August 29, 2007

E-Mail Productivity Is Waning ... Or Is It?

Has your e-mail campaign productivity dropped significantly over the past three years?

For all of the glitz and vendorspeak surrounding e-mail, many companies tell me that e-mail campaign performance declined by between ten and forty percent over the past three years.

Often, the folks who analyze e-mail campaigns do not have the tools necessary to decompose the performance of an individual campaign. Often, these folks don't talk to the SAS programmers or Catalog circulation experts sitting down the hall from them, folks who could really help them out!

You've got to remember, these Catalog/SAS folks have seen every productivity problem under the sun. E-mail marketers often have much less business experience to draw upon. So why not get yourself some help???

On the surface, your e-mail campaign performance might look like this, over the years:
  • 2004 $/E-Mail = $0.29.
  • 2005 $/E-Mail = $0.26.
  • 2006 $/E-Mail = $0.24.
  • 2007 $/E-Mail = $0.23.
Things don't look too promising. Time to fire the e-mail director.

Here's where you go talk to that SAS programmer down the hall. Ask this person to segment your e-mail subscriber file into two groups:
  • Group 1 = Customers who clicked-through an e-mail to the website at least two times in the year prior to receiving the current e-mail campaign. Call these folks "engaged" customers.
  • Group 2 = All other Customers.
Within each group, measure $ per e-mail.

Many times, you'll see this kind of trend:

2004 Engaged Customers 10,000 $2.00

All Other Customers 90,000 $0.10

E-Mail Totals 100,000 $0.29

2005 Engaged Customers 11,000 $2.10

All Other Customers 108,000 $0.07

E-Mail Totals 119,000 $0.26

2006 Engaged Customers 12,100 $2.15

All Other Customers 129,600 $0.06

E-Mail Totals 141,700 $0.24

2007 Engaged Customers 13,310 $2.17

All Other Customers 155,520 $0.06

E-Mail Totals 168,830 $0.23

This is important! E-Mail campaign productivity is not decreasing. Instead, you have what catalogers call a "file mix issue".

Catalogers have known for a century the importance of "file mix", of having a healthy file of great customers. Catalogers seldom talk about the performance of the entire file when sharing results.

In this case, the file might actually be healthy. "Engaged" customers, those who click-through at least two e-mail campaigns per year are increasing in size, and productivity per e-mail campaign is increasing.

What is happening is that there is a significant portion of the e-mail file that is completely disinterested. This part of the file is increasing at a faster rate than the engaged portion of the file, and productivity per e-mail among this audience is decreasing.

The "file mix" is driving productivity down.

When the engaged audience is decreasing in size, or the engaged audience is spending less per e-mail campaign, you have a problem.

The good folks in the e-mail campaign management tribe can get some answers by simply talking to the folks in the SAS tribe, or the folks in the Catalog circulation tribe.

By simply segmenting the e-mail list into these two groups, one can quickly determine if there is a performance problem, or a file mix problem.