Study: A Little Personalization Goes a Long Way. Just How Little? You Might Be Surprised.Jul 19, 2016 - by Kristine Lowery
Savvy marketers know the power of true, one-to-one personalization. It enables superior customer retention and stronger acquisition, and therefore leads to sustainable, profitable growth.
Not everyone has achieved that level of personalization yet, of course. Sometimes, it’s easy to forget just how much of a difference it can make to take even baby steps along the road to personalization. It’s fantastic if you are using behavioral and interest data from all channels to make every channel more relevant and connected, to offer your customers the absolute best experience possible. But a new study from researchers at Stanford University and the University of Chicago offers a potent reminder that just getting started – using one of the most basic tactics imaginable – can pay some pretty serious dividends, too.
How basic are we talking? Really basic. As in, using the first name of your customer in the subject line of an email.
Three experiments, three darn good findings
That’s exactly what the researchers did. First, they partnered with a company that sold test-prep software and courses to people studying for accounting degrees. They sent out more than 68,000 emails. In half of them, the subject line began, “First name…” In the other half, the subject line did not include the name. What happened?
- Open rates jumped 20% in the group that received the more personalized subject lines. Not surprisingly, this company now includes the recipient’s first name in every single one of its emails. Wouldn’t you?
- Churn rates went down for the group that got personalized email. This was an unexpected result of the experiment. In the group whose names were not included in the subject line, 1.2% of customers unsubscribed. When the firstname was included in the subject, only 1% of customers unsubscribed.
In the next experiment, the researchers wanted to figure out what happened when a retailer tried to re-engage lapsed customers. In this case, they worked with Mercado Libre, which is the largest online seller in Latin America. The researchers sent out about 1.1 million emails, and half of them included a first name in the subject line. Here are the results from the more personalized emails.
- Open rates rose by 6%
- Click-throughs rose by 7%
- Unsubscribes dropped by 11%
Last, the researchers sent out emails to 5,000 lapsed members of an email list used by Stanford’s own marketing team. You can probably guess what happened in the group that received the more personalized email.
- Email open rates went up 23%
- Click-through rates went up 32%
- Unsubscribes dropped, but the because the sample size was small, the difference here was not statistically significant
To help understand why personalization achieved these results, the researchers also experimented with including the name of the recipient’s company in the body of the email. That move more than doubled the clickthrough rate (to .23% from .11% ) and cut unsubscribes by 6%.
At the very least, this research shows it’s completely worth taking those first few steps toward personalization. What we’d love to see the same team do is move beyond response rate optimization – those opens and clicks – and look downstream to determine the long-term conversion and revenue impact of using such basic tactics when compared to more advanced approaches to personalization.