Commentary

Inactive Subscribers Still Help Pay The Rent

Your engaged customers read your emails, click your links, and buy your products. But what about the inactive subscribers who signed up for your list but don’t even open your emails, and you’re not really sure they care. There’s more to the story than just opens and clicks, according to a new analysis by MailChimp. Your inactive subscribers might not be actively engaging with your email, but that doesn’t mean that they haven’t noticed your message or skimmed your subject lines, says the report.

According to the study, one inactive subscriber is worth 32% of an active subscriber. And inactive subscribers purchase more frequently and are less likely to churn than customers who aren’t subscribed to your email list. 

Analyzing 60 million e-commerce purchases and 40 million email addresses from retailers for list segmentation and automation, the study declared an email address "active" if it had opened or clicked in the previous 6 months. If an address had been sent campaigns, but not opened any of them, it was considered "inactive." On average, says the report, 61% of retailers’ recipients in 2015 were active.

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The study showed that both active and inactive subscribers outperform non-subscribed customers in every way. Subscribers order at least 25% more frequently, and when they do, they spend at least 6% more than non-subscribers. Most importantly, they are much more likely to return. Inactive subscribers are 26% more likely to make a follow-up purchase than non-subscribers, and active subscribers were actually 38% more likely to come back.

Retail Email Subscriber Behavior vs. Non-Subscribers (6.6 billion sends; 60 million e-commerce purchases; 40 million email addresses from retailers)

 

Active Subscriber

Inactive Subscriber (Revenue = 32% of Active Subscriber)

Retention Rate

38%

26%

Order Frequency

25%

27%

Order Value

6%

8%

Source: MailChimp, February 2016 (Active member opened or clicked in prior 6 mos; Inactive subscriber received emails but not engaged them.)

On average, says the report, in 2015, 56% of revenue came from customers who were not subscribed before ordering, 37% came from active subscribers, and 7% came from inactive subscribers. Considering only revenue from subscribers, 84% came from active subscribers and 16% came from inactive subscribers. Overall, an average of 45% of a retailers’ revenue comes from individuals who were subscribed.

2015 Revenue by Customer Type

Type of Customer

% of Revenue Generated

Active

37%

Inactive

7%

Non-subscriber

56%

Source: MailChimp, February 2016

Though 61% of recent recipients are active, it appears that they account for 84% of subscriber revenue. The study used the following calculation to compare the revenue per subscriber from the active and inactive segments of a list:

Formula (Ri/Si) / (Ra/Sa)

  • Ri=Inactive Subscriber Revenue
  • Si=Inactive Subscribers
  • Ra=Active Subscriber Revenue
  • Sa=Active Subscribers

Averaged across retailers, an inactive subscriber was worth 32% of an active subscriber. And, a similar calculation found that inactive subscribers are also 32% as likely to convert as active subscribers. Though these percentages line up because inactive and active subscribers spend about the same amount on an order, active subscribers end up being worth more because they churn a lot less and keep spending money.

But, the report concludes that, thoughInactive subscribers might not engage with your email, they still generate a lot of revenue. They churn less, buy more frequently, and are 26% more likely than non-subscribers to make another purchase. Finally, the report recommends re-engagement strategies as opposed to pruning inactive subscribers from lists.

For additional information from MailChimp, please visit here.

 

 

 

1 comment about "Inactive Subscribers Still Help Pay The Rent".
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  1. Bill Kaplan from FreshAddress, Inc., February 25, 2016 at 5:08 p.m.

    Impressive stats on the value of inactives, particularly when you consider that the leading factor resulting in inactive subscribers is simply that you’re emailing them at email accounts they no longer read. 

    With nearly 30% of an email list going stale on an annual basis, 
    the biggest problem with most reactivation campaigns is that companies develop interesting programs but then email their inactives at old, dead addresses. 

    To avoid wasting your money on reactivation programs that generate minimal returns, a successful reactivation program needs to incorporate an Email Change of Address (ECOA) service to ensure that the offers you're sending reach people at their preferred email addresses, rather than simply falling on deaf ears.

    Doing so will enable you to best leverage your marketing spend, thereby enabling you to reconnect with lost customers and drive the ROI and revenues you're seeking. 

    To learn how to further optimize your email reactivation programs, see http://www.freshaddress.com/services/email-change-of-address-ecoa/

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