French retailer Fnac learned that e-mail
marketing does work after all-provided the
mailings speak to customers’ actual concerns.

By Jack Gordon

The word may look like a typo, but on its home turf, Fnac is a famous name. The French retail giant is more than 50 years old, having opened its first Paris store in 1954, and it does more than $8 billion in annual revenue. To unfamiliar Americans, however, Fnac (Fin-ACK) often is described as the Best Buy of Europe. Its enormous stores in France, Belgium, Switzerland, Italy, Spain and other countries sell a similar range of goods: computer hardware and software, electronics, televisions, DVDs and CDs, in addition to books, concert tickets and more.

Unlike Best Buy, however, Fnac does not compete as a low-price leader. The chain is owned by luxury-brand specialist PPR, a French multinational holding company that also owns Gucci. Fnac positions itself as an upscale shopping alternative, not as a discounter.

This presented a special challenge to Fnac.com, the e-commerce division launched by the company in 1999. Online shoppers are notoriously price sensitive, yet Fnac.com could not sabotage the brick-and-mortar stores by undercutting them to a significant degree. The site’s job was to expand the revenue pie, not to steal slices from the existing one.

To build a brand relationship with online shoppers that would justify prices often higher than those they might pay on other sites, Fnac.com had to talk to them somehow. E-mail seemed the likeliest medium, and the site soon launched an electronic newsletter. But the e-mail strategy fell flat until the marketing crew learned some lessons the hard way-and began to get personal.

SHOTGUN VS. RIFLE
The original e-newsletter focused on new consumer-electronic products, explains William Courtier, business intelligence manager for Fnac.com. A single edition-the same edition-was sent weekly to every subscriber willing to opt-in.

That eventually amounted to 1 million mailings every week, Courtier says. How many subscribers actually opened them? The company didn’t know. No analytic software was in place to gather data on open rates, unsubscribe rates or other metrics. The newsletter was cumbersome to put together, and had to be mailed by IT specialists. There was no automatic integration with the product inventory for fnac.com, never mind inventories in the physical stores. Communication between the newsletter staff and the stores was, in fact, practically non-existent.

Worst of all, there was no way to personalize the newsletter by sending different editions to people with different interests. And if the content could not be customized and made “;dynamic,”; Courtier says, “;then it was not possible to make it relevant.”;

In 2004, fnac.com went looking for a better way to run an e-mail campaign. “;Relevance”; was at the top of the demand list, Courtier says. Any discounter could send out an e-mail blast, announcing a new product or a special price. If only a small fraction of recipients cared enough to open the e-mail, the economics still made plenty of sense-to a discounter.

Not to Fnac.com, however. Because “;our prices on the site are the same as in the stores,”; Courtier says, his marketing efforts had to build real relationships. People who received e-mails from Fnac.com needed to believe that the retailer would have something personally relevant to tell them. Ideally, not just here’s a new CD, but here’s a new CD from your favorite singer. Not here’s a laptop computer, but here’s the laptop you’ve been looking for.

“;We have a big database with a lot of information about our customers,”; Courtier says. There ought to be a way for an e-mail campaign to make intelligent use of that information to speak to customers in a far more personal way.

Fnac.com also wanted an e-mail system that would make these personalized newsletters and other mailings easy to produce, and that would allow the entire process, including the actual mailing, to be handled by marketing people, not IT people.

Fnac.com settled on an enterprise marketing software system from Neolane Inc., a Paris-based company founded in 2001, now with several offices in Europe and clients including Virgin Megastores and Sephora. Last year, the company opened a U.S. division headquartered in Newton, Mass. Neolane’s software handles campaign management and lead management for multichannel marketers, including targeting, delivery, tracking and reporting functions for e-mail and mobile campaigns.

Fnac.com’s problems in getting a handle on its e-mail operation were not at all unusual, says Neolane’s co-founder and president, Stephan Dietrich. “;People manage their marketing channels with a silo approach, and most of them still struggle to coordinate e-mail with the other things they’re doing,”; he says. For instance, a retailer might have physical stores, a website, a catalog operation and a direct-mail program. Even if all of those channels work in harmony to some degree, the company’s e-mail marketing campaign rarely supports them in an integrated way.

As a simple example, Dietrich says, if a company wants to promote a new service, it might send out a direct-mail piece-and nothing else. If, instead, the company sends a pre-announcement by e-mail, then the DM piece, then another e-mail to follow up, it is likely “;to get an 85-percent lift in response,”; he says. But few companies do. Their systems aren’t set up to allow e-mail or mobile marketing efforts to mesh with activities in other channels.

HAVE WE GOT A DEAL POR VOUS
Today Fnac.com is the number-one retail site in France-and Courtier is much happier with his e-mail campaign. For one thing, marketing specialists run it, from content selection to mailing. The system is integrated with inventories-down to individual product numbers-in the stores, as well as on the e-commerce side. Marketers in the stores can create campaigns on the same platform used by those at the website.

Everything that Fnac knows and learns about its customers is now fed into the system to add personalization and relevance to mailings. The formal newsletter still goes out regularly, but only a third of it is standardized. The rest is targeted and customized to appeal to specific types of customers.

That customization starts with information that people provide in the “preferences” box when they opt-in to receive mailings from Fnac.com. But it doesn’t end there. On a broad level, members of Fnac’s loyalty club get different versions of the newsletter-with different offers-than non-members. On a more particular level, using a web analytics tool and other systems, Fnac tracks its customers’ actual buying history and their navigational behavior on the website. What books, DVDs, cell phones, computers or other items did they look at, and when? That information helps to produce constantly updating “propensity scores” for different products.

This keeps the information about customers’ preferences up to date, a vital consideration to ensure real relevance, Dietrich says. “What you did yesterday is more important than questions you answered two years ago.”

The same kind of information that determines who gets which version of the newsletter is used to target other mailings. A purchase might trigger a mailing that includes a coupon for a future purchase of the same or a related item. Who should receive notice of a particular product launch? Who should hear about a “;flash”; sale that might last only a day? And if a particular Fnac store is hosting an event-a book signing or a concert, perhaps-who not only lives near that store but has a buying or navigational history suggesting that he or she would be interested?

Because of the automated tracking functions in place, Courtier now has a much better handle on the metrics of the e-mail campaign and the results it is producing. He says that the newsletter has an open rate of 20 percent. In a world of busy people with crowded inboxes, that qualifies as excellent-especially since the newsletter’s unsubscribe rate is a tiny 0.5 percent. This suggests that a person who fails to open one issue may very well open the next.

And the actual results? The e-mail campaign now generates 10 percent of all site visits to Fnac.com, Courtier says. That is, one in 10 site visitors is responding to something seen either in the newsletter or another mailing. (In total, Fnac sends out 40 million e-mails each month.) What’s more, 10 to 25 percent of total sales on Fnac.com are made to buyers who are responding to a mailing.

As a next step, Fnac.com is considering expanding the e-mail campaign to the mobile-marketing world by sending text messages to opt-in customers. A special version of the website, optimized for mobile users, already exists. According to Dietrich, the software platform would allow text messaging to be added to, and integrated with, the e-mail campaign within two days, any time that Fnac decides to pull the trigger. Because the mobile option is far more expensive than e-mail, however-six to eight cents per text message in Europe, Dietrich says-Fnac is eyeing the medium carefully.

If and when the marketing effort does go mobile, Courtier says it might begin as a post-sale service. Having bought a product, a customer could receive a text confirmation or updates on shipping.

Whatever those text messages might contain, one thing seems certain: Fnac.com will not be blasting them out with a shotgun. They will be targeted to particular people who are highly likely to be interested in what they have to say. To repeat Courtier’s favorite term, they will be relevant.

Jack Gordon has served as Electronic Retailer magazine’s editor at large since September 2004.