What's "infinite email ROI"? Nick Carter, marketing and sales manager for ValuePetSupplies.com says it's making tens of thousands of dollars in revenue from a email campaign that cost him nothing. Literally nothing.
So we caught up with Nick to learn how he's regularly squeezing up to 7,000 ROI from his email campaigns, and made them 451 percent more efficient than paid search marketing. He told us, and also shared some pretty provocative thoughts on how coop ad dollars could be better used if re-allocated to online marketers and the vendors that serve them.
Q: Let's start at the top. Tell us about ValuePetSupplies.com.
Nick Carter: My buddy Zach, who I worked with at a prior company, started ValuePetSupplies close to three years ago. Initially he started it as an eBay business, then they invested in some multi-marketplace hosted technology that includes our own storefront. Things grew very, very, very quickly.
He wore so many hats that it was almost impossible to make it any kind of routine to market to any of the 80,000 customers that he had at that time. A good percentage of my job now is email marketing. I also do the paid search marketing, which is part of the story. We have really good comparison numbers.
Our storefront in December represented 68% of our customer revenue, the rest of it comes through eBay and Amazon. Paid search marketing generated 30.69 percent of that share of [storefront-generated] revenue at an average order cost of $10.96. The average order value is $68.04, so the ROI on that is 621 percent, or earned revenue per share of 16.1 percent. That’s a little high for me. I try to keep it below 15 percent if I can.
For every dollar we spend in paid search, we profit. We're happy with it. But by comparison the VerticalResponse email campaigns we've been running generated 26.25 percent of our revenue, so slightly less, but at a cost of only $2.89 per order. The average order value was almost $81, for an earned revenue share of 3.57 percent, making email 451 percent more efficient than paid search. It's by far our most efficient marketing channel. Just add more customers and it's all good.
Q: But you use email for retention, not acquisition, right?
NC: Yes, paid search is mostly new business. Between eBay and paid search and comparison shopping engines we get about 3,000 new customers per month. Our existing customer base right now is almost exactly 100,000.
Q: Tell us more about your email campaigns; messaging, segmentation, and frequency, for example.
NC: For the month of December, which is somewhat typical, although being a holiday it may be a little less than typical, we sent 16 emails. Each campaign is generally comprised of two or three emails: "one-day only," "three days left," "last day," those types of offers are our most common. There's a number of different ones that we do. One of our most effective is the new customer campaign. Every month, I send an email to customers who signed on the previous month or so. You get a new customer appreciation email with a discount. Our first 60,000 or so customers didn't get any retention marketing. I'm still trying to convert those people every month.
Another bucket is our non-returning customers. They're on a pretty high rotation of programs, and those programs are pretty aggressive because we're trying to get them to come back.
The new customers get an email with a coupon, then a 3 day and a last day offer. Each of those emails will generate about $1,000, and the ROI on them is 10,000 percent. It costs me $9 to do it and I get $1,000 worth of revenue. And we're hopefully creating habitual customers more frequently by doing that. Returning customers as a percentage has gone up from 20 to over 30 percent of revenue.
So the new customer campaign is ongoing. Non-returning customers we throw all kinds of stuff at. I'm doing one now that's "a gift for your dog/cat" or pet, if you don't know what animal they have. We segment by type of pet, type of treat. Our number one selling products are, believe it or not, puppy pads. That's a very habitual customer. They tend to repeat, to be urban, they don't necessarily buy much else. We would market to them based on their product preference. Similarly with our Bully Stick treats, the other huge-selling product. That's also a consumable.
We tried campaigns on filter needs for aquarium customers. It didn't do anything. It didn't pay for itself. Whereas a free shipping campaign over a certain dollar amount is guaranteed to generate revenue, [as is] any sort of clearance event in a special section of our website, often in combination with a free shipping offer, but probably at a higher dollar rate, like $100.
This treat, Bully Sticks, these are high-volume, very well recognized premier pet products. We're always looking for products that lend themselves well to search or email marketing -- not all of them do. Some of it's product specific, some of it's pet specific, some is more broad-based, like free shipping.
Q: Are you doing lifecyle marketing? For example, when puppies literally outgrow pads, do you try to sell the owners adult dog products?
NC: No, people keep buying them. If you lived in an apartment in Manhattan and had dogs that couldn't be walked during a big chunk of the day, you'd have these things plastered all over. They're also for breeders and end-of-life incontinent dogs. People buy them for themselves. It's the same exact product as a bed pad -- they come off the same machines. People buy them for themselves from us. Lifecycle stuff? We're not that sophisticated yet. We're still working on the low-hanging fruit.
Q: I've heard you've gotten 7,000 percent returns on campaigns. Tell me details of that.
NC: New customer emails are routinely 75 to 12,000 percent. I did a puppy pad campaign in November that was 10,522 percent ROI. It went out to 4,000 customers. I got 43 conversions, $3,367 in revenue, and it only cost me $32. The product ones tend to have the highest ROI because they're so targeted. When we do a really broad-based email to 10, 20, or 30 or 40,000 customers the ROI tends to be between 2,000 and 5,000 percent. The puppy pad customers were like, "OK, who has bought puppy before, but hasn't bought them in a certain amount of time?" That produces extremely high ROI because you only send out a small number of emails and you get a lot of orders.
Q: Last, but certainly not least, tell me about your "infinite ROI" campaign
NC: Certain treats, like Greenies, have got an excellent coop program. [The campaign] cost us literally nothing. We used their money. We offered 15 percent off, which again was their program, so it came out of their pocket. We made $30,000 selling Greenies in October-November based on five emails.
Most vendors have some sort of marketing coop program, but it is typically geared toward traditional media. One of our biggest suppliers specifically states "no internet anything" in their contract. The reason why, I've been told by one manufacturer, is they want to take that coop money in exchange for slapping an ad on their Web site. They seems to have created some sort of negative or exclusionary view toward internet marketing, and that's the only thing we do. We don't do anything else. I've been in discussion with these manufacturers. With Greenies we had over $12,000 in accrued coop that would have expired. Free money. We either use it or lose it. We were able to convince them to do this email marketing campaign and the results were just incredible -- and it cost us nothing.
It really set a precedent with that particular vendor. Paid search blows my mind in terms of how efficient it is, and email is 4.5 times more efficient and you can measure it in every detail, every click. It would also be a huge windfall for email providers like VerticalResponse to get a cut of these [coop] dollars from their customers. People should know they should be taking this free money and generating tens of thousands of dollars through email marketing or paid search.
That was a huge windfall for us. It was like finding $30,000 on the floor.
Greenies email camapign results: