May 26, 2020

Returns and Email Targeting: Actionable Outcomes

Here's a paraphrased quote from one of my followers on Twitter.
  • "You must be nuts to think that your client base would want to analyze email behavior across individuals. Nobody wants to do that. You keep talking like somebody who wants to do things like big companies do them."

I'm not talking "Big Company" strategy here ... I'm talking common sense. Either you want to do the right thing and make your company more profit and boost your career, or you want to be lazy.

You get to make the choice.

Here's a choice I'd make a hundred times out of a hundred. This company possesses the following metrics:
  • If an item is returned, the item costs the company $10 of lost profit to ship the item back and process it appropriately.
  • 45% of sales independent of returns convert to profit.
  • Each email delivered costs the company $0.003.
  • The company has a "Low Returns" segment ... future return rate = 10%. Most customers are here.
  • The company has a "Medium Returns" segment ... future return rate = 30%. Some customers reside here.
  • The company has a "High Returns" segment ... future return rate = 60%. Some customers reside here.
So let's overlay an Email QuickScore (remember those ... click here now) against the Returns Segment. Then let's measure demand, sales, expense, and profit in the next thirty days. Ready???

Email / Returns Profit

What do you observe?

At a demand-level, high returns customers are the "most valuable". This is where online marketers measure stuff, and as you are about to see that's not a great idea.

When I back out return rates from the next month, we see that high returns segments are not worth nearly as much.

Next, I subtract email costs (minimal) and returns costs (not minimal). Oh oh.

And finally, the bottom portion of the table shows us what profit looks like. High returns customers are uniformly unprofitable in email marketing campaigns.

Why in the heck are you sending email marketing campaigns to high returns customers?

Let's get busy doing something about this!

And if you don't have the resources to do something about this, contact me right now ( and I'll get busy creating actionable ways to combine email marketing and returns to generate your company more profit.

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