The Danger in Mailing Too Often
If you increase your mailing frequency from once a week to twice a week, you'll probably increase your revenue. Three mailings per week increases your revenue even further. So what's wrong with sending oodles of email? You may be losing your best customers.
I recently studied the results of emails sent by two similar women’s clothing retailers. Both companies have several hundred stores in shopping malls and began the year with approximately the same number of subscribers in their databases. Company A sent more than 42 million emails, about 72 emails per address; Company B sent more than 50 million emails, about 90 emails per address. The results show that company B’s higher mailing frequency took a toll on its subscription rate: 10.6 percent of recipients unsubscribed compared to 7.5 percent of company A’s recipients.
However, 17 percent of company B’s subscribers became buyers versus only 10 percent of company A’s. A difference in average order size between the two retailers may have been due to different merchandise rather than a result of less frequent mailing.
Interestingly, some of the subscribers who unsubscribed made purchases before they disappeared. The total online purchases of all unsubscribers for each company was close to $1 million, as shown in the accompanying diagram. The most significant number is the average spend per unsubscriber. Company A’s unsubscribers spent an average of $220, whereas all its buyers spent only an average of $177. Company B’s unsubscribers spent an average of $156, while all its buyers spent an average of $115.
These charts reveal that the lost subscribers were more valuable than those who remained. Company B lost 292 customers who bought products four or more times before they disappeared. This kind of analysis shows the hidden costs of increasing mailing frequency. What else can we conclude from these numbers? That frequent mailing increased the number of sales and the number of unsubscribes. Marketers need to analyze those who leave, either through unsubscribing or their address becomes undeliverable. If you're losing your best customers, you need to find out why and what you can do about it.
How to keep your best customers
You know two facts at this point: frequent emails increase sales, but they turn some people off. You can live with losing nonbuyers; you can’t live as comfortably if you lose frequent buyers, especially if it’s because you send them too many emails. One solution is to treat your buyers better than your nonbuyers.
This solution wasn’t easy for either company to adopt. Both had a large brick-and-mortar presence and considered their email program as a sideline. They fell into a trap because all they collected from subscribers in the opt-in process was their email address and first name. Using that name, they could personalize the greeting in the content, but that was it. Going forward, their buyers got exactly the same emails as nonbuyers. The retailers could have appended data and created personalized emails just for buyers. Why didn’t they take advantage of the situation?
For both companies the answer is a common one among email marketers: they were so busy creating new emails that they had little or no staff resources available to create differentiated communications for buyers. Such mass emailers typically live hand-to-mouth. Each email offered deep discounts as inducements for their subscribers. Their management was seeking the least costly way of delivering emails.
Any marketer who proposes creating different emails for buyers versus nonbuyers will have a tough time convincing management that the extra expense is justified. But numbers don’t lie. According to JupiterResearch, “Engaging in relevant communications increases net profits by an average of 18 times more than broadcast mailings.” What can you do to get management’s attention on this situation?
Frequent emailing and the effect on offline sales
Not shown in the above chart are the offline sales attributed to these subscribers. Typically, 75 percent of offline purchases made by customers who are active on the web are made after research. Unquestionably, subscribers who received emails were prompted to go to the brand's local retail store to try on the clothing before they bought it.
The offline sales due to these emails were significant, but the problem is that no one knows how significant. The reason these sales don’t show up on the chart is because these retailers didn’t maintain customer marketing databases that showed sales from all channels. Creating such a marketing database costs more than $1 million per year. That kind of expenditure just doesn’t fit into the business model of the heavily discounting mass emailer. If they had calculated their off-email multiplier, they'd have realized that the emails were generating up to $40 million in total sales rather than the $10 million they thought. With numbers like these, which they didn't have, spending $1 million for a database would have made sense.
So, what should you do with your email program? Here are some ideas to consider:
- put coupons in your emails that are good in-store as well as on your e-commerce site;
- feature products in your emails that aren't advertised elsewhere;
- set up a loyalty program so that customers will let you know when they're buying, no matter which channel;
- use surveys to get feedback from your email subscribers; and
- give unsubscribers the choice to change the frquency with which they receive email from you — it's better than losing them completely.
Arthur Middleton Hughes is vice president of The Database Marketing Institute. This article is taken from his new book, "Strategic Database Marketing, 4th Edition." Arthur can be reached at Arthur.firstname.lastname@example.org.