HEWLETT-PACKARD

Paul Horstmeier, a 14 -year veteran of Hewlett-Packard who took on the position of e-marketing manager two years ago, quickly realised that the computer industry giant had made a mess of its attempts at e-mail marketing. The company's typical customers include IT managers whose business division has purchased servers, printers and services from Hewlett-Packard. These customers also include managers in other parts of the business, and those managers request e-mail updates and newsletters that tell them when new printer drivers are available, when security updates are posted and when product updates come to market. Once in a blue moon they call a customer help line, but they're much more likely to get most of their answers from online sources. Customers like these love getting news and updates by e-mail and are quite responsive to online marketing offers.

Even with that knowledge, HP wasn't using its Web presence effectively, Horstmeier says. HP had been steadily collecting business customer data and e-mail addresses from all of its sales channels but didn't have a central program or strategy for e-mail marketing. At times, as many as nine different marketing groups would blast out e-mail marketing campaigns to segments of the list, but each one was a single shot effort."They weren't coordinated, they weren't leveraged in any way, and we didn't learn from them," Horstmeier says. Instead of (by some fluke) promoting loyalty among its business customers, these efforts were more likely to promote irritation by inundating people with information they didn't want or ask for, he says.

Horstmeier recognised that in order to provide useful benefits to HP, his group needed to take control of e-mail campaigns from those nine different marketing groups. It also had to champion the customer-centric idea that marketing should be a long-term process that focuses on the life cycle of customers instead of looking at a sale as a singular occurrence."We didn't do this in a vacuum, though. We worked with HP's larger CRM strategy groups to figure out what we could do with e-mail marketing that would fit into the larger CRM framework," Horstmeier says. That meant Horstmeier's group had to focus on the e-mail marketing piece while coordinating its efforts with the larger corporate picture that included other customer-facing groups like call centres and customer service teams.

The reverse was true too. HP at large had to understand what Horstmeier's group was up to, says Mike Overly, worldwide CRM manager for HP's business customer organisation. HP is in the process of rolling out a worldwide system that shows a single, unified view of customer contacts, says Overly."We need to do this in order to provide a consistent customer experience, and [the e-marketing group's] work is a rock solid piece that will be tightly integrated into that single-customer master."

To accomplish that goal, the e-marketing group brought in e-mail analysis, segmentation and personalisation tools from California-based Digital Impact. By analysing its e-mail databases, HP found that its business customers fell into two groups - IT managers and end users. So instead of immediately churning out more e-mail campaigns, HP set out to learn what these groups wanted through small pilot tests. The company found that IT managers were willing to tell HP exactly what kinds of general product and support alerts and newsletters they'd like to receive (such as laptop support newsletters and discussion forums, print driver updates, and new product introductions) while end users wanted much more specific information about the exact product (network server, PC or printer model number) they'd purchased and how to use it.

Horstmeier and his group decided to provide exactly what these two groups asked for, but they wanted to find out which type of marketing campaign best suited each customer's individual preferences. So HP embarked on a carefully controlled project comparing an e-mail campaign with a direct-mail offer. He says his team looked at both cost savings and revenues generated from both campaigns, and studied the e-mail marketing's effect on the customer experience. Sending product support alerts and e-mails to targeted customers saves Hewlett-Packard $US150,000 per month in call centre costs.

The results showed that more of their customers responded to the low-cost e-mail offer, making it over 20 times more cost-effective. (It costs $US1 per direct mailing per customer but only between 10 and 15 cents per customer to create and send monthly e-mail, for more than 1 million customers per month.) Customers also said they loved getting the e-mail alerts and updates with more than 85 per cent saying they were quite satisfied with the content they received. And the e-mail campaigns generated an estimated $US15 million in new sales revenues per month, Horstmeier says.

As for cost savings, the e-marketing division estimates they save a half million dollars per month by combining and reducing the multiple e-mail campaigns. By sending out product support alerts and e-mails, the resulting reduction in calls made to support lines alone saves close to $US150,000 a month, Horstmeier says.

"We found that we can deal with IT managers with a one-to-many campaign where they all get some of the same e-mails. It's high volume and quick," Horstmeier says. But the company's customers"require more tailored campaigns that fit their specific situations - these require a deeper level of personalisation and detail, which bring us a greater level of detail in return".