Bayesian Inference for Assessing Effects of Email Marketing Campaigns

Jiexing Wu,Kate J Li,Jun S Liu

doi:10.1080/07350015.2016.1141096

Jiexing Wu, Kate J Li + Show 1 more

Open Access

https://doi.org/10.1080/07350015.2016.1141096

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Abstract

Email marketing has been an increasingly important tool for today’s businesses. In this article, we propose a counting-process-based Bayesian method for quantifying the effectiveness of email marketing campaigns in conjunction with customer characteristics. Our model explicitly addresses the seasonality of data, accounts for the impact of customer characteristics on their purchasing behavior, and evaluates effects of email offers as well as their interactions with customer characteristics. Using the proposed method, together with a propensity-score-based unit-matching technique for alleviating potential confounding, we analyze a large email marketing dataset of an online ticket marketplace to evaluate the short- and long-term effectiveness of their email campaigns. It is shown that email offers can increase customer purchase rate both immediately and during a longer term. Customers’ characteristics such as length of shopping history, purchase recency, average ticket price, average ticket count, and number of genres purchased also affect customers’ purchase rate. A strong positive interaction is uncovered between email offer and purchase recency, suggesting that customers who have been inactive recently are more likely to take advantage of promotional offers. Supplementary materials for this article are available online.

Highlights

Email marketing is to directly market a commercial message to people using email
By integrating over all individual-specific random effects, we greatly reduce the dimension of the posterior distribution, which results in an efficient Markov chain Monte Carlo (MCMC) algorithm
We discover that customer purchase rate decreases as the length of shopping history or purchase recency increases, indicating that customer retention is a serious challenge to the company

Summary

Introduction

Email marketing is to directly market a commercial message to people using email. It is significantly cheaper and faster than traditional marketing vehicles and is widely used today. In a survey conducted by Direct Marketing Association, 66% of consumers have made online purchases as a result of an email marketing message. According to a ChoozOn Corporation survey, 70% of consumers made use of a discount coupon from a marketing email in the week prior to the survey. It is well-established that email marketing is useful at the overall level. Evaluating the effectiveness of an individual company’s email marketing campaigns is crucial and still challenging

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