Early last year, a 1937 Bugatti 57S Atalante, one of rarest and most cherished collector cars in existence (with only 17 ever made), was discovered unexpectedly in a dilapidated English country garage. The Bugatti, a 72-year old supercar that could reach 130 mph in an era when most cars could only do 50, quickly sold at auction for more than $4.5 million dollars. We’ve all heard stories like this before – finding a Bugatti in the garage, a Picasso in the attic, a lost Beethoven symphony in a bookshelf – but rarely do we get lucky enough to find this type of “discovery” in the world of multichannel retail. But today happens to be your lucky day…

The discovery that will change your year (this year and every year after) is the opportunity to capture and leverage the email addresses of your offline store customers. This opportunity – hidden in plain sight – can easily add tens of millions of dollars in incremental sales across both online and offline channels. Better yet, capturing this opportunity requires almost no financial investment, only some cross-functional collaboration geared at changing the mindsets and behaviors across the organization. This paper will help you quantify the opportunity at hand and help you understand the key building blocks required to capture its full potential.

Calculating The Dormant Opportunity
Somewhat surprisingly, there are two almost binary levels of focus regarding in-store email capture. On one side, some multichannel retailers capture more than 30% of all customer addresses at the point of sale on a continuous basis (and have email lists in the tens of millions). On the other side, there is another group of retailers who are literally capturing zero (or almost zero) email addresses in-store. My hypothesis is that the retailers capturing zero are unaware of the goldmine they are overlooking. To help you understand the size of your company’s opportunity, use the simple formula below:

Step 1: Calculate Revenue per Email Captured
The first thing you need to do is place an explicit value on every email address captured. For example, if today you are driving $8 million in sales from a list of 2 million email addresses, then we can stipulate that each email is worth approximately $4 annually. If you’re doing a decent job of email marketing, this number should be at least $4 and may be as high as $7 or more.

Step 2: Decide How Many Addresses You Should be Capturing Offline
To understand how many addresses you should be acquiring in-store, you first need an estimate of in-store customer transactions. Start by taking offline store sales and dividing by your in-store average transaction value. For example, if your offline sales are $1 billion annually and the average transaction value is $50 then you have approximately 20 million customer transactions each year. Next, apply a best practice benchmark rate of 30% email capture to those in-store customer transactions. So in our example, if we are capturing 30% of our annual 20 million customer transactions, we would have 6 million new email subscribers every year.

Step 3: Calculate the Revenue Opportunity
To determine the value of these uncaptured in-store addresses, simply multiple the value per email address from above ($4) by the in-store emails captured at the 30% best practice rate (6 million). This gives us an incremental online revenue opportunity from these emails of almost $24 million.

Step 4: Calculate the Offline Impact
But wait, it gets better – and this is the part that gets the store ops guys’ attention: email subscribers tend to favor the channel where they subscribed – so these new in-store subscribers will tend to heavily skew towards offline purchases more than online purchases (although the goal is always to have them become multichannel customers). It is not unusual for a email campaign to drive between $3-10 in offline sales for every $1 in online sales. If you take a conservative approach and use the 3X multiplier and apply it to your new $24M in email-driven online sales – you get a shocking $72M in incremental offline sales driven from the same list of new email addresses – for a grand total of $96 million in incremental sales each and every year. And an incremental $96 million on a base business that’s currently running at $1 billion is the kind of payback that gets everyone’s attention, including the CEO.

I know there are naysayers in every group that will try to shoot holes in these numbers (despite evidence from other retailers to the contrary) so let’s assume that these numbers are too good to be true. So we’ll cut them in half (leaving an incremental $48M in sales for our example company). Then we will cut them in half again (leaving still an incremental $24M). Then we will cut them in half again (leaving an incremental $12M in sales). Even at this level, the program would drive a 1.2% comp for our hypothetical $1B organization. At what point wouldn’t we mobilize the organization for this type of opportunity – especially when the financial investment required is de minimis?

