January 17, 2008

E-Mail Strategies And A Study From Return Path

A recent study documented on the Return Path website chided retailers for sending what consumers considered "Junk E-Mail".

I think all of us have sat in the seat of the consumer, and understand how irrelevant many e-mail marketing campaigns appear when they arrive in our in-box.

Now, I want to make it clear that I am not taking sides here (nor is this a criticism of Return Path in any way, shape or form). I just want to present a case from the viewpoint of a General Manager accountable for delivering a healthy profit and loss statement. The GM is given four choices (sales and profit are based on actual e-mail marketing relationships):
  1. Send two e-mail campaigns per week to the entire e-mail list of 500,000 customers. Total sales = $9.9 million. Total profit = $2.9 million.
  2. Send two e-mail campaigns per week to the top half of the e-mail file, send no e-mail campaigns to the bottom half of the e-mail file. Total sales = $8.1 million. Total profit = $2.4 million.
  3. Send one very smartly designed e-mail campaign per week to the entire e-mail list of 500,000 customers. Total sales = $6.5 million. Total profit = $1.9 million.
  4. Send one very smartly designed e-mail campaign per week to the top half of the e-mail file, no e-mail campaigns to the bottom half. Total sales = $5.3 million. Total profit = $1.6 million.
Again, I'm not taking sides here. I do want for you to see things via the eyes of the business leader.

If a business leader is required to deliver increases in sales and profit (and if the brand is publicly traded, the business leader has a fiduciary responsibility to increase shareholder value), the numbers listed above drive the business leader toward choice #1. The business leader may feel pressured to increase e-mail frequency, mailing non-responders in an effort to deliver promised sales and profit forecasts, delivering less-than-compelling e-mail campaigns that deliver half the productivity of a well-designed campaign (as is illustrated in this example).

The challenge for all of us is to present a compelling case that illustrates how fewer campaigns offering relevant, targeted content actually increases sales and profit more than choice #1 outlined above.

Until this happens, we'll continue to see business leaders opting for choice #1. This choice is opposite from the strategy advocated by many e-mail experts, the opposite strategy desired by a consumer, but is often the choice most beneficial to the brand in the short-term (i.e. twelve months).

P.S.: I realize I'll get comments about high opt-out rates and consumer frustration and sender reputation and long-term profitability. If you elect to take this route, please pretend you're speaking to the General Manager of a direct-to-consumer brand --- present a compelling case with realistic metrics and accurate financial information --- no rhetoric please.