August 10, 2006

How Many Times Should You E-Mail A Customer Each Week?

Here is an article from DMNews, authored by Philippe Suchet, CEO of Kefta. Kefta is a company specializing in dynamic online targeting. The article advocates dismissal of frequent, untargeted e-mail blasts, and outlines several qualitative reasons why this practice should be stopped.

Let me pose a scenario to you. Pretend you are CEO of an online company that sends four untargeted e-mail blasts each week to an e-mail list of 10,000 names. You do not have the resources, nor the marketing budget, to develop targeted e-mail campaigns, or pay a vendor to execute complex campaigns for you. Like most businesses, you need every additional penny you receive from your customer. You have tested different two different e-mail contact strategies, one strategy includes four campaigns per week, the other strategy, only one campaign per week. Here are the metrics:

Situation #1: Four e-mail campaigns per week.
  • E-Mail list = 10,000 names.
  • Each week, 500 names are added to the e-mail file.
  • Each week, 450 names opt-out/unsubscribe, or become invalid.
  • Across a typical week, the four campaigns total $12,000 net sales and $2,000 profit.
Situation #2: One e-mail campaign per week.
  • E-Mail list = 10,000 names.
  • Each week, 500 names are added to the e-mail file.
  • Each week, 350 names opt-out/unsubscribe, or become invalid.
  • Across a typical week, sending just one campaign yields $5,000 net sales and $833 profit.
It is your turn to play virtual CEO. Do you over-contact your customers, and generate more than double the profits, or do you contact your customers less frequently, and sacrifice $1,167 of profit per week?

When we play the role of "customer", the answer appears cut and dried. We wouldn't over-contact the customer.

When we play the role of "CEO", our objectives may be different. The scenario where four e-mails per week are sent results in a 30% increase in opt-outs/unsubscribes. However, there are fewer names leaving the database than being added to the database. As a result, the CEO is likely to advocate four e-mail contacts per week.

Ok, time to share your point of view. You are the CEO. Which e-mail contact strategy do you implement, and why?

4 comments:

  1. Great exercise! The decision rests on two points:
    1) does the organization have the funds to make it through a reduced revenue period. If no, then point #2 is moot.

    2) Rev per msg is 67% greater, and opt outs are reduced by 22%, for one mesage per week strategy.

    If the answer to #1 is yes, and the strategy of one message per week is implemented, the breakeven period for the strategy is 1.7 years. That is, beyond 1.7 years, the performance of the one send per week strategy is better. In fact, it's much better and grows VERY quickly beyond that point.

    Still, there are simple things a person can do that help in relevance. For instance, break the list into people who ordered during the prior week, versus those who did not. Message separately and test different strategy and offers. Doing one send per week, rather than 4, you have more bandwidth to do additional things. This dimension, recent order, may not be the best dimension, just an example.

    Thanks!

    Mark

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  2. Kevin H.4:52 PM

    Good job identifying the short-term verses long-term payback of the strategies!

    I read very little in the literature about understanding the tradeoff between e-mail performance, contacts per week, unsub rates, and file growth. You did the math in a way that helps illustrate the difference in performance.

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  3. Hey, I just wanted to say that this was an excellent post! Personally, I think I tend to take the view of the customer too often when planning my advertising campaigns. As a result, I think "oh, they don't want to be bothered that much" or whatever, so I don't send out as many emails as I perhaps should. Now that you've performed this exercise, I view things in a whole different way!

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  4. Kevin H.1:59 AM

    Thanks for your comments, "Biz". I appreciat the feedback!

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