We know that marketers are not, by and large, doing a great job with email. Return Path recently released the results of a study of 61 email marketing programs here in North America. These are big brands like Nike, Tiffany, Martha Stewart and Best Buy, who are well recognized for their marketing savvy. Yet, 60% did not send a welcome message. Another third (30%) did not send any messages at all in the 30-day timeframe of the study. About 70% of companies we studied gathered subscriber data at the point of collection. A startling 75% never used it to enhance subscriber experience.
This isn't a surprise -- we see the results of this research in our own inboxes every day.
Is this complete disregard for the subscriber experience (and revenue potential!) a lack of intelligence among email marketers? I don't think so. I suspect it's because it's easy to send email, but hard to create amazing and compelling subscriber experiences. In order to create the type of email program that is responsive to our subscriber needs, we need resources, both technology and human. And that means we need money.
A big part of the problem is that there remains a deeply rooted misconception (particularly among executives) that email is free. Certainly, whenever we send out a blast, we earn revenue. And this is true even when our messages don't resonate with all of our subscribers. So the ROI seems high because it requires little in hard costs to send them out.
We have to get better as an industry in making a business case for investment in the email channel. The way to make a business case is to show the actual costs of irrelevancy. For example, we can prove that even the short-term revenue boost from sending "just one more" email blast has a measurable long-term negative effect.
Your CFO (or CMO or CEO) thinks that sending that additional message is simply the cost of broadcasting them -- the CPM we pay to our email delivery vendor. Actually, the real cost includes the costs of replacing addresses lost because of increased unsubscribe requests, complaints (clicks on the "This is Spam" button), decreased deliverability and fatigue.
Let's say that your "one more blast" message to a million recipients results in a half a percent more unsubscribe requests, a 5% boost in complaints and a 10% boost in fatigue. Add that up, and you are talking about 150,000+ subscribers that you need to pay to acquire again or replace. The negative revenue hit is not just against this one mailing. You also need to factor in the cost of unrealized future revenue from those lost subscribers. If your average subscriber spends even $100 a year with your company through email, you've lost the opportunity to capture that revenue from all 50,000+ subscribers.
Lastly, the impact of this mailing has what I call a "brand slam" factor, based on negative brand impression and lower loyalty. We typically assign some brand slam factor (say a penny or half a penny) based on the inverse of your open rate - how many subscribers never opened anything this month? You've taken a brand slam with emails that are not compelling enough to engage.
Add it all up. When we do the math on our sample mailing of just one million records, we often find that a mailing that the CFO thought cost around $1,000 in broadcast fees, actually cost the business $500,000 or more. That is real money! And a real missed opportunity for future sales and customer relationships.
Here's where all that math pays off -- doing the ROI calculation for a mailing that costs $1,000 is very different when the actual cost is closer to $500,000. It's really hard to make up that delta in revenue, especially when you have to pay to acquire customers or pay high fees to contact them via other channels like telesales or postal mail or search. Now this is a language that your CFO can understand. You can quickly start talking about investment in the channel.
OK, you may be thinking: "Focus on the customer." That sounds reasonable. Yet, if this is so obvious, why don't we do it? Well, I think it's because email marketing works too well. It's easy to get stuck in the status quo, blasting away at our subscriber files with irrelevant messages and hoping that it resonates with enough subscribers each time to make our number. Imagine a world where your strategy is measured less on "hope" and more on long-term ROI. Imagine a time when you are not only controlling the message flow and being responsive to subscriber needs, but you actually have the budget and resources to get it done well.
Once we bridge this language gap and effectively make the case for more resources and more support, we can start to seriously optimize subscriber experiences and ensure that our email programs continue to deliver in the long term.