Let’s assume we are moving forward and turn our focus to the requirements necessary for capturing this astounding opportunity. There are six simple keys to putting an effective in-store email capture program in place. It is not unusual to find multichannel retailers with one or more of these building blocks already in place (at least to some degree). But the key to a successful program is having all of the building blocks in place with each block developed properly.

SPONSORSHIP: Everything Starts At The Top

Communicate the Potential Sales Impact
This initiative, like any other cross-functional initiative, will require sponsorship and support from the very highest levels of the organization in order to be successful. After seeing the math above, it shouldn’t take long for your CEO to become the most vocal of executive sponsors for this program. They should quickly begin communicating both the importance and the urgency of this program to everyone from EVPs to district and store managers. Make sure this communication cascades down the organization and is reinforced frequently over the first year of the program.

Obliterate the Channel Conflict Issue
Inane arguments about channel cannibalization have lingered on somehow for more than a decade. The most commonly heard objection (typically from store operations) is that this program is primarily for the benefit of the online channel. In fact, just the opposite is true. Offline stores are in a position to receive the lion’s share of the benefit from this program (3-10X the benefit as mentioned above). And anecdotal evidence shows that in-store email subscribers, while typically becoming cross-channel buyers, tend to remain skewed towards purchasing in-store as opposed to online. The keys to overcoming the channel conflict issue are simple: a strong push from the CEO, reinforced by an equally strong push from the head of store ops, followed (as quickly as possible) by solid sales data that demonstrates a positive impact on store performance. If you have serious skeptics, consider a pilot program within a progressively-minded region/district where you can make disciples of a group of store managers who will see their sales increase as a result of email campaigns to their in-store customers.

GOALS: Structure And Rewards Bring Needed Focus

Set Aggressive, Phase Goals
The quickest way to align the organization with a strategically-important program like this is to develop and assign goals, and then measure both individuals and groups against those goals. Having every employee know that they will be measured and rewarded based on these goals is key. Using the right balance of aggressiveness and pragmatism is also a key. For example, it would be unrealistic to expect to start from capturing 0% of customers on Day 1 and move to a 30% capture rate in several weeks. But setting an aggressive goal of having a “capture run rate” of 30% by the end of the first year is not unrealistic. Set the aggressive goal and then build a phased approach to getting there (e.g. 5% run rate by the end of Q1, 10% run rate by end of Q2, etc.)

Cascade Goals and Rewards throughout the Organization
It will be important to set these phased goals – along with corresponding rewards – at the region, district, and store levels so that everyone is focused and motivated on the program. One word of caution: setting goals at the store associate level should be scrutinized carefully in order to understand whether intra-store competition is more or less beneficial than having those same associates work together to compete against other stores. In either case, make sure there is a mix of rewards (i.e. small vs. large, spot vs. accumulated) that are spread frequently throughout the program. Early rewards should focus on driving “buzz” and engagement, while later rewards are intermittent and should focus on maintaining visibility and mindshare of the store ops personnel.

TOOLS: Resources To Drive Results

Develop a Concise, Compelling Script
Assuming you’ve done everything outlined above, you should now have a committed group of store associates who understand the program’s importance as well as the potential rewards available for helping to bring that program to life. The primary tool these store associates will need in order to be effective is a concise, compelling script to use with customers. The script should be simple enough for every associate to remember, yet robust enough to handle a variety of different responses and objections that might arise. Start by developing the base script that solicits the customer’s email address. This should include a clear “ask” combined with a punchy pitch of the program’s benefits. Augment the script with responses to multiple objection scenarios including privacy, “too many emails already”, and the classic non-objection objection “I’ve already given you my email address.” Once again, the key is a concise, impactful script that is easily committed to memory.

