March 23, 2022

Then The Email Marketer Sub-Optimizes Profit While Optimizing Engagement

Allow me to share gross margin percentages by marketing channel for this brand. Tell me if you see something interesting:

  • 47% = Call Center.
  • 48% = Online Orders.
  • 48% = Affiliate Marketing.
  • 44% = Email Marketing.
  • 51% = Search.
This company has a $120 average order value in search, and a $125 average order value via email marketing. How about profit?
  • 0.51*$120 = $61.20 of gross margin.
  • 0.44*$128 = $56.32 of gross margin.
The marketer is generating $5 more gross margin via search than via email marketing.

This marketer, of course, offers discounts to encourage the customer to buy via email marketing.

This marketer, of course, celebrates the fact that AOVs are $8 higher than in other channels.

This marketer, of course, is sub-optimizing profit.

I know, I know, here come the trolls arguing that the discounts lead to greater response levels and increased engagement and those gains offset the $5.00 given up in the process.

Ok - prove that your thesis is true. A/B test the discounts, and tell me if your thesis holds.

Until then, measure gross margin percentages by channel - are you, as a marketer, sub-optimizing profit in an effort to optimize engagement and average order values?

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