchase the items being promoted.

• Frequency Approach-No individual will receive more than 1 email in any 2 week period.

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Segmentation: Approach and Definitions

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Segmentation ObjectivesSegmentation Objectives

• Whenever possible, segments will be based on the buying behavior of the individual eligible to receive Half promotional emails.

• Where buying behavior data is not available, demographic data will be used to create segments.

• Segments must be continuously tested to see which segments are best predictors of promotional performance.

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Segmentation DevelopmentSegmentation Development

• To help meet objectives on last slide:

– Segments will be based primarily on whether individual has made a purchase or not. (Buyers vs. Non-buyers)

– Primary segments for Buyer Group based on buying behavior such as product category preference (Meta Lovers) and price sensitivity (Bargain Shoppers vs. Premium)

– Possible additional segments for Buyer Group, to be tested periodically, are gender and source of registration (eBay or Half.com)

– Primary Segments for Non-Buyers will be gender and registration source (eBay or Half.com)

– Individuals who register via eBay or become eBay sellers will be treated differently than current audience.

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eBay Segments and DefinitionseBay Segments and Definitions

• Two eBay segments will be created:– eBay Registrants-individuals who registered via the

eBay site– eBay Sellers

• Email strategy for these two segments are on-going with eBay direct marketing.

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Buyer SegmentsBuyer Segments

• Individuals who have made at least one purchase on Half.com will be considered a buyer.

• Buyers will be broken into two distinct groups:1. Active Buyers

2. Inactive Buyers

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Active Buyer Segmentations: Approaches and Definitions

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Active Buyers DefinitionActive Buyers Definition

• Active Buyers:– Opt-ins who make at least 1 purchase every 4 weeks

through purchase 1-2 and at least 1 purchase every six weeks through purchase 3+.

– This approach was approved early in 2002 and was developed due to data that showed there was a large drop off in users who made purchase 1 or 2. By purchase 3, the percentage of individuals not making a future purchase on Half.com decreases significantly and flattens for the remaining purchase life cycle.

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Active Buyer/Meta Lover Active Buyer/Meta Lover SegmentationSegmentation

• Active Buyers will be primarily segmented by which product categories (Metas) they are likely to buy in. Categories include books, music, movies, games, computers, computer accessories and electronics.

• An individual likely to buy in a category is considered a Meta Lover for that category.

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Meta Lover SegmentationMeta Lover SegmentationDefinitionsDefinitions

• A Meta Lover in Books, Music, Movies, Games, and Electronics is defined as any individual who has 20% or more of their items purchased in a category.

• An individual can be a Meta Lover of multiple categories if they meet the conditions above in multiple categories.

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Active Buyer/Meta Active Buyer/Meta Lover-Bargain/Premium Lover-Bargain/Premium

SegmentationSegmentation• If a user meets one of the conditions mentioned

above for receiving an email that is meta specific in BMMG, an additional segmentation occurs based on the user’s price sensitivity.

• ASP will be determined for each meta and matched with the ASP for each user

– User’s ASP > ASP for Meta=Premium Buyer– User’s ASP< ASP for Meta=Bargain Buyer

• 2 Emails will be created for a BMMG category, one catering to bargain buyers, the other premium buyers.

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Computer and Electronics Computer and Electronics Segmentations and DefinitionsSegmentations and Definitions

• To enhance cross sell opportunities 2 additional segments will be developed for Computers and Electronics:

1. BMMG Cross Sell Segment -determined based on the historical average dollars spent in BMMG before making a first purchase in Computers or Electronics. Any active buyer who reaches the average dollars spent for either category will receive email promotion for that category.

2. Computers Accessories Segment-individuals who have made a computer hardware purchase in the last 6 months. Individuals in this segment will receive specific emails promoting computer accessories.

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Active Buyer/Cross Sell Active Buyer/Cross Sell SegmentationSegmentation

• If an opt-in active buyer does not meet the conditions for a meta lover but has purchased a trigger item that indicates a propensity to buy in a meta, the buyer will receive an email for that meta.

• Proposed Cross Sell Triggers include:– DVD Player Purchased-Movies Lover– Audio Equipment Purchased-Music Lover– Game System Purchased-Games Lover

• These individuals will be placed in the bargain segmentation for their respective meta if applicable.

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Active Buyer/Net Perceptions Active Buyer/Net Perceptions SegmentationSegmentation

• As each promotional email is prepared, the products being promoted will be entered into the Net Perceptions engine to suggest a list of qualified buyers for the email.

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Inactive Buyer Segmentations: Approaches and Definitions

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Inactive Buyers-DefinitionInactive Buyers-Definition

• Inactive Buyers:– Purchase 1-2: inactive 4 weeks post purchase– Purchase 3+: inactive 6 weeks post purchase

• Currently this process is automated, results have been successful compared with traditional email campaigns:– Traditional Email—Click Thru Avg 1%, Conv Avg 2%– Inactive Auto Email-CT Avg .7%, Conv Avg 29%

• We will continue to automate Inactive Buyer emails and pull inactives out of the traditional email process

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Non-Buyer Segmentations: Approaches and Definitions

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Non-Buyers-DefinitionNon-Buyers-Definition

• Non Buyers:– Individuals opted in to Half.com promotional emails

who have not made a purchase on Half.com

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Non-Buyer SegmentationNon-Buyer Segmentation

• Non-Buyer class will be further segmented based on tests of:– Gender– Registration Origination

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Additional Segmentations: Approaches and Definitions

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Inside Scoop Participants

• All current and future inside scoop participants will receive emails for the meta they have chosen regardless of their opt-in status. They will be placed in the bargain segmentation in BMMG.

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Segmentation Flows for EmailsSegmentation Flows for Emails

eBay OriginYN

Opt-In TBDNY

No Email

Mixed Meta Email

Every 2 Weeks

Active Buyer

NY

Net-P Auto Email

B M M G C CeAcc

Meta EmailPremium v. Bargain

Meta Email

Cross Sell/Net P Segmentation

Y N

No Email

Meta Lover

Y N

eBay SellerNY

TBD Purchases>0

NY

Inside Scoop

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Email Frequency Strategy

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Email Frequency Strategy

• No opt-in will receive more than 1 email every 2 weeks.• Non-Buyers will receive an email once every 2 weeks.• Inactive Buyers will receive emails according to Inactive

Buyer schedule:– If on purchase 1 or 2 will receive automated email on 4th week of

inactivity and every 4 weeks until a purchase is made-but no more than 3 consecutive emails

– If on purchase 3 or more will receive automated email on 6th week of inactivity and every 6 weeks until a purchase is made-but no more than 3 consecutive emails

• An opt-in should receive at least one Half.com email promotion every 6 weeks

• All eBay segments will be tagged to apply with eBay communication policy

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Email Promotion Strategy

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Email Promotion Strategy

• For Active Buyers:– Campaigns will be based on rotating meta basis with

priority to BMMG with periodic mixed meta emails– Will receive meta specific emails up to once every 2

weeks if Meta Lover conditions are met– For Meta Lovers in BMMG, will either receive premium

or bargain meta email based on their ASP for that meta– Test devoting space for cross promotion and Net-P

generated recommendations

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Email Promotion Strategy

• For Inactive Buyers:– Campaigns will be based on Net-

Perception recommendations only

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Email Promotion Strategy

• For Non-Buyers:– Campaigns will focus on lower-priced

BMMG items, with focus on books, along with some brand name computer and electronics items

– Will be sent once every 2 weeks– User will receive an email based on

either gender or registration origination

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Potential IssuesPotential Issues

The strategies above could:• Cause issues for creative resources• Require significant data warehouse development• Cause issues for tech resources• Cause issues for marketing resources