Use Multiple Formats for Support
To further help your store associates, you should deploy a variety of in-store “support aids” that simultaneously build awareness with customers while serving as constant reminders for employees. Signage at the POS station combined with larger signage at strategic locations around the store is a great first step. Associate pins or lanyards are also a great idea. I particularly like the lanyard idea early in the program because it can be printed on both sides, with the associate script and key program points printed on the back to serve as a memory aid while the program is new. The key is to use multiple, reinforcing formats that help to effectively get the message across to customers and employees alike.

VALUE: A Compelling Reason For The Consumer

Develop a Compelling Value Proposition
Obviously the entire program hinges on getting customers to want to join – and that means a strong value proposition. Why exactly should a customer sign up for your emails? Finding what resonates with your customers will vary from company to company. It might be as simple as a discount or it might be some type of special access to new products or information, or both. Your cross-functional project team will be able to develop ideas that will work for your customers.

Sustaining the Value Proposition
If your core value proposition is simply a percentage off a customer’s first order, it would not be atypical to see a spike in subscriptions, followed by some incremental sales, and then a large number of unsubscribes. You must strive to develop a way to engage the customer past the initial promotion. Godiva is one example of a retailer that has found a great multichannel approach to sustaining the value proposition. For each email address, Godiva provides one free piece of chocolate each month (in-store). The subscriber also receives a special in-store gift with a purchase over $10. Finally, free standard shipping is provided for one online order along with exclusive online-only specials. The beauty of this structure is that the program promotes both online and offline shopping and continues the engagement long after the initial subscribe.

TRACKING: Trust, Verify, and Share

Track Results Constantly
Reporting is crucial to this type of program since we now have employee and group goals tied to the results. Tracking the number of email addresses captured at the store, district, and region levels is essential. Understanding how many of these addresses are 1) valid, and 2) incremental is also essential. There are a number of technologies and tactics for screening invalid addresses and protecting your email program’s deliverability (check with your email service provider for details). A must for this program is a timely feedback loop that allows all levels of the organization, especially the stores, to see results on at least a weekly basis.

Understand Disparities across Stores
Analysis of email capture reports should quickly highlight any disparities across stores, districts, and regions. Understanding these differences can help to identify program obstacles while identifying emerging best practices. Make sure to interrogate these differences and share the techniques and practices that work in high-performing units with lesser-performing units in the hope that better results can be achieved across the entire organization.

MOMENTUM: Seize The Opportunity With Subscribers

Initiate Relationship with Customers
You should now have millions of new email subscribers – don’t squander the opportunity. Maintaining momentum starts with initiating a dialogue with the customer as soon as possible. Send an immediate acknowledgement (in the form of a thank you email possibly with an offer) no more than 48 hours after the customer subscribes. This will require a nightly email data transfer from the stores – a requirement that will most likely receive some push-back but it is critical to making this program work. One of the most common reasons for unsubscribing cited by customers is not remembering subscribing in the first place.

Introduce Your Brand
Once you’ve acknowledged the new subscription, take advantage of this new relationship by introducing the subscriber to your brand. One of the easiest ways to accomplish this is to deploy a triggered multi-wave progression of emails with unique content that introduces the subscriber to different aspects, features or offerings across your store. Generally, these should be spanned over several weeks and should cover a different category or solution area each time.

Capture Additional Data for Targeting
Take the opportunity throughout the multi-wave progression to capture additional data that will be useful for targeting in the future. Numerous studies have shown that the most common reason subscribers leave your email list is that the content becomes irrelevant. Follow email best practices with your new customers, focusing more on targeted, relevant messages rather than overwhelming them with continuous “batch and blast” emails.

Every Day You Wait Means Lost Sales...
Millions and millions of customers visit your stores each year. These customers have already shown some propensity for your brand by being in your store. These customers most likely shop online every week somewhere. These customers are probably open to a broader dialogue with your company via email. And building that dialogue (and capturing tens of millions of incremental dollars in sales) is neither expensive nor difficult. With a little bit of focus and collaboration, new email dialogues with these offline customers can be worth much more than a vintage Bugatti…

Jeff McCall is a Senior Vice President at GSI Commerce where he leads the company’s Strategy Services